Mayora Indah (MYOR IJ)

Attractive FY24F growth on stronger sales & sustainable margins

Following MYOR’s 9M23 earnings beat, we slightly raise our FY23-25F forecast and TP to IDR3,500 (from IDR3,300 prev.) as we expect MYOR will sustain solid margins and see stronger sales growth prospect from festive events in 1H24. Maintain our Buy rating on an attractive FY24 core profits growth (+13% yoy).

Margins expansion drove robust earnings growth in 3Q23/ 9M23. MYOR reported robust 3Q23 net profits of IDR807bn (+64% qoq/ +87% yoy), which drove 9M23 net and core profit of IDR2tn (+87% yoy) and IDR2.18tn (+128% yoy) respectively. At the topline, 9M23 revenue of IDR8tn (+2.8% yoy), was supported by steady growth in export rev. (+6.1% yoy) which well offset tepid domestic rev. growth of +0.7% yoy, with packaged beverages revenue growing at a strong +7.8% yoy, versus still soft food segment (+2.2% yoy). While high ASP adjustments in FY22 (at around 15%) drove lower 9M23 sales volume (-5% yoy), this has supported gross margins expansion to 26.7% (above our prev. FY23 forecast of 25.4%). Combined with a well-controlled 9M23 opex (at 14.5% of sales), 9M23 net profit grew at a robust 87% yoy and beat our forecast.

Attractive FY24 sales growth outlook, potentially supported by festive events. During pre-pandemic, MYOR’s revenues grew at a solid 2014-19 CAGR of 12% with steady volume CAGR of 8%. In FY24, we see prospects for MYOR’s revenue to grow close to the pre-pandemic period, potentially supported by festive events in 1H24 (i.e., presidential and regional elections). Thus, we forecast volume and revenues growth of 9% and 11% yoy in FY24F. On the margin front, we base our FY24 COGS forecast on key commodity prices outlook (Wheat down 6% yoy, Sugar -4% yoy, Crude oil +1% and CPO flattish, based on Bloomberg consensus) and thus, expect MYOR sustain its gross margins at 26.9%. Combined with 14.5% opex/revenues, we forecast FY24F core profits to grow at an attractive 13% yoy to IDR3.2tn.

Reaffirm Buy rating with higher TP of IDR3,500. We lift our TP to IDR3,500 (from IDR3,300 prev.) to reflect our higher earnings forecast and as we roll over our forecast to 2024. Our new TP implied FY24F PE of 25.3x (vs. 5-yr average PE of 28.6x). We continue to like MYOR on its attractive earnings growth outlook, as we see the company shall be among the key beneficiaries of purchasing power recovery amid possibility of second round presidential elections and a higher social protection budget (+12.4% yoy).

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