External broker reports(aggregated public sources), BRI Danareksa Research

BRI Danareksa Research

External broker reports(aggregated public sources)

As a one-stop financial solution with the vision to be the most valuable securities house, BRI Danareksa Sekuritas (BRIDS) has maintained an excellent track record and extensive experience in the capital market as an underwriter, broker, and financial advisor for individual, institutional, foreign and domestic, private and government clients. Established in 1992, PT Danareksa Sekuritas is a securities company that performs activities as a securities broker, underwriter, or arranger and financial advisor.

Equity Bottom-Up

<ul><li>Post FY23 earnings (broadly in-line vs our est.), KLBF guides for further improvements in FY24F revenues/ EPS growth at 6-7% and 13-15% yoy.</li><li>Despite the management’s guidance, we see limited catalysts for revenue growth to improve beyond 2Q24 amid soft purchasing power.</li><li>We keep our FY24-25F EPS growth forecast (3-10% yoy) and DCF-based TP of Rp1,600, with a Hold rating on the unexciting growth outlook.</li></ul><p><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></p>

Post FY23 earnings (broadly in-line vs our est.), KLBF guides for further improvements in FY24F revenues/ EPS growth at 6-7% and 13-15% yoy.Despite the management’s guidance, we see limited catalysts for revenue growth to improve beyond 2Q24 amid soft purchasing power.We keep our FY24-25F EPS growth forecast (3-10% yoy) and DCF-based TP of Rp1,600, with a Hold rating on the unexciting growth outlook.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Kalbe Farma - Retaining Our Conservative FY24 View

ASEAN Insight Provider, CrossASEAN Research

Angus Mackintosh

ASEAN Insight Provider

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

<ul>
<li>
<a href="https://www.smartkarma.com/entities/kalbe-farma-tbk-pt" target="_blank" data-smartkarma-citation="entities:6303:1" rel="noopener">Kalbe Farma (KLBF IJ)</a> continued to experience a high post-COVID base effect in 3Q2023, with consumer habits shifting to leisure versus health plus there was a softening of consumer demand.</li>
<li>The company also experienced higher raw material prices and higher operating expenses which depressed margins but expectations are for a recovery in margins in 4Q2023 and FY2024. </li>
<li>
<a href="https://www.smartkarma.com/entities/kalbe-farma-tbk-pt" target="_blank" data-smartkarma-citation="entities:6303:1" rel="noopener">Kalbe Farma</a> stands out as Indonesia's largest pharmaceutical company with strong exposure to consumer health and nutritional products with rising health consciousness amongst Indonesians. Valuations do not reflect impending recovery.</li>
</ul>



Kalbe Farma (KLBF IJ) continued to experience a high post-COVID base effect in 3Q2023, with consumer habits shifting to leisure versus health plus there was a softening of consumer demand.
The company also experienced higher raw material prices and higher operating expenses which depressed margins but expectations are for a recovery in margins in 4Q2023 and FY2024. 

Kalbe Farma stands out as Indonesia's largest pharmaceutical company with strong exposure to consumer health and nutritional products with rising health consciousness amongst Indonesians. Valuations do not reflect impending recovery.


Kalbe Farma (KLBF IJ) - The End of a Long Transition

<ul><li>We are turning more cautious on KLBF’s FY23-25F EPS growth as we see threat for its branded prescription drugs from the persisting rising trend of hospital patients visits from JKN patients in 9M23 (17% CAGR in 2014-22).</li><li>Against this headwind, we project a lower FY24F earnings growth of 2.9% yoy (21-27% cut in FY23-25F est.) and cut our rating to HOLD with a lower TP of IDR1,600.</li><li>Hospital operators MIKA, HEAL and SILO have reported further increase in revenue portion from JKN patients in 9M23, continuing the trend from the past few years (data shown by National Health Program/ BPJS that showed 17% CAGR in 2014-22 (34% in FY22) increase in total number of visits by JKN patients to healthcare facilities.</li></ul><p><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></p>

We are turning more cautious on KLBF’s FY23-25F EPS growth as we see threat for its branded prescription drugs from the persisting rising trend of hospital patients visits from JKN patients in 9M23 (17% CAGR in 2014-22).Against this headwind, we project a lower FY24F earnings growth of 2.9% yoy (21-27% cut in FY23-25F est.) and cut our rating to HOLD with a lower TP of IDR1,600.Hospital operators MIKA, HEAL and SILO have reported further increase in revenue portion from JKN patients in 9M23, continuing the trend from the past few years (data shown by National Health Program/ BPJS that showed 17% CAGR in 2014-22 (34% in FY22) increase in total number of visits by JKN patients to healthcare facilities.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Kalbe Farma (KLBF IJ) - Persisting Headwind in FY24 from Shifting Industry Trend

<ul><li>KLBF foresees better margins in 4Q23 and 2024, supported by the nutritional division (4Q23) and a favorable product mix (2024).</li><li>Additionally, the prolonged dry and hot weather has boosted patient traffic at hospitals and in turn leads to higher demand for pharma and OTC products.</li><li>KLBF currently trades at an attractive FY24F PE of 22.5x (15% discount to its avg 5-year). </li></ul><p><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></p>

KLBF foresees better margins in 4Q23 and 2024, supported by the nutritional division (4Q23) and a favorable product mix (2024).Additionally, the prolonged dry and hot weather has boosted patient traffic at hospitals and in turn leads to higher demand for pharma and OTC products.KLBF currently trades at an attractive FY24F PE of 22.5x (15% discount to its avg 5-year). Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Kalbe Farma (KLBF IJ) - Better Outlook Amid Potential 4Q23 Improved Margin

<section class="figure"><section class="figure"><div class="content-highlight"><p><a href="https://www.smartkarma.com/entities/kalbe-farma-tbk-pt" target="_blank" data-smartkarma-citation="entities:6303:1" rel="noopener">Kalbe Farma (KLBF IJ)</a> is South-East Asia's largest pharmaceutical company, with the majority of its sales in Indonesia. The company booked a respectable and resilient set of 1H2021 results with sales rising supported by organic volume growth. After the recent correction , we see this as a key process to rising levels of health-conscious in Indonesia.</p></div></section><p><a href="https://www.smartkarma.com/entities/kalbe-farma-tbk-pt" target="_blank" data-smartkarma-citation="entities:6303:1" rel="noopener">Kalbe Farma (KLBF IJ)</a> saw a solid performance from its prescription pharmaceuticals division, with sales growth of +5.4% YoY in 1H2021.</p>
<p>The company's nutritionals division saw a slight drop of -0.5% in sales in 1H2021, mainly due to a change in products mix towards slightly more affordable products , which bodes well for future growth and its ESG credentials.</p>
<p>As a core part of the company's ESG initiative, <a href="https://www.smartkarma.com/entities/kalbe-farma-tbk-pt" target="_blank" data-smartkarma-citation="entities:6303:1" rel="noopener">Kalbe Farma (KLBF IJ)</a> is proactively extending access to healthcare through a number of different strategies.</p></section><section class="figure"></section><section class="figure"></section><section class="figure"><section class="figure"><p>The company expects continuing improvement in 2H2021, which will support sales growth of +7-10% for FY2021, with EPS growth of +7-10%, and a dividend payout ratio of 45-55%.</p>
<p><a href="https://www.smartkarma.com/entities/kalbe-farma-tbk-pt" target="_blank" data-smartkarma-citation="entities:6303:1" rel="noopener">Kalbe Farma (KLBF IJ)</a> currently trades in 22.9x FY21E PER and 20.9x FY22E PER versus its 5-year average forward PER of 26.3x forward PER, making it look attractive at current levels. </p></section></section>

Kalbe Farma (KLBF IJ) is South-East Asia's largest pharmaceutical company, with the majority of its sales in Indonesia. The company booked a respectable and resilient set of 1H2021 results with sales rising supported by organic volume growth. After the recent correction , we see this as a key process to rising levels of health-conscious in Indonesia.Kalbe Farma (KLBF IJ) saw a solid performance from its prescription pharmaceuticals division, with sales growth of +5.4% YoY in 1H2021.
The company's nutritionals division saw a slight drop of -0.5% in sales in 1H2021, mainly due to a change in products mix towards slightly more affordable products , which bodes well for future growth and its ESG credentials.
As a core part of the company's ESG initiative, Kalbe Farma (KLBF IJ) is proactively extending access to healthcare through a number of different strategies.The company expects continuing improvement in 2H2021, which will support sales growth of +7-10% for FY2021, with EPS growth of +7-10%, and a dividend payout ratio of 45-55%.
Kalbe Farma (KLBF IJ) currently trades in 22.9x FY21E PER and 20.9x FY22E PER versus its 5-year average forward PER of 26.3x forward PER, making it look attractive at current levels. 

Kalbe Farma (KLBF IJ)- Back to the Business of Health

Indonesia

PT Kalbe Farma Tbk produces and develops pharmaceutical products for human and animal healthcare.  Through its subsidiaries, the Company also operates in the pharmaceutical, health food, and packaging industries.

Kalbe Farma (KLBF IJ)

Kalbe Farma - Retaining Our Conservative FY24 View

Post FY23 earnings (broadly in-line vs our est.), KLBF guides for further improvements in FY24F revenues/ EPS growth at 6-7% and 13-15% yoy.

BRI Danareksa Research