Indofood CBP Sukses Makmur (ICBP.IJ Rp 12,150; BUY TP Rp 14,000) Positive Outlook for FY24-25F Intact with Potential Boost from Festive Season Demand

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Indofood CBP Sukses Makmur (ICBP IJ)

Positive Outlook for FY24-25F Intact with Potential Boost from Festive Season Demand

Following the solid 9M24 results, we raise our FY24-25F revenue growth forecast to 8% yoy, primarily driven by stronger volume expectation.
We also expect demand from overseas markets, coupled with stable margins, to support FY24/25F core profit growth of 7%/11% yoy.
Maintain Buy rating with a higher TP of Rp14,000. We expect positive momentum to continue into 4Q24 and 1Q25, backed by Eid festivities.

9M24 solid revenue driven by volume and strong overseas markets

ICBP reported solid 9M24 revenue growth of 8.1% yoy, mainly driven by volume growth (no ASP adjustment in 9M24 YTD). Domestic rev. grew 5% yoy in 9M24, while overseas rev. grew 15% yoy, supported not only by the Pinehill market (Middle Eastern and African countries) but also by other regions, such as the U.S., Canada, and North America. With a sustained GPM of 37.2% in 9M24, ICBP reported higher opex primarily due to increased A&P spending to support new product launches and higher freight costs from rising export sales volume. Below operating, ICBP recorded a forex gain of Rp753bn from financing activities. Combined with Rp1.5tr financing costs and Rp535bn forex loss from operating activities, this led to 9M24 core profit of Rp7.6tr (+14% yoy).

Expect solid FY24/25F core profit growth of 7%/11% yoy

Following the release of 9M24 results, we have revised up our FY24/25F revenue forecasts to Rp73.5tr/Rp79.4tr, respectively, reflecting higher volume growth estimates of 6.6% yoy (5.5% yoy prev.) and 5.7% (prev. 5.3% yoy). We expect strong demand from the overseas market, which contributes 30% to ICBP’s revenue, along with solid growth in the domestic market, to drive improved sales volume and maintain a solid gross margin at 37%/36.8% in FY24/25F. We project ICBP will keep A&P spending steady at 3.6% to FY24/25F revenue. However, due to higher freight costs and forex losses from operations, we have revised down our FY24 core profit forecasts by 5.7%. Nonetheless, this translates to FY24 and FY25F core profit of approximately Rp10tr (+7% yoy) and Rp11tr (+11% yoy), respectively.

Maintain Buy rating with a higher TP of Rp14,000

We rolled over our DCF-based valuation to FY25, assumed revenue CAGR 2026-30F of 7% (vs. 6% prev. and FY24-26F CAGR: 8%) and arrived at higher TP of Rp14,000, (implied FY25F PE of 14.3x). We maintain our Buy rating as we expect ICBP to continue benefiting from the positive sales trend in Pinehill/overseas markets, with momentum extending to 1Q25 due to Eid festivities at the end of Mar25. The downside risks to our recommendation include rising commodity prices, which could pressure margins, and weakening purchasing power.

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