Mandiri Sekuritas Kalbe Farma: a takeaway from a plant visit (KLBF, Rp1,970, Buy, TP: Rp1,900)

We visited Kalbe Farma’s pharma plant at Cikarang and powder milk plant at Cikampek yesterday and found out some interesting highlights.

􀂄 The plant has consistently met the current GMP (Good Manufacturing Practices) requirement as the company put a great concern about the quality of the product.

􀂄 The pharma plant has 10 lines and majority of them is running at full capacity. There is a dedicated and fully utilized line for Promag and Procold OTC products, which has become the company’s blockbuster products).

􀂄 The powder milk plant runs at 50-60% utilization under the Chil Kid/Chil School brand. The company’s new milk powder products, Zee, is produced at third party manufacturers (toll out).he company’s M&A process is still underway, no definite
timeline yet when it will be completed.

􀂄 At the current price, the stock is trading at 2010F PER of 16.6x and EV/EBITDA of 6.6x. We are currently reviewing our recommendation on the company as the share price has already exceeded our TP of Rp1,900/share.