Sido Muncul: Riding the Wave of Herbal Growth with Strong Q3 Performance and Promising Outlook

Date: October 28, 2024
Broker: UOB Kay Hian

Company Overview

Sido Muncul is the largest producer of herbal medicine (jamu) and energy drinks in Indonesia.

Stock Data

• Share Price: Rp615
• Target Price: Rp800 (Previous Target Price: Rp900)
• Upside Potential: +30.1%
• Bloomberg Ticker: SIDO IJ
• Shares Issued: 30,000.0 million
• Market Capitalization: Rp18,450.0 billion (US$1,183.9 million)
• 3-Month Average Daily Turnover: US$1.5 million
• 52-Week High/Low: Rp775/Rp486

Recent Financial Performance

3Q24 Results

• Net Profit After Tax (NPAT): Rp218 billion, up 47.5% year-over-year but down 22.2% quarter-over-quarter.
• The quarterly decline was attributed to weak purchasing power.
• Export sales grew by 70% year-over-year in 9M24 and 56% year-over-year in 3Q24.

9M24 Performance

• Total NPAT: Rp778.1 billion, an increase of 32.7% year-over-year.
• Sido Muncul’s herbal products contributed significantly, with the recently introduced Tolak Linu product accounting for 5% of herbal sales, while Esemag accounted for 2%.

Sales and Market Conditions

• Sales Declines: 3Q24 herbal product sales fell by 4.5% year-over-year, energy drinks decreased by 16% quarter-over-quarter, and pharmaceuticals dropped by 16%.
• Geographical Contributions: Malaysia now contributes 4% of total sales, with exports making up 8% of total sales.
• The company is awaiting product approvals in Cambodia and Vietnam.

Future Outlook

• A recovery in 4Q24 is anticipated due to seasonal factors, including:
  • Increased consumption of herbal drinks during the rainy season.
  • Year-end festivities likely boosting sales of Esemag and Tolak Angin Linu.
  • Retailers expected to restock inventory during the year-end period.

Financial Metrics

• Revenue (1H24): Rp1,896 billion, a 14.7% increase year-over-year.
• Gross Profit (1H24): Rp1,104 billion, a 25.8% increase year-over-year.
• Operating Profit (1H24): Rp759 billion, a 34.9% increase year-over-year.
• Net Profit (1H24): Rp608 billion, a 35.8% increase year-over-year.

Key Financials (Forecasts)

Conclusion

Sido Muncul has demonstrated robust growth, particularly in its export segment, despite facing challenges in domestic sales. The company’s strategic positioning and product offerings are expected to drive further growth as market conditions improve.