2Q22 sales volume up 6.2% yoy
HMSP reported 1H22 sales volume growth of 5.7% yoy (vs our FY22 forecast of +3.3% yoy) driven by the solid growth of Sampoerna A (+9.2% yoy) and Dji Sam Soe (+5.6% yoy). The easing of pandemic-related measures has positively impacted the sales volume of cigarette producers in Indonesia. Nonetheless, sales have still been driven by the below tier-1 segment given continued down trading. We expect the solid performance to be maintained going forward. Maintain BUY.
Total 1H22 industry sales increased +6.2% yoy (FY21: +7.2% yoy).According to the release by Philip Morris International (PMI), total 2Q22 industry cigarette sales in Indonesia increased by 6.6% yoy to 76.8bn sticks (1Q22: +5.8% yoy and 2Q21: +12.4% yoy), leading to 1H22 volume of 152bn sticks (+6.2% yoy) mainly due to the growth of sales in the below tier-1 segment which have tax advantages. PMI reported that the easing of pandemic-related measures has positively impacted cigarette consumption.
HMSP’s 1H22 sales volume increased by 5.7% yoy (FY21: +4.3% yoy). HMSP reported 2Q22 sales volume of 21.4bn sticks, + 6.2% yoy (1Q22: +5.2% yoy and 2Q21: +11.5% yoy), leading to 1H22 volume of 42.3bn sticks, +5.7% yoy. Sampoerna A reported sales volume growth of 9.1% yoy in 1H22 (FY21: +15% yoy), mainly supported by A Mild. Dji Sam Soe’s (DSS) sales volume saw growth of 5.2% yoy in the same period (FY21: -8.6% yoy), driven by DSS Magnum Mild. Other brands under HMSP including Sampoerna U reported tepid +1% yoy sales volume growth. In 1H22, HMSP reported slightly lower market share of 27.8% (vs FY21’s 28% and 1Q21’s 27.8%) as the lower market share of other brands under HMSP and DSS was partially offset by Sampoerna A. Based on our estimate, Sampoerna A’s market share was maintained at 12.8% in 1H22 (FY21: 12.8% vs 1Q22: 12.9%). Meanwhile, the market share of DSS was slightly higher at 7.7% (FY21: 7.6%).
Maintain BUY. From our observations, we think HMSP will book better performance than GGRM in the coming quarters, given the lesser price increases required. We expect stronger economic activities to provide room for price increases which will allow cigarette players to maintain margins this year. We foresee a potential rerating for HMSP to its avg 2-y PE of 20x and maintain our BUY recommendation with a TP of IDR1,250.
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