Analisa Saham HMSP | 14 Februari 2019

HM Sampoerna (HMSP IJ) - 4Q18 sales volume flat YoY   

4Q18 sales volume flat YoY but up 1.4% QoQ; Above our estimate

Philip Morris International (PMI), the parent entity of HM Sampoerna (HMSP), released 4Q18 sales volume data, showing that HMSP sold 26.9bn sticks in the quarter (+1.4% QoQ; flat YoY). Cumulatively, 2018 sales volume grew slightly to 101.4bn sticks (+0.1% YoY), above our estimate of 100.7bn. However, while 4Q18 sales volume was stable YoY, we note that HMSP’s overall market share contracted slightly to 32.7% (vs. 33.0% in 3Q18). 

Regardless, it is encouraging that HMSP’s sales volume growth in 2018 (+0.1% YoY) was positive, outperforming the industry average. Indonesia’s cigarette industry grew slightly in 4Q18 (+0.7% YoY), but for the full year, industry sales volume growth was negative (-0.16% YoY). 

Lower-margin products continue to support growth

Sales of the company’s higher-margin flagship brand Sampoerna A (39% contribution to 2018 sales volume) were down sharply YoY in 4Q18 (-10.8% YoY to 10.39bn sticks; vs. 10.33bn sticks in 3Q18 and 10.17bn sticks in 2Q18). Meanwhile, lower-margin products such as Dji Sam Soe Magnum Mild 16s (launched in May 2017) continued to support sales volume growth. The Dji Sam Soe brand’s sales volume continued strong growth in 4Q18 (+13.4% YoY, vs. +18.1% YoY in 3Q18 and +41.9% YoY in 2Q18), reaching 8.04bn sticks. Looking ahead, we expect sales of machine-made (SKM) cigarettes to improve in 2019, helped by limited ASP hikes. We also look for a margin recovery on the back of muted excise tax growth. 

Reiterate Trading Buy rating with TP of IDR4,300 

We expect Sampoerna A’s sales volume to improve in 2019, given limited ASP hikes. Notably, in 4Q18, Sampoerna A’s sales volume remained stable (+0.6% QoQ) despite an increased selling price (+3% QoQ), which we believe indicates that Indonesia’s purchasing power recovery is getting underway.    

by miraeasset