Sido Muncul (SIDO.IJ Rp 565; BUY TP Rp 640) Expects strong 4Q24 result with FY25 growth target of 10% yoy

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Sido Muncul (SIDO IJ)

Expects strong 4Q24 result with FY25 growth target of 10% yoy

SIDO remains optimistic about achieving a minimum 10% yoy growth in FY24 revenue, supported by the “last bite” program in Oct-Nov24.
The management guides for 10% yoy revenue and net profit growth in FY25, driven by volume and inflation-based ASP adjustments.
SIDO has the lowest exposure to USD-linked raw materials among its peers and currently offers a 6.1% dividend yield. Upgrade rating to Buy.

SIDO expects strong 4Q24 rev., supported by the “Last bite” and ASP increase

SIDO remains optimistic to achieve a minimum 10% yoy growth in FY24 revenue, which would enable SIDO to surpass its high 4Q23 revenue base (exhibit 1). The strong 4Q24 performance was driven by “Last bite” program, which ran from Nov to Dec24 for Tolak Angin. Meanwhile, for coffee mix products, the company implemented an ASP adjustment in Oct24 in response to rising coffee prices.

Energy drinks category shows growth potential in both domestic and export

The energy drink market continues to show growth potential domestically, supported by increasing projects such as food estates in Kalimantan and Merauke, government-led housing construction targeting 3mn units, and stable commodity prices, which are expected to drive higher mining and plantation activity. In the export market, demand from Malaysia and Nigeria was reported to remain strong.

FY25 revenue and net profit growth guidance of 10% yoy

The management guides for 10% yoy revenue and net profit growth in FY25, primarily driven by volume and inflation-based ASP adjustments. Additionally, the rainy season in 1Q25 and the upcoming fasting season should support SIDO’s sales volume. In FY25, the company plans to expand its warehouse capacity in Semarang, Central Java, to increase inventory storage for raw materials and finished goods. However, with production utilization at around 50%, SIDO expects to allocate Rp150-175bn in capex for the year (same amount with FY24). The company launched several new products including Tolak Angin Batuk and Esemag. However, the majority of revenue still comes from the Tolak Angin group (~ 50%) followed by energy drinks (~ 20% of total revenue).

Upgrade to Buy following share price correction

Among its consumer sector peers, SIDO stands out as the only company with minimal exposure to USD-linked raw materials, relying more on locally sourced content. At the current price, SIDO trades at FY25F PE of 15x. The share price has declined 6.6% from its Ytd high, and at the current level, SIDO offers a 5.6% dividend yield. Following the share price correction, which results in an above 10% upside to our TP, we upgrade our rating to Buy with unchanged TP of Rp640.

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