Price: IDR 10,100 - Target Price: IDR 12,000
FY22: Instant noodles remain the primary growth driver. ICBP posted revenue growth of +12.0% YoY in 4Q22, boosting its full-year revenue to IDR 64.8 trillion (+14.1% YoY), in line with our forecast (99.3% FY22 projection). The positive performance was mainly driven by the +15.8% yoy growth in revenue from instant noodles (73.3% of ICBP's revenue), supported by the significant increase in ASP (+12% YoY) (ICBP raised its ASP to maintain EBIT margin amid raw material spike). Due to ICBP's position as the market leader in the Indonesian instant noodle industry (market share >70%), its instant noodle segment managed to record sales volume growth (+3% YoY) even with a higher ASP. Besides instant noodles, almost all of ICBP's other business segments experienced sales volume growth, including snacks (+10% YoY), food seasonings (+12% YoY), nutrition and specialty foods (+1% YoY), and beverages (+5% YoY).
Recovery of EBIT margin. ICBP reported an EBIT margin of 24.1% in 4Q22 (+158bps qoq), marking its successful recovery from the massive slump in 2Q22 (15.2%). Almost all ICBP’s business segments reported better EBIT margins, except for nutrition and specialty foods (-168bps qoq) and beverages (-322bps qoq). Regarding its full-year figure, ICBP’s EBIT margin was relatively stable at 20.6%, with an EBIT of IDR 13.4 trillion (+14.6% YoY). With the decline in raw material prices, we expect ICBP's EBIT margin to stabilize at 20.7% in FY23F.
Unrealized forex loss of IDR 4 trillion. Even though ICBP's FY22 net profit slipped -28.3% YoY to IDR 4.6 trillion, it was still in line with our estimates (101.3% of SSI’s FY22 projection). The drop in net profit was mainly caused by unrealized forex loss (IDR 4 trillion) triggered by rupiah depreciation (-9.3% YoY) and did not reflect ICBP's operating performance (ICBP's core profit went up +7% YoY to IDR 7.3 trillion). The forex loss came from financing activities, specifically the USD 2.75 billion global bonds issued to repay ICBP’s debt related to the Pinehill acquisition. It should be noted that the Middle East and African market (Pinehill's target) actually outperformed the Indonesian market in FY22 (sales growth: +14.8% YoY vs. +14.1% YoY), with those area's contribution to ICBP's consolidated sales increasing to 23.1% from 22.9% in FY21. Going forward, we expect Pinehill to record another positive growth in FY23F, albeit with a lower growth rate, considering economic challenges in its target market (high inflation and currency depreciation), which may hurt people's purchasing power in those areas.
BUY, TP IDR 12,000. Supported by post-pandemic mobility recovery and more distribution channels, we project ICBP to book revenue growth of +11.0% YoY in FY23F, with EBIT growth of +11.1% YoY. We reiterate our BUY rating on ICBP with a TP of IDR 12,000 (15.1x FY23F PE).