Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Glaxo SmithKline Consumer Healthcare
Sales growth improves
GSKCH’s 2Q CY11 net sales grew a robust 21.6% yoy,
compared with 9.5% in the previous quarter.
Higher input costs (up 31%) and ad spend (up 34%)
resulted in lower EBITDA growth of 14%.
Nevertheless, better cost management kept EBITDA
margin healthy at 18%. Net profit grew 15% yoy.
We raise CY11/12E EPS by 2/3% supported by strong
sales growth and increase price target to Rs2,461
(Rs2,292 earlier). At one-year forward P/E of 25.5x we
find valuations rich and recommend investors to wait for
a better entry point. Maintain IN-LINE.
Volume growth rebounds. Post muted sales growth of
9.5% in 1Q CY11, GSKCH’s sales rebounded with growth of
21.6% yoy in 2Q CY11 to Rs6.5bn. This was driven by
estimated volume growth of 14-15% in core business and
strong performance in newly launched products.
Raw material costs higher-than-expected. Like various
FMCG companies that declared results, GSKCH’s gross
margin was also under pressure. The rise in prices of its key
inputs like milk and barley led to an increase in raw material
cost-to-sales by 300bps yoy and 250bps qoq to 40.6% in
1Q CY12.
Ad spend high, but EBITDA margin remains healthy.
GSKCH continues to support its new products launched in
the past 2-3 years with higher advertising. Ad spend-tosales was up 140bps yoy to 15.3%. However, 220bps yoy
decline in other expenses-to-sales limited EBITDA margin
decline to 130bps yoy at 17.7%. Adjusted net profit was up
14.9% yoy.
We raise CY12/13 earnings. We raise CY11/12E EPS by
2.5/3.5% on the back of rebound in core business volume
growth and possible margin improvement through better
cost management.
Maintain IN-LINE. We expect steady volume growth and
margin improvement to result in sales and EPS CAGR of
16.6% and 19.5% over CY10-13E, respectively. However,
one-year forward P/E of 25.5x offers limited upside. We
recommend investors to wait for a better entry point and roll
forward to Jun ’13 EPS with a revised price target of
Rs2,461 (earlier Rs2,292) based on a forward P/E of 22x.
Re-iterate IN-LINE.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Glaxo SmithKline Consumer Healthcare
Sales growth improves
GSKCH’s 2Q CY11 net sales grew a robust 21.6% yoy,
compared with 9.5% in the previous quarter.
Higher input costs (up 31%) and ad spend (up 34%)
resulted in lower EBITDA growth of 14%.
Nevertheless, better cost management kept EBITDA
margin healthy at 18%. Net profit grew 15% yoy.
We raise CY11/12E EPS by 2/3% supported by strong
sales growth and increase price target to Rs2,461
(Rs2,292 earlier). At one-year forward P/E of 25.5x we
find valuations rich and recommend investors to wait for
a better entry point. Maintain IN-LINE.
Volume growth rebounds. Post muted sales growth of
9.5% in 1Q CY11, GSKCH’s sales rebounded with growth of
21.6% yoy in 2Q CY11 to Rs6.5bn. This was driven by
estimated volume growth of 14-15% in core business and
strong performance in newly launched products.
Raw material costs higher-than-expected. Like various
FMCG companies that declared results, GSKCH’s gross
margin was also under pressure. The rise in prices of its key
inputs like milk and barley led to an increase in raw material
cost-to-sales by 300bps yoy and 250bps qoq to 40.6% in
1Q CY12.
Ad spend high, but EBITDA margin remains healthy.
GSKCH continues to support its new products launched in
the past 2-3 years with higher advertising. Ad spend-tosales was up 140bps yoy to 15.3%. However, 220bps yoy
decline in other expenses-to-sales limited EBITDA margin
decline to 130bps yoy at 17.7%. Adjusted net profit was up
14.9% yoy.
We raise CY12/13 earnings. We raise CY11/12E EPS by
2.5/3.5% on the back of rebound in core business volume
growth and possible margin improvement through better
cost management.
Maintain IN-LINE. We expect steady volume growth and
margin improvement to result in sales and EPS CAGR of
16.6% and 19.5% over CY10-13E, respectively. However,
one-year forward P/E of 25.5x offers limited upside. We
recommend investors to wait for a better entry point and roll
forward to Jun ’13 EPS with a revised price target of
Rs2,461 (earlier Rs2,292) based on a forward P/E of 22x.
Re-iterate IN-LINE.
No comments:
Post a Comment