Remarkable FY09 Operating Performance
TSPC reported 23.8% YoY FY09 sales growth to Rp 4,497.9 mn, the highest growth level in the last 10 years. Higher purchasing power has boosted FY09 pharmaceutical sales to Rp 1,598 mn, translating to 16.5% YoY growth. Personal Care and Cosmetic (PCC) division continue it increase by 22.9% YoY to Rp 1,011.2 mn. Inline with pharmaceutical industry recovery, distribution services division leap 34.1% YoY to Rp 1,888.8 mn.
No Price Hike: to Enlarge Market Share
Management stated that volume increase is the main factor of pharmaceutical and PCC sales growth in 2009, approximately 10%-12% YoY. In upcoming years, TSPC intend to maintain minimum sales price hike strategy in order to raise market share. Hence, sales volume and new product launch will become the main driver of TSPC sales growth.
Lower Net Margin Still At Peers Level
Due to TSPC strategy of not increasing product sales price at the time of higher raw material cost, FY09 net margin has decreased to 8% from 8.8% in year earlier. Nevertheless, FY09 net margin still stood at average peers’ margin of about the same level. Supported by Rupiah appreciation, we are optimistic FY10 net margin to hover at our estimated 8.6% level.
Positive Outlook and Recommendation
On the back of higher purchasing power, we forecast TSPC to report 13.9% YoY FY10 sales growth. We recommend to BUY TSPC at TP Rp 970/share. Our TP implies 10x PE10F and 5x EV/EBITDA 10F.
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