Kalbe Farma (KLBF) - In-line 3Q10 Highlights

Kalbe Farma (KLBF) – Maintain BUY
Price: Rp2,625 – Target Price: Rp2,950

In-line 3Q10 highlights

  • As of 9M10 KLBF posted revenue and earnings growth by 12%and 46.5% YoY to Rp7.27 trillion and Rp902 billion respectively, in line with our estimates and represent 70% and 74% from our FY10 projection.
  • Net margin improved to 12.4% in 9M10 (from 9.5% 9M09). Operating and gross margin also went up to 17.7% and 51.2% respectively compared to 16.2% and 49.2% in 9M09.
  • Aggressive marketing and advertising were done until 9M10 in order to boost sales as well as introducing new products such that operating expenses went up by 14% YoY.
  • We change our risk free rate to 8.5% from previously 9%, we also revised our estimates of revenue and earnings for FY10-11 after factoring in the loss of Kageo Igar Jaya divestment and lower minority interest, as a result our new price target is Rp2,950. Maintain Buy