Jul 14, 2010

Mayora 1H revenue jumps 30%

Consumer products player PT Mayora Indah Tbk (MYOR) indicated a rosy 1H 2010 results with 30% revenue growth.
In a company update published by PT Mandiri Sekuritas today, analyst Yohan Setio said with 30% growth, it could reach Rp3.1 trillion, or 52% of consensus FY10F estimates.
Factoring seasonality effect, it could easily beat consensus. This validates Nielsen survey that predicts 15% growth in consumer goods industry.
The company gained market share as it grew faster than the industry. Mandiri Sekuritas' conservative margin assumption leaves upside room if the company increases selling price that has been flat since last year.
"Factoring rosy 1H 2010 indication and sooner than expected capacity expansion. We upgrade our target price to Rp9,000/share," said Yohan.
The revenue growth represents 52% and 55% of Bloomberg FY 2010F consensus and our previous forecast, respectively.
10 years historical data showed that 1H revenues on average represented 48% of FY revenues, thus the company is likely to beat consensus estimates by 8% for top line and 16% for bottom line.
Nielsen study showed that 4M10 spending on daily consumer goods reached Rp44 trillion with FY2010F estimates of Rp115 trillion (+15.3% year on year).
Furthermore, it revealed that biscuit and coffee industry grew by 7%yoy, while candies contracted by 10%yoy.
At the same time, Mayora’s sales for these products grew by around 30%. It means that the company gained market share as it grew faster than industry.
"Based on these, we estimate the company’s biscuit market share, which represents 28% of sales, grew from 16.2% to 19.6%.
Mandiri Sekuritas is still confident with its gross margin assumption of 22.5%, which is slightly lower than that of FY09 at 23.7% and 1Q10 at 22.9%.
"Our conservative gross margin assumption is because we assume that the company responds to higher raw material price by using product resizing strategy, not selling price adjustment, as happened since last year. Thus, positive catalyst exists as the company could possibly increase its selling price."
Mandiri Sekuritas adjust Mayora's bottom line forecast by +22.4% for FY2010F as MYOR indicates strong 1H10 performance, and +30.7% for FY11F as the company’s new capacity reached full utilization rate sooner than expected and it plans to continue the expansion.
"Our discounted cash flow based method results in target price of Rp9,000/share, which equal to PER10-11F of 14.0-12.1x, or 18% cheaper than consumer sector, excluding UNVR," the research said.   

Disclosure: No position at the stock mentioned above. 

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