Kalbe Farma (KLBF IJ)

Healthy FY25 growth outlook intact despite ST Rupiah headwinds

• Solid prescription revenue and operating efficiency drove strong 9M24 net and core profit growth of 15.2%/10% yoy.
• We estimate healthy FY25 net profit growth of 7.3% yoy, supported by 7.5% rev. growth with sustained margins.
• Stronger Rupiah will provide a positive catalyst. We maintain our Buy rating with an unchanged TP at Rp1,800 (FY25F PE of 24.6x).

Solid prescription revenue and operating efficiency drove strong 9M24 net and core profit growth

KLBF delivered solid revenue growth in 3Q24 and 9M24, driven by the prescription business (+16% yoy in 3Q24, +10.4% yoy in 9M24). The Consumer Health segment also showed strong growth of 11% yoy in 3Q24, benefiting from a low base comparison. However, the 3Q24 gross margin declined to 38.6% (from 39.5% in 2Q24), primarily due to lower margins in the prescription segment. In 9M24, Nutrition and Consumer Health reported slight GPM improvement vs the same period last year, supported by lower input costs. Lower opex (particularly in A&P and Salary) contributed to solid 9M24 net profit growth of 15.2% yoy, reaching ~ Rp2.4tr. This represents 75%/73% of BRIDS/Consensus estimates and is in line with the expectation. KLBF’s 9M24 core profit rose by 10% yoy, supported by an FX gain of Rp6bn (compared to an FX loss of Rp41bn in 9M23) and the absence of Covid-related inventory write-off (9M23: Rp53bn).

Healthy FY25 net profit growth of 7.3% yoy

Going into FY25, we estimate the prescription segment to remain as the key growth driver (+10% yoy), primarily led by unbranded generics. KLBF anticipates increasing contribution from Biosimilar and Oncology products starting in FY26F, projected to account for 20% of total prescription revenue or 5-6% of total FY26F revenue. For FY25F, we project revenue growth of 7.2% yoy, supported by a stable gross margin of 39.2%. With opex remaining steady, we estimate FY25F net profit growth of 7.3% yoy.

Stronger Rupiah as a positive catalyst; Maintain Buy Rating

At the current price, KLBF is trading near the lower end of its YTD performance at FY25F PE of 19.7x, slightly below its -1SD avg 5y PE of 20.5x. The expectation of a 25bps rate cut by Bank Indonesia this week is expected to bolster economic activity. Despite ST headwind from a strong USD, the support or bottoming of IDR may serve as a positive catalyst for KLBF. We maintain a Buy Rating on KLBF with a TP of Rp1,800, implying FY25F PE of 24.6x.

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