FY19’s Unaudited Bottom Line Lowers than Estimate
Based on FY19’s unaudited results, KLBF achieved the top-line of IDR22,6 trillion (+7.40% y-y), in line with conservative sales to fall short in the range of 6%-8%. Meanwhile, the top-line performance outperformed our estimate as growth in skimmed milk powder (+5.0% y-y), unbranded generics (+7.1% yy), and third party sales & distribution (+15.7%) respectively giving their contributions to sales supported the top-line performance. Conversely, the nutritional segment was underperformed as its sales declined 2.8% y-y due to prevailing regulation of valid OTC license provided by pharmacies leading to a downturn in OTC sales. Nevertheless, bottom-line to amount to IDR2.4 trillion (+1.7% y-y) is far below our estimate of 94.3%.
Cautious Stance Is Signal for Weaker Performance
Based on FY19’s unaudited profitability ratio, GPM and NPM declined to 45,22% and 11,0%, respectively. We estimate lower margins as unbranded generic kept growing at faster paces compared to other products (i.e., licensed and branded generics) in responses to the increasing number of JKN participants–223 million participants as of February 2020)–higher prices of skim milk prices and product mix. Because KLBF recorded lower margins and top-line growth than that in FY18, we revise higher our FY20E estimated revenue from IDR23.7 trillion to IDR24.0 trillion (+6.2% y-y) pursuant with The Company guidance. For FY20E estimated net profits, we make a downward revision from IDR2.7 trillion to IDR2.6 trillion (+4,7% y-y) or in line with the net profit of 4%-5% based on the Company guidance.
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