Mayora Indah (MYOR IJ)

Expect solid 2Q24 volume growth to sustain in 2H24

• MYOR delivered +17% yoy 2Q24 revenue growth on strong domestic and export volumes, driving 13% yoy 1H24 core profit growth (inline).
• We expect higher volume but with lower margins, translating to minor revisions in our FY24/25F core profit est. (-1.8%/14% yoy growth).
• We reiterate our Buy rating with a higher TP of Rp3,350 (FY25F PE of 20.2x); expect strong seasonal performance in 2H24 as catalyst.

Strong 2Q24/1H24 revenue growth backed by positive market trends

MYOR reported solid 1H24 revenue growth of 9% yoy, supported by a 13% yoy increase in volume. In 2Q24, both domestic and export markets showed strong sales growth recovery of 20%/14% yoy compared to 9%/-5% yoy in 1Q24.  In the export market, MYOR noted solid growth in Malaysia, China, and India in 2Q24, with the expectation for this positive trend to continue in the 2H24. In Jun24, MYOR’s market share in the biscuit and wafer categories increased to 42.3%/24.8%, up from 39%/21% in 1Q24. This growth was driven by expanding market share and an enlarged market size in these categories.

More upbeat volume growth, but a more conservative margin outlook

Management now expects 10-12% yoy revenue growth (vs. <10% prev.). However, it now expects a lower gross margin at 25% due to higher cocoa and coffee prices, with plans to further adjust ASP in 2H24, following a ~3% ASP increase in Coffee and Chocolate in 2Q24.  Post 2Q24 results, we lift our FY24/25F vol. growth assumptions to 9.8%/10.2% with higher ASP increases of 1.5%/1.2%, hence a 3%/6% upgrade in our FY24/25F revenue est. We trimmed our FY24/25F gross margin by 50bps, while maintaining the A&P/rev. ratio at 8.5%. These adjustments result in minor changes to our net/core profit estimates (Exhibit 2). We estimate the FY24/25F core profit to be Rp3.3tr/Rp3.7tr, translating to -1.8%/14% yoy growth.

Reiterate Buy rating; expect seasonal revenue growth as a catalyst in 2H24

In the past ten years, MYOR’s 2H revenue and core profit have consistently contributed more than 1H’s (at 52-55% for rev. and 54-58% for core profit). Similarly, we expect positive seasonality from exports in 3Q24 and end-of-year festivities to sustain steady volume growth in 2H24. Thus, we reiterate our Buy rating with a higher DCF-based TP of Rp3,350 (FY25F PE of 20.2x), as we roll over our valuation to FY25. Downside risks include lower-than-expected margins due to higher input costs and lower sales volume.

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