Research: Sido's Prospects Of Business Appear More Promising To Enter Semester II 2024

Photo: Doc. Sido Muncul

JAKARTA - Mirae Asset Sekuritas analyst Rizkia Darmawan in his research is of the view that the business prospects of PT Industri Jamu and Pharmacy Sido Muncul Tbk (SIDO) look even more promising entering the second semester of 2024.

According to him, the sale of Tolak Angin is predicted to increase due to the entry of the rainy season at the end of this year.

"We project that Sido Muncul (SIDO) will generate revenue and net profit will grow more than 20 percent in the second semester of 2024 thanks to the rainy season in the fourth quarter and the decline in raw material costs," he explained in research quoted on Wednesday, September 18.

Rizkia's projection regarding the growth of the bottom line is quite large when compared to SIDO's moderate management estimates of a minimum of more than 10 percent this year. According to him, the rainy season will always be a strategic moment for the sale of Tolak Angin which has become part of the lifestyle of the Indonesian people.

This sentiment is profitable for SIDO, considering that Tolak Angin is the backbone of the company's revenue with a contribution of around 50 percent of the total revenue.

With the highest gross profit margin among other SIDO products, the herbal medicine segment and supplements that include Tolak Angin, are expected to continue to record significant growth.

Based on the Meteorology, Climatology and Geophysics Agency (BMKG), the rainy season will start to spread evenly in Indonesia in the fourth quarter of 2024, with high rainfall in most areas.

"This weather condition is believed to increase the demand for Tolak Angin, which is known as an herbal solution to maintain endurance," added Rizkia.

On the other hand, Sido Muncul (SIDO) also continues to innovate in terms of distribution so as to expand the reach of Tolak Angin products. Since May and July 2024, SIDO has started distributing its products directly to Alfamart and Indomaret outlets, without a sub-distributor intermediary.

This step is predicted to boost gross margins by up to 5 percent and increase sales volume by 5 percent. With a combination of profitable rainy season, distribution innovation, and export market growth, Rizkia believes, SIDO will continue to record solid financial performance in the remainder of 2024.

"We estimate that SIDO shares will continue to attract investors with a target price of IDR 830 per share," he explained.