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

Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/industri-jamu-dan-farmasi-sido-muncul-tbk-pt" target="_blank" data-smartkarma-citation="entities:6033:1" rel="noopener">Sido Muncul</a> recently released its 1H2022, which reflected some impact from inflationary pressure impacting the purchasing power of its customer base, especially for herbal products.</li>
<li>The company's food and beverage division and notably energy drinks saw some impact from a slowdown due to consumers taking a longer Lebaran break this year but saw strong exports.</li>
<li>
<a href="https://www.smartkarma.com/entities/industri-jamu-dan-farmasi-sido-muncul-tbk-pt" target="_blank" data-smartkarma-citation="entities:6033:1" rel="noopener">Sido Muncul (SIDO IJ)</a> saw a sharp correction post its numbers but we would expect some recovery in 1H2022 and a resumption of growth in FY2023 plus valuations are attractive.</li>
</ul>



Sido Muncul recently released its 1H2022, which reflected some impact from inflationary pressure impacting the purchasing power of its customer base, especially for herbal products.
The company's food and beverage division and notably energy drinks saw some impact from a slowdown due to consumers taking a longer Lebaran break this year but saw strong exports.

Sido Muncul (SIDO IJ) saw a sharp correction post its numbers but we would expect some recovery in 1H2022 and a resumption of growth in FY2023 plus valuations are attractive.


Sido Muncul (SIDO IJ) - Opportunity in Adversity

Asian Insight Provider - Actionable ideas, CrossASEAN Research

Henry Soediarko

Asian Insight Provider - Actionable ideas

<ul>
<li>Launched 30 new SKUs during COVID-19 in multiple areas of health that can transform the company from herbal remedies into a bigger conglomerate of health providers. </li>
<li>PE firm that backed SIDO in the earlier years reduced its holdings but it should not be seen as a vote of negative confidence in the company. </li>
<li>
<a href="https://www.smartkarma.com/entities/industri-jamu-dan-farmasi-sido-muncul-tbk-pt" target="_blank" data-smartkarma-citation="entities:6033:1" rel="noopener">Sido Muncul (SIDO IJ)</a> can be compared to <a href="https://www.smartkarma.com/entities/blackmores-ltd" target="_blank" data-smartkarma-citation="entities:928:1" rel="noopener">Blackmores Ltd (BKL AU)</a> which has a wide range of health products but trades at a 100% premium to SIDO. </li>
</ul>


Launched 30 new SKUs during COVID-19 in multiple areas of health that can transform the company from herbal remedies into a bigger conglomerate of health providers. 
PE firm that backed SIDO in the earlier years reduced its holdings but it should not be seen as a vote of negative confidence in the company. 

Sido Muncul (SIDO IJ) can be compared to Blackmores Ltd (BKL AU) which has a wide range of health products but trades at a 100% premium to SIDO. 


<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> released a reassuring set of results with sales growing +13.6% and net profit by +12.5% in 2021, with growth coming from prescription drugs and distribution</li>
<li>2022 should see growth picking up across all of its divisions with recovery for consumer health and nutritionals plus its digital strategies are starting to make a difference. </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> trades in 22.8x FY22E PER and 21.0x FY23E PER versus its 5-year average forward PER of 26.3x forward PER, making it look attractive at current levels. </li>
</ul>



Kalbe Farma (KLBF IJ) released a reassuring set of results with sales growing +13.6% and net profit by +12.5% in 2021, with growth coming from prescription drugs and distribution
2022 should see growth picking up across all of its divisions with recovery for consumer health and nutritionals plus its digital strategies are starting to make a difference. 

Kalbe Farma trades in 22.8x FY22E PER and 21.0x FY23E PER versus its 5-year average forward PER of 26.3x forward PER, making it look attractive at current levels. 


Kalbe Farma (KLBF IJ) - Rebalancing Growth

<p><a href="https://www.smartkarma.com/entities/industri-jamu-dan-farmasi-sido-muncul-tbk-pt" target="_blank" data-smartkarma-citation="entities:6033:1" rel="noopener">Sido Muncul (SIDO IJ)</a> 's share price has lagged <a href="https://www.smartkarma.com/entities/jakarta-stock-exchange-composite-index" target="_blank" data-smartkarma-citation="entities:22914:1" rel="noopener">Jakarta Stock Exchange Composite Index (JCI INDEX)</a> in the last year due to the vaccine discovery and the shelved overseas expansion plan which has caused the earnings multiples to decrease although the earnings result has been strong.</p>
<p>A cross-border travel resumption that will sooner rather than later take place will inevitably lower freight costs therefore Sido Muncul can carry on with its overseas expansion plan to Nigeria and the Philippines that they had to put on hold during COVID-19. </p>
<div class="content-highlight">
<p>Combining the overseas expansion plan resumption and the potential for mean reversion, it is not a bad idea to hold <a href="https://www.smartkarma.com/entities/industri-jamu-dan-farmasi-sido-muncul-tbk-pt" target="_blank" data-smartkarma-citation="entities:6033:1" rel="noopener">Sido Muncul (SIDO IJ)</a> . For shareholders who invested 5 years ago and made a decent return on Sido Muncul, it is not a bad idea to sell some to lock in some profit to maintain a certain level of exposure in the portfolio without being too overweight Sido Muncul. </p>
</div>

Sido Muncul (SIDO IJ) 's share price has lagged Jakarta Stock Exchange Composite Index (JCI INDEX) in the last year due to the vaccine discovery and the shelved overseas expansion plan which has caused the earnings multiples to decrease although the earnings result has been strong.
A cross-border travel resumption that will sooner rather than later take place will inevitably lower freight costs therefore Sido Muncul can carry on with its overseas expansion plan to Nigeria and the Philippines that they had to put on hold during COVID-19. 

Combining the overseas expansion plan resumption and the potential for mean reversion, it is not a bad idea to hold Sido Muncul (SIDO IJ) . For shareholders who invested 5 years ago and made a decent return on Sido Muncul, it is not a bad idea to sell some to lock in some profit to maintain a certain level of exposure in the portfolio without being too overweight Sido Muncul. 


<div class="content-highlight">
<p>We continue to take a positive view on <a href="https://www.smartkarma.com/entities/industri-jamu-dan-farmasi-sido-muncul-tbk-pt" target="_blank" data-smartkarma-citation="entities:6033:1" rel="noopener">Sido Muncul (SIDO IJ)</a> as an increasingly interesting consumer health play for Indonesia, with its main brand a household name, with signs that its product diversification has gained significant traction both in beverages and supplements.</p>
</div>
<p><a href="https://www.smartkarma.com/entities/industri-jamu-dan-farmasi-sido-muncul-tbk-pt" target="_blank" data-smartkarma-citation="entities:6033:1" rel="noopener">Sido Muncul (SIDO IJ)</a> recently released a very solid set of results for 3Q2021, with sales growing by +41% YoY , bringing 9M2021 sales growth to +23% YoY driven by improving consumer sentiment, with sustained growth from its leading products, and a higher contribution from new products.</p>
<p>It has also extended its distribution channel to 131,000 wholesalers and retailers for 9M2021 covering over 100,000 outlets and has further embraced digital channels, now selling through around 20 external marketplaces.</p>
<p>The company also saw improved margins in 3Q2021, with the gross margin improvement driven by stable raw material prices, operational efficiencies, and effective cost controls.</p>
<p><a href="https://www.smartkarma.com/entities/industri-jamu-dan-farmasi-sido-muncul-tbk-pt" target="_blank" data-smartkarma-citation="entities:6033:1" rel="noopener">Sido Muncul (SIDO IJ)</a> has benefitted from the increasing health consciousness amongst Indonesian consumers and saw the sales of its core product Tolok Angin grow by +40% YoY  3Q2021. </p>
<p>The company has continued to diversify its product offering with its new products (NPD) seeing a growth rate of more than +140% QoQ in 3Q2021.</p>
<p><a href="https://www.smartkarma.com/entities/industri-jamu-dan-farmasi-sido-muncul-tbk-pt" target="_blank" data-smartkarma-citation="entities:6033:1" rel="noopener">Sido Muncul (SIDO IJ)</a> continues to focus on improving its ESG ratings and recently saw the <a href="https://www.smartkarma.com/entities/industri-jamu-dan-farmasi-sido-muncul-tbk-pt" target="_blank" data-smartkarma-citation="entities:6033:1" rel="noopener">Sido Muncul (SIDO IJ)</a> rating reduced to low-risk by Sustainalytics.</p>
<section class="figure"><a href="https://www.smartkarma.com/entities/industri-jamu-dan-farmasi-sido-muncul-tbk-pt" target="_blank" data-smartkarma-citation="entities:6033:1" rel="noopener">Sido Muncul (SIDO IJ)</a> maintains an optimistic outlook for this year and 2022 as the economic recovery kicks in together with an increased focus on a healthy lifestyle.</section>


We continue to take a positive view on Sido Muncul (SIDO IJ) as an increasingly interesting consumer health play for Indonesia, with its main brand a household name, with signs that its product diversification has gained significant traction both in beverages and supplements.

Sido Muncul (SIDO IJ) recently released a very solid set of results for 3Q2021, with sales growing by +41% YoY , bringing 9M2021 sales growth to +23% YoY driven by improving consumer sentiment, with sustained growth from its leading products, and a higher contribution from new products.
It has also extended its distribution channel to 131,000 wholesalers and retailers for 9M2021 covering over 100,000 outlets and has further embraced digital channels, now selling through around 20 external marketplaces.
The company also saw improved margins in 3Q2021, with the gross margin improvement driven by stable raw material prices, operational efficiencies, and effective cost controls.
Sido Muncul (SIDO IJ) has benefitted from the increasing health consciousness amongst Indonesian consumers and saw the sales of its core product Tolok Angin grow by +40% YoY  3Q2021. 
The company has continued to diversify its product offering with its new products (NPD) seeing a growth rate of more than +140% QoQ in 3Q2021.
Sido Muncul (SIDO IJ) continues to focus on improving its ESG ratings and recently saw the Sido Muncul (SIDO IJ) rating reduced to low-risk by Sustainalytics.
Sido Muncul (SIDO IJ) maintains an optimistic outlook for this year and 2022 as the economic recovery kicks in together with an increased focus on a healthy lifestyle.

Sido Muncul (SIDO IJ) - A Consumer Health Gem

Indonesia

Sido Muncul is an Indonesian company specializing in herbal medicine, pharmaceuticals, and food and beverage products. Its product categories include herbal medicine and supplements, such as the well-known Tolak Angin, along with food and beverages, and pharmaceutical items. The company is headquartered in Semarang, Central Java, Indonesia, and was established in 1940.

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Sido Muncul (SIDO IJ)