ID - [Consumer]: Bullish On FMCG: Initiate Mayora; Upgrade Unilever
Analyst: Andrey Wijaya
Link to our 91-pages report: https://research.rhbtradesmart.com/attachments/24/rhb-report-ind_consumer-non-cyclical-consumer-staples_sector-update_20180824_rhb-59123892973111775b7f3df2a72f2.pdf
Our pecking order: ICBP > UNVR > MYOR > ROTI
We are bullish on Indonesian FMCG companies – initiate coverage on Mayora with BUY, upgrade Unilever to BUY from Neutral, reiterate BUY on Indofood CBP with higher TP.
We see consumer spending improving, boosted by higher government subsidies – recipients of cash hand-outs have increased and public servants’ salaries are to be raised by 5% on average.
Key risk in our view is a weaker IDR that may increase costs. However, we see room to pass on higher costs by raising selling prices. Our ground checks suggest no major retail price increases YTD.
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