Equity Research

 

UNVR continued to record solid earnings performance with FY19 results came in at 98% our and 100.2% consensus forecasts. UNVR’s 4Q19 earnings was supported by better profitability margin across the board. Going forward, UNVR expects to focus on winning customers by accelerating innovation new products and brands within its HPC and F&R segments to better serve.  At this juncture, UNVR is trading at 38.7x – 35.7xP/E20F-21F. We maintain our Neutral recommendation with TP of Rp 9,000/share.

 

Broadly Inline, despite revenue momentum still soft

UNVR booked 4Q19 revenue of Rp10.6 trillion (-2.8% QoQ and +3.1%YoY) translates into FY19 to Rp 42.9 trilliun (+2.7%YoY).  This met our expectation, formed 100% our estimates FY19 of Rp42.9 trillion. Domestic revenue slightly stronger at 3.8% YoY, albeit weaker than 3Q19 (+6,1% YoY). UNVR’s soft 4Q19 revenue to weak performance by F&R segment (-9.7% QoQ, +3.6% YoY) and HPC segment (-0.2% QoQ, +2.5% YoY).  Keep in mind UNVR booked one-off gains from the spreads business in FY18. Therefore, UNVR reported lower operating profits in FY19 of Rp 10.1trilliun (-17.9% YoY). Nevertheless stripping out the one-off gains, UNVR reported FY19 core net profits grew +9.1% YoY, inline.

 

Margin recover on ASP hike and stronger Rupiah

The improvement in gross margin offset the weaker revenue growth. Gross margin improved at 52.9% (+260bps QoQ; +150bps YoY), due higher ASP, stronger Rupiah and lower raw material costs. Segment wise, HPC gross margin improved to 56.8% in 4Q19 (vs 3Q19: 53.6% and 4Q18: 53.3%). For F&R gross margin flattish at 43.4% (vs 3Q19: 42.8% and 4Q18: 46.9%). EBIT margin slightly lower in 4Q19 due to significant cost bump in advertising which up +47% YoY. While Rupiah weakness continues to be the main culprit, we expect softer commodity prices (CPO price down by c.13.9% Ytd) to ease pressure on UNVR’s gross margin. We forecast the company’s FY20 gross margin to be 53.1%, and improving to 54.3% in FY21 on our expectation of more favorable raw material prices. Given that UNVR is most sensitive to currency movements, based on our sensitivity analysis every 1% in Rupiah against the USD would boost earnings by 1.2% and vice versa.

 

Maintain NEUTRAL recommendation – TP at Rp 9,000/ share 

We view UNVR topline growth as the bellwether of overall consumption appetite. Hence, there could be downside risks to revenue growth at other consumer staple companies. We estimates that UNVR’s performance will be better in 2020, supported by our expectation for UNVR to continue aggressively introduce innovative new products going. We still believe investors continue to prefer defensive stocks such as UNVR given the short-term macro headwinds coming from potential capital outflows.  At this juncture, UNVR is trading at 38.7x – 35.7x P/E20F-21F. We maintain our Neutral recommendation with TP of Rp 9,000/share.

 

Key risks. 1.) Intense competition may affect the purchasing power, 2.) Supply & demand balance, 3.) Raw material costs fluctuation, and 4.) USD and IDR volatility

 

Financial Summary
(Rp billion)	2017A	2018A	2019A	2020F	2021F
Revenue	35,607	38,413	42,923	44,524	46,313
EBITDA	6,553	6,746	10,955	11,387	12,339
Net profit	3,797	4,576	7,533	7,755	8,406
EPS (Rp)	918	917	987	1,016	1,102
PER (x)	43.03	43.08	40.01	38.74	35.74
BVPS (Rp)	617	678	993	692	869
EV/EBITDA (x)	16.69	16.20	14.48	13.21	11.97
Dividend yield (%)	2.04	2.03	2.68	2.07	2.13
RoE (%)	135.40	120.21	142.62	116.95	108.50
Source: Company data and Lotus Andalan Research

 

 

PDB RI tumbuh 5,02% YoT di akhir 2019

Badan Pusat Statistik (BPS) mencatat Produk Domestik Bruto (PDB) RI pada akhir tahun 2019 tumbuh sebesar 5,02% YoY mencapai senilai Rp 10.949 triliun (vs Rp 10.425 triliun di 2018) ditopang oleh pertumbuhan sektor informasi dan komunikasi (+9,4% YoY); kesehatan (+8.7% YoY); jasa keuangan & asuransi (+6,6% YoY); transportasi & pergudangan (+6,4% YoY); pendidikan (+6,3% YoY); konstruksi (+5,8% YoY); real estate (+5,7% YoY); akomodasi & makan minum (+5,8% YoY) dan perdagangan besar & eceran (+4,6% YoY). Namun demikian, pertumbuhan PDB RI 2019 tersebut melambat dibandingkan dengan pertumbuhan PDB 2018 (+5,17% YoY) dan dibawah asumsi PDB APBN 2019 (+5,3% YoY) dipengaruhi oleh tensi perang dagang AS-Tiongkok sehingga menyebabkan terjadinya perlambatan  pertumbuhan ekonomi global serta adanya dampak dari momentum Pilpres 2019.

 

Berdasarkan klasifikasi pengeluaran, belanja konsumsi rumah tangga dan investasi barang modal di 2019 tercatat tumbuh sebesar 5,04% YoY dan 4,45% YoY masing-masing mencapai senilai Rp 5.936 triliun (vs Rp 5.651 triliun di 2018) dan Rp 3.596 triliun vs Rp 3.443 triliun di 2018) ditopang oleh kuatnya daya beli masyarakat (yang tercermin dari rendahnya inflasi) dan didukung oleh pembangunan proyek infrastruktur yang tengah berjalan. Realisasi belanja konsumsi rumah tangga dan investasi barang modal tersebut memberikan kontribusi masing-masing sebesar 54% dan 33% terhadap total PDB RI. Kami mencatat bahwa pertumbuhan belanja investasi barang modal 2019 tercatat lebih rendah dibandingkan dengan realisasi pertumbuhan belanja investasi barang modal di 2018 (+6,63% YoY) sebagai akibat dari sikap wait & see investor atas Pilpres 2019 dan outlook melambatnya laju ekonomi global, terutama dari eskalasi ketidakpastian tensi perang dagang AS-Tiongkok.

 

 

Kami memproyeksikan pertumbuhan PDB RI tahun ini sebesar 5,2% YoY yang akan ditopang oleh belanja investasi barang modal dan konsumsi rumah tangga yang solid sejalan dengan ekspansifnya pembangunan proyek infrastruktur dan daya beli masyarakat yang stabil. Estimasi PDB 2020 tersebut lebih rendah dibandingkan dengan asumsi pertumbuhan PDB RI dalam APBN 2020 yang sebesar 5,3% YoY. Kami juga menekankan bahwa faktor resiko masih dikontribusikan dari global yakni tensi perang dagang antara AS-Tiongkok ditambah dengan adanya kasus penyebaran virus corona di awal tahun ini. 

 

Ringkasan Ekonomi Makro
Periode	2016	2017	2018	2019	2020F
PDB	5,03%	5,07%	5,17%	5,02%	5,20%
Rupiah/US$ (Rp)	13.436	13.555	14.481	13.901	14.400
BI 7-day RRR (%)	4,75	4,25	6,00	5,00	5,00
Inflasi (%)	3,02	3,61	3,13	2,72	3,00
CA/PDB (%)	(1,80)	(1,70)	(2,98)	(2,66)*	(3,00)
Cadangan Devisa (US$ juta)	116.362	130.196	120.654	129.183	135.642
*) Data 3Q19 Sumber: Bank Indonesia, BPS dan Riset Lotus Andalan