PT Kalbe Farma Tbk (KLBF) recorded an impressive performance in the fourth quarter of 2024 (4Q24). KLBF’s net profit reached IDR 862 billion, growing by +22.8% YoY and +50.3% QoQ. This surge was driven by an increase in revenue to IDR 8.41 trillion, up +6.6% YoY and +6.3% QoQ.

On the operational side, KLBF’s 4Q24 EBITDA grew significantly by +18.5% YoY and +52.4% QoQ to IDR 1.35 trillion. EBITDA margin also expanded by +1.6ppt YoY and +4.9ppt QoQ to 16.1%. With these results, KLBF’s total FY24 net profit reached IDR 3.24 trillion, up +17.1% YoY, while annual revenue increased +7.2% YoY to IDR 32.65 trillion. Annual EBITDA also increased +11.6% YoY, with a margin increasing +0.6ppt YoY to 15%.

FY24 Growth Drivers: Sales Volumes and Raw Material Prices

In 2024, almost all KLBF segments recorded positive revenue growth, except for the nutrition segment. Management revealed that the increase in revenue was driven by an increase in sales volume of 5%, about 0.5% from new products, while the rest came from an increase in the average selling price (ASP).

In addition, the stable price of raw materials also has a positive impact on KLBF’s profitability. Gross profit margin increased +1ppt YoY to 39.8%, marking the first turning point since 2016, when gross profit margin was still at 49%. This shows that KLBF has managed to manage production costs more efficiently.

FY25 Outlook: 8-10% Growth Target with Challenges from USD

For 2025, KLBF targets revenue and net profit growth of 8-10% YoY. However, challenges remain, especially from the weakening of the rupiah against the US dollar which could have an impact on profit margins.

Management expects top line growth to be driven by the following segments:

• Low-double digit growth in the pharmaceutical segment.
• 8-10% YoY growth in the consumer health segment.
• Mid-single digit growth in the nutrition segment.
• Growth of 9-12% in the distribution segment.

In addition, the sales and administrative cost efficiency (SGA) strategy and periodic price increases on certain products will help KLBF maintain profitability at a stable level compared to FY24.

The Effect of Renminbi and USD on KLBF Production Costs

Over the past few years, KLBF has reduced its production cost exposure to USD by increasing the contribution of the Renminbi. Currently, about 80% of raw material costs in the pharmaceutical and consumer health segments use the Renminbi, down from the previous 90% that relied on the USD.

However, exchange rate risks are still there. Management estimates that any weakening of IDR 100 against the USD could reduce gross profit margin by 0.1%. The revenue and net profit growth target of 8-10% YoY for FY25 is based on the assumption of the IDR/USD exchange rate at 16,100.

KLBF Stock Recommendation: BUY with a Target Price of IDR 1,880

Based on the FY24 financial statements that are in line with expectations, we remain optimistic about KLBF’s prospects. Using a valuation method based on a P/E (Price to Earnings) ratio, KLBF is currently trading at 15.9x P/E FY25, which is 1.1 S.D. below its five-year average. This shows a pretty attractive valuation.

We maintain a BUY recommendation with a target price (TP) of IDR 1,880. However, there are several risks to consider, including:

• Increased contribution of non-branded products in the pharmaceutical segment.
• Prolonged fierce competition in the nutrition segment.
• Higher than expected increase in raw material prices.
• The weaker rupiah against the USD was larger than expected.

Conclusion: Is KLBF Still Interesting to Collect?

With solid profit growth, operational efficiency, and careful pricing strategy, KLBF remains an attractive choice in the pharmaceutical sector. Despite the risks of exchange rate fluctuations, the company’s strategy in currency diversification and raw material cost management sends positive signals.

For investors looking for defensive stocks with strong fundamentals, KLBF is still worth collecting. With a valuation that is still relatively cheap compared to its historical average, this stock offers an attractive opportunity for those looking to enter the healthcare sector with stable growth prospects.

Reference ((Flash Focus KLBF))