INDF’s revenue grew 11.86% QoQ or 3.64% YoY to IDR86.9 trillion in 9M24. INDF’s revenue growth in 9M24 was driven by the revenue of the Consumer Branded Product (CBP) segment, which rose 9.14% QoQ or 8.38% YoY to IDR55.57 trillion. However, three other segments, namely Bogasari, Agribusiness, and Distribution, experienced revenue decline in 9M24.

All operating segments recorded operating profit growth. All three of INDF’s operating segments could still record operating profit growth despite sales pressure in 9M24 (Table 3). Agribusiness segment recorded the most significant operating profit growth of 63.74% YoY to Rp1.88 trillion (vs. 1.15 trillion in 9M23).

Rising Crude Palm Oil (CPO) prices drove the Agribusiness segment’s operating profit growth in 9M24. From January to September 2024, the average CPO price increased by 3.78% YoY to MYR4,006/ton. We assess that the Agribusiness segment has attractive prospects going forward, along with the new government’s targets and policies that could potentially benefit this segment.

INDF’s net profit growth in 9M24 was driven by improved non-operating performance. During 9M24, INDF’s net profit reached Rp12.29 trillion, growing 180% QoQ or 25.33% YoY. This growth was driven by the strengthening of the Rupiah against the US$ so that INDF could reverse the loss on foreign exchange in 2Q24 into profit on foreign exchange in 3Q24.

Using the Discounted Cash Flow method with a Required Return of 7.58% and Terminal Growth of 2.75%, we estimate INDF’s fair value at IDR8,196 per share (Expected PE at 6.04x and EV/EBITDA at 3.90x in FY24). Therefore, we maintain our Buy rating on INDF with a higher target and potential upside of 10.01%.

By PHINTRACO SEKURITAS | Research
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