Muted on Top, but Upbeat at the Bottom

SMSM’s revenues grew slightly by 1.1% (yoy) in FY24 to Rp5,165 billion vs. Rp5,108.4 billion in FY23, while core net profit expanded by 8.3% (yoy) to Rp1,024.2 billion in FY24 from Rp946 billion in the previous year. Geographically, around 60% of the Company’s revenues came from overseas, whilst the remaining 40% came from domestic sales. Asia remained the biggest chunk of the Company’s overseas contributor with 37.5% share of total overseas revenues, followed by America (26.23%) and Europe (20.2%). In terms of growth, domestic revenues grew by just 0.7% (yoy) in FY24 from a year earlier, while overseas revenues gained by 1.4% (yoy) in FY24 compared to FY23. Revenues from Asia actually fell by 12% (yoy) from FY23, but were 17.9% (yoy) and 10.2% (yoy) higher revenues from Europe and America, respectively had been able to make up for the decline. Based on its products, SMSM’ revenues from filter sales remained the biggest, comprising 52.8% of total external sales (ex-intersegment sales). Trading revenues came in second with 29.6% of total external sales, while radiator, body maker and others made up the rest. Notable changes were the big jump of 23.5% (yoy) in sales of radiator, whereas sales from body maker and others dropped by 26.1% (yoy) and 9.4% (yoy), respectively. Filter on the other hand, inched 0.6% (yoy) lower.

Margins Consistently Improving

Profitability margin has improved across all levels. Gross profit margin (GPM) has ticked higher to 37.1% in FY24 vs. FY23; core operating profit margin (cOPM) has also improved from 25.8% in FY23 to 26.5% in FY24; whereas core net profit margin (cNPM) – which excludes non-controlling interests – has increased to 19.8% in FY24 vs. 18.5% in FY23. If we look at the table on the appendix section, from FY19 to FY24 the three margins have been consistently increasing. In terms of returns, SMSM’s return on assets (ROA) stood unchanged at 20.6% at the end of FY24 vs. FY23, while return on equity (ROE) managed to inch higher from 29.3% at the end of FY23 to 29.5% at the end of FY24.

Bigger Capex for Fixed Assets

Throughout FY24, SMSM had spent Rp204 billion for fixed assets and right-of-use assets. On fixed assets, the Company spent Rp191 billion, up by 30.7% (yoy) from Rp148 billion spent in FY23, while for RoU assets it spent Rp13 billion compared to Rp14 billion spent in the previous year.

Target Price Lowered

Based on the automotive industry and the global trade outlook for FY25, we opt to err on the side of caution, especially amidst the highly uncertain global trade outlook. Thus, we have lowered our target price from Rp2,079 per share in our previous update to Rp1,956 per share. Compared to the current price of Rp1,780 per share, the upside potential is 9.9% and implies Price-to-Revenue Ratio (PRR25F) of 1.9x, Price-to-Earnings Ratio (PER25F) of 10.0x, and Price-to-Book Value Ratio (PBV25F) of 2.8x.