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Monday, September 12, 2011

PT Kalbe Farma Tbk - Focusing in Quantities Rather Price Raise

PT Kalbe Farma Tbk (KLBF) changed its strategy to improve performance. Manufacturers of these drugs are now the focus of increased sales volume due to compete at the level of the price gap has become more limited. Known, because, the government set the price range of drugs.

Step KLBF increase sales volume, among others, by building a new factory in Cikarang, also a factory in the Philippines or Vietnam. The company is preparing capital spending this year valued at Rp 700 billion.

The factory in Cikarang, capacity to produce generic drugs KLBF up to 50%. KLBF also increase ownership in PT Enseval Putera Megatrading Tbk (EPMT) to strengthen the drug distribution channels.

According to Batavia Prosperindo Securities analyst, Andy Ferdinand, KLBF have no problem funding the expansion because it has cash of Rp 2 trillion and Rp 2 triltiun treasury stocks. "This could be a capital expansion, both at home and abroad," he said.

But according to Securities analyst Krishna, Irwan Budiarto, the construction of a factory in Cikarang has not urgent because currently only accounts for 2.2% of sales. He predicted, increasing the capacity of this plant a new urgency in two-three years later. According to Irwan, KLBF actually benefit from new products, such as Hydro and Tipco Fatigon, which is accepted by society.

Irwan projections, the company will achieve revenue target of Rp 6.5 trillion year end. One of them thanks to the sustained presence of a new factory.

In addition to spurring production, KLBF also want to increase exports more than 25%, higher than the contribution of exports in 2010 of 4.1%. Even so, Andy estimates, export sales do not increase significantly compared to the growth of domestic demand.

Promotion expenses

In the midst of incessant plans to increase sales volume and expansion, analysts said, the performance of the first half of 2011 is less satisfactory. Gifar Indra Sakti, Sucorinvest Central Gani analyst writing in his research, promotional activities erode the high profits KLBF business. During the first half, operating profit or business KLBF only increased 4.8% to Rp 878.6 billion.

In fact, sales of the first half reached 4.95% or rose 5.1% over the same period last year. Efficiency of production costs and the strengthening of the rupiah exchange rate also makes KLBF gross profit rose 8% to Rp 2.5 trillion.

KLBF performance, according to Gifar, helped decrease the burden of taxes and minority interest. This pushed net profit rose 18% to Rp 676 billion. Despite the rise in some sectors, Gifar mention KLBF assess performance in the first half of 2011 under the consensus of analysts.

All three analysts give recommendations for KLBF to hold. Target prices of Irwan Gifar are the same, Rp. 3650 per share. Within Gifar, the target price reflects a price to earnings ratio (PER) of 19.8 times and 17.5 times, for the years 2011 and 2012.

Based on first half performance and its prospects, Andy set a lower target price, Rp. 3100 per share. Price KLBF on Monday (12 / 9), rose 0.69% to Rp 3600 per share.

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