KLBF: Bitter Pills, NEUTRAL with lower TP at Rp1,300
05 Nov 2018
KLBF: Bitter Pills, NEUTRAL with lower TP at Rp1,300
KLBF 9M18sales/ net profit of Rp15.68 trillion (+3.9% YoY)/ Rp1.8 trillion (+1.4% YoY) were below than expected, only made up 71.5% of FY18F Rp21.92 trillion in line with moderate consumption during the year. Though the company has selectively increased the selling price by 3-5%, GPM declined by 110bps YoY from 48.8% in 9M17 to only 47.7%, mostly due to sharp IDR depreciation that directly affected the raw material cost (>90% RM were still imported). In order to compensate the drop in GPM, the company has conducted efficiencies in opex, particularly in marketing spending. We made downward adjustments to our projection to reflect company’s lower target guidance and come up with new TP of Rp1,300 per share.
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