3Q18’s Buoyant Sales of 10.4%
HMSP enjoyed the growth of 10.4% in sales from IDR25.7 trillion in 3Q17 to IDR28.3 trillion in 3Q18. The machine–made clove cigarettes (SKM) — contributing 70% to the total sales — is the pillar of 3Q18’s buoyant sales as it sales grew by 14.2% from IDR17.2 trillion in 3Q17 to IDR19.7 trillion in 3Q18.

Estimate of Slight Decline in Gross Profit Margin
HMSP’s gross profit margin is estimated to slide from 24.4% in 2017 to 23.5% in 2018. The deceleration was beset by creeping-higher excise rates for tobacco from 48% imposed on 9M17’s sales to 51% imposed on 9M18 sales. The Indonesian government leveraged higher excise rates of 11% for tier 1 SKM from IDR530/cigarette in 2017 to IDR590/cigarette in 2018. Excise rates topping inflation throttled HMSP’s gross margins.

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