Results Review:
Indofood CBP (ICBP IJ, BUY, TP: IDR10,200)
A Likely Better Outlook In 1Q17
Indofood CBP (ICBP IJ, BUY, TP: IDR10,200)
A Likely Better Outlook In 1Q17
We
see a better earnings outlook in 1Q17 driven by better sales mix and higher
ASPs. Indofood CBP plans to launch more higher-priced products variants – such
as Indomie Real Meat and Pop Mie Meaty – thanks to the strong demand in this
high product market segment. Indofood increased ASPs to boost EBIT margin,
after its 4Q16 EBIT margin narrowed on QoQ basis. FY16’s earnings came in line
with expectation. Maintain BUY with a DCF-based TP of IDR10,200 (19% upside),
implying 27x and 21x FY17F-18F P/Es respectively.
Launch
more premium products.
This year, Indofood CBP Sukses Makmur (Indofood CBP) guided that the amount of
new products launches are likely to be same with that of in 2016. However, in
2017, Indofood is to launch more higher-priced products, such as Indomie Real
Meat and Pop Mie Meaty – instant noodles with real meats such as chicken and
beef – thanks to the strong demand in this high market segment. These new premium
products should improve sales-mix.
Key
products’ higher ASPs.
We see its 1Q17 EBIT margin likely to improve. In January, our ground checks
reveal that its popular products’ – Indomie Kari Ayam and Indomie Goreng
Special – retail selling price increased by 4.7% MoM and 5% MoM respectively.
Ready-to-drink (RTD)-tea Ichi Ocha’s retail selling price also rose around by
10% MoM. We see the higher ASPs are likely the pass on costs from the increase
in costs especially cost of goods sold (COGS) in 4Q16. QoQ basis, Indofood’s
EBIT margin narrowed to 12.1% in 4Q16 (vs 14.8% in 3Q16).
Maintain
BUY
with IDR10,200 TP, implying 27x and 21x FY17F-18F P/Es respectively.
4Q16
earnings in line.
FY16 earnings improved to IDR3.6trn (+20% YoY), in line with expectation. 4Q16
earnings came in at IDR768bn (-9.9% QoQ, +38% YoY), as EBIT margin narrowed QoQ
driven by higher costs. However, YoY, EBIT margin widened to 12.1% in 4Q16 (vs
10.3% in 4Q15)
Kindly click the following link for the
full report: Indofood CBP : A Likely Better Outlook in 1Q17
Best regards,
Best regards,
Andrey
Wijaya
Senior Vice President
Research
Analyst – Auto, Consumer, Cement
PT.
RHB Securities Indonesia
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