Mayora Indah (MYOR.IJ Rp 2,350; BUY; TP Rp 3,200) Steady indicative 2Q24 sales growth, with intact margin outlook

Stock Code	Last Price	Change	Change %
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Mayora Indah (MYOR IJ)

Steady indicative 2Q24 sales growth, with intact margin outlook

MYOR’s management expects robust sales growth in 2Q24 off a low base in 2Q23 after double-digit growth (mom and yoy) in Apr-May24.
Higher raw material costs led to lower margins in 2Q24. As such, MYOR will gradually adjust ASP at the consumer level.
Maintain Buy with an unchanged TP of Rp3,200 (implying FY24F PE of 21x).

Expect robust 2Q24 sales growth: export markets starting to revive

In our recent meeting, MYOR’s management indicated that May24’s monthly sales still grew at a “double-digit” rate mom and yoy following solid growth in Apr24 sales off a low base in 2Q23. Nonetheless, sales growth in Jun24 may slow due to school holidays and seasonal factors (i.e. Eid Al-Adha holidays). Furthermore, MYOR’s management also indicated that export sales to Malaysia and China had begun to revive, adding that 2H24 sales would be aided by seasonal events (i.e. Mooncake Festival in 3Q24). Against this backdrop, we expect MYOR to attain our FY24F sales target (+7.8% yoy), given the larger expected contribution from export markets (FY23: 44%).

MYOR plans to steadily increase ASP to offset higher raw material prices

MYOR indicated that it had started to adjust the ASP of several products in 2Q24. The prices of chocolate products have already been raised at the retailer level, while the prices of coffee products will initially be adjusted in export markets (in Malaysia, China, Europe and the US) within a range of 5-6%, while for the domestic market MYOR will give 1-2 months consideration after the market leader (Kapal Api) adjusted its prices in May24. For 2Q24, MYOR is expected to record lower margins qoq owing to the impact of higher raw material prices. Since May24, MYOR has utilized coffee and cocoa inventory at higher prices (coffee and cocoa prices in May24: US$4,120/MT and US$9,331/MT; May23: US$2,256/MT and US$3,007/MT). Nonetheless, MYOR plans to gradually increase the ASP at the consumer level after the "back-to-school" period in July-August. Furthermore, the management sees room for a higher market share in wafers and candy, with additional capacity from new factories and new product launches (5 to 10 products).

Maintain Buy with an unchanged TP of Rp3,200

We maintain our Buy rating with an unchanged TP of Rp3,200 (implying FY24F PE of 21.3x, at -0.5x SD to the avg 5-y PE) as we see support for earnings from greater exposure to exports (45% to revenue) versus its peers (5-8%) to sustain sales volume growth going forward, supported by ASP increases and offsetting potential downside from currency weakness. Key risks to our view include higher raw material prices in addition to lower-than-expected sales volume in domestic and export markets.

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