PT Victoria Care Indonesia (VICI IJ) Strong brands and digital marketing channel drive promising

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PT Victoria Care Indonesia (VICI IJ)

Strong brands and digital marketing channel drive promising growth outlook

Backed by major brands and strong new product launches in FY22, VICI 9M23’s top line outperformed FMCG peers at 41% yoy.
Digital marketing channel has supported new product launches, strong sales and robust earnings growth.
For FY24, the company estimates revenues growth of 15-20%, with a minimum GPM of 53% and NIM of 12-13%.

Tapping the growing market of beauty industry

VICI is a manufacturer of beauty products, targeting the mid-segment female population aged 17-30 years, with product prices ranging from Rp17,000 to Rp100,000. It was established in 2007 with one factory in Semarang, working together with 30 distributors to achieve nationwide coverage. In 9M23, VICI reported solid net revenues of Rp1tn, +41% yoy, supported by 102 new SKUs (Bodycare, Skincare and Haircare) launched in FY22. VICI’s main brands comprise of Herborist, Miranda, CBD and NuFace, which combined contributed to more than 95% of the total 9M23 sales. Supported by digital marketing, NuFace reported 9M23 sales growth of 150% vs FY21 sales.

Digital marketing supported robust top line growth

VICI’s digital marketing initiatives have helped the company to double its online sales contribution from 12.3% in 9M22 to 24% in 9M23 (highest versus peers within our coverage) with A&P costs around 17% of sales (vs. peers’ 7-12%). Digital marketing not only positively impacts online sales, but also drives offline sales, which increased by 26% yoy in 9M23, with General Trade provided the biggest contribution to offline sales (60%). With sales through Tiktok accounting for around 50% of online sales, the ban on Tiktok Shop/ TTS (at least for the time being) may drive a drop in online sales in 4Q23F.

Promising growth prospect in store for FY24

A strong top line and a higher 9M23 gross margin of 55.8% (FY22: 52.5%) thanks to an improved product mix, supported 9M23 net profit growth of 168.2% to Rp143bn (annualized FY23 net profit of Rp190bn, +95% yoy). VICI expects revenues to grow by 15-20% in FY24, with GPM to be maintained at least at 53% and NIM of 12-13%. VICI trades at FY23 annualized PE of 23.3x, higher than the sector’s 19.1x but with an attractive earnings growth profile (+95% yoy based on annualized 9M23 net profit).

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