Consciencefood: Margin surprise in FY11, raise TP (BUY, S$0.23, TP S$0.39)
Melissa Yeap (6232 3897, melissa.yeap@sg.oskgroup.com)
Terence Wong, CFA (6232 3896, terence.wong@sg.oskgroup.com)
Consciencefood reported a 40% YoY rise in PATMI to Rp131b, on the back of a 22% rise in
revenue to Rp743b. While revenue came in within expectations, earnings were 17% above
expectations due to 1) Higher gross margins (29% vs forecast of 26%) and lower operating
expenses which resulted in PATMI margin of 18% vs forecast of 15%. The Group declared DPS of
0.68 S¢/share, which works out to 3% yield. We raise our GPM assumption to 28.7% and reduce
our opex to derive a higher PATMI margin of 17% vs 15% previously. We introduce our FY13F and
rollover our valuations from 7x FY11 to FY12 to derive a new higher TP of S$0.39. Maintain BUY.
FY11 revenue in-line. Sales of instant noodles rose 26% YoY to Rp731.2b, in-line with our forecast
of Rp709.0b while sales of snack noodles fell 54% YoY to Rp11.5b vs forecast of Rp12.0b. This is
in line with management’s decision to focus on instant noodle production rather than snack noodles
which were loss-making last year. Going forward, it will completely halt the production of snack
noodles and revert those interchangeable lines to instant noodles.
Margins boosted earnings above expectations. FY11 PATMI of Rp130.7b rose +40% YoY and
were 16% above expectations due to higher than expected gross margins (29% vs forecast of 26%)
and lower than expected opex which resulted in higher net margins of 18% vs forecast of 15%.
New beverage line. The Group’s beverage production equipment is expected to be delivered in
1H12 and targets production by 2H12. We expect its new beverage line to contribute sales of
Rp151b and Rp232b in FY12/13, accounting for 15%/20% of total Group revenue.
New cup noodle line. The Group is still testing waters with this new product and will commence
commercial production in 1H12. We expect new sales contribution of Rp108b and Rp126b in
FY12/13, accounting for 11% of Group total sales in the two years.