PT Kalbe Farma Tbk, 1Q12: Strong Quarter; Beats Expectations, Morgan Stanley

Quick Comment: Kalbe Farma reported strong results
for 1Q12. Revenue, EBIT, and PAT grew 27.7%, 23.6%,
and 27.7% yoy, respectively. Revenue beat
expectations by 4%, while earnings beat MS estimates
by 5-6%. The upside was driven by better-thanexpected
growth and margins from the Prescription
Pharma and Nutritionals divisions. 1Q PAT is 24% of our
full- year profit estimate (vs. historical average of c22%).
We continue to view Kalbe as a better consumption play
within our Indonesian consumer coverage and retain our
OW rating.

Kalbe Farma, Management revised its guidance upwards—numbers in line with our estimates, Credit Suisse

● Kalbe’s management has revised its 2012 guidance: it now
expects operating margins of 16.0-16.5% and earnings growth of
10-15% YoY, on the back of 18-20% revenue growth YoY.
Previously, during an analyst meeting in mid-Feb, management
had guided for 15-20% YoY revenue growth for 2012, with
operating margins of 15-16% and earnings growth of 5-10% YoY.
● Management said that the upward revisions were based on the
encouraging results in the first two months of this year, while it is
optimistic about price increases in 1H12. Management also sees
an improving trend for the newly launched products.
● Our forecasts are in line with management guidance. We expect
19% YoY revenue growth in 2012, with operating margins of
16.2% and net profit growth of 8% YoY.
● Our DCF-based target price of Rp3,100 implies 19.9x 2012E P/E,
with 27% estimated earnings growth over the next two years. The
stock has underperformed the JCI: it has only gained 2% YTD,
while the JCI has gained 4%. We reiterate our NEUTRAL rating.