JAKARTA - Although the producers of Tolak Angin, PT Industri Jamu and Pharmaceutical Sido Muncul Tbk (SIDO) still recorded a declining trend in performance in the first semester of 2022, it is believed that in the rest of this year their income and profits will improve, as well as the value of their shares.
NH Korindo Sekuritas analyst Cindy Alicia Ramadhania in her research, quoted on Tuesday, August 9, said that during the first 6 months of this year, Sido Muncul's sales fell 3 percent on an annual basis worth Rp. 1.6 trillion.
"This decline was due to low demand, both for the herbal and F&B segments in the domestic market," said Cindy.
The decline in demand for SIDO products, said Cindy, was caused by high food inflation, so consumers prefer to focus on meeting basic needs.
From the Pharmaceutical segment, demand was stable in the first 6 months of 2022, supported by products related to COVID-19, including paracetamol, cough syrup, and so on. Meanwhile, sales of the herbal & supplement segment in the first semester of 2022 tended to be stable, with margins ranging from 66 percent to 67 percent amid slowing demand for herbal medicine, especially in the cold symptom category.
On the other hand, the performance of the F&B segment was depressed by the slowing demand for Kuku Bima Energi and vitamin C products. In fact, Kuku Bima Ener-G products contributed 16 percent to the company's sales and recorded higher export sales in Nigeria and Malaysia.
"SIDO projects that the margins of the F&B segment in the future will increase, because most of the prices of its main products have been adjusted," added Cindy.
In the future, SIDO will utilize international business lines to offset the decline in the domestic market. In the first semester of 2022, international business grew 80 percent year on year (yoy) with new export countries, namely Senegal and Togo.
In the third quarter of 2022, SIDO plans to expand to Ghana and Cameroon, while for the next quarter it will export products to China, Kenya, and Vietnam.
As for SIDO's share price, which is currently in a downward trend, today it actually strengthened to the level of Rp. 775, or up 3.33 percent compared to the closing trading on Monday, August 8.
NH Korindo Sekuritas recommends buying SIDO shares, with a target price of Rp900 per share. The price target implies a P/E of 17.4 times or -1 STD with a potential increase of 18.4 percent.
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