Resilient, this is the recommendation for shares in the consumer goods sector

Reporter: Akhmad Suryahadi | Editor: Khomarul Hidayat

KONTAN.CO.ID – JAKARTA. Consumer goods sector stocks are indeed more resilient to economic pressures. Evidently, the consumer goods sector index (consumer goods) is still the winner of the sectoral index since the beginning of the year or by extension year-to-date (ytd).

Quoting data from the Indonesia Stock Exchange (IDX), as of Monday (14/9) the consumer goods sector index has only corrected 5.5% since the beginning of the year.

This correction is lower than the decline that occurred in the Composite Stock Price Index (IHSG), which has even fallen by 18.06% since the beginning of the year. The corrections that occurred in the consumer sector index were also lower than other sectoral indices, such as the property sector which fell by 34.8% and the index of various industries (miscellaneous industry) which dropped to 29.55% ytd.

However, analyst at Phillip Sekuritas Anugerah Zamzami Nasr assessed that shares of consumer goods issuers are still in a reasonable valuation and not yet premium (expensive). This is because a number of stocks in this sector are still attractive and discounted.

“By sector, the consumer goods index shows that some are still trading below -1 standard deviation from the five-year average P / E and PBV,” Zamzami told Kontan.co.id, Monday (14/9).

Also Read: JCI rose 2.89% on the first day of PSBB Jakarta, this is the projection for Tuesday (15/9)

A number of shares of consumer goods issuers that can be considered include PT Indofood Sukses Makmur Tbk (INDF), PT Indofood CBP Sukses Makmur Tbk (ICBP), PT Kalbe Farma Tbk (KLBF), PT Unilever Indonesia Tbk (UNVR) to PT Gudang Garam Tbk (GGRM).

In addition to being in the defensive sector, these five emitters are assessed to have balance sheet the good, by the ratio net gearing is below 1, as well as with net debt per EBITDA below 5. In addition, Zamzami assesses that these issuers have a good track record of growth in the last five years.

Evidently, the compound annual growth rate (compound annual growth rate or CAGR) of more than 2% and a pre-tax CAGR rate (earing before tax/ EBT) more than 3%. These stocks are also considered discounted, as seen from their book value (P / B), which is currently below the average P / B in the last five years.

Hold on tight

Even though the DKI Jakarta Provincial Government reimposes large-scale social restrictions (PSBB), Zamzami assesses that consumer goods issuers will be quite defensive from this sentiment. This is because the products produced by this issuer are daily necessities, which demand will always be there.

In addition, consumer goods issuers are also less affected by the business cycle (business cycle) good when downturn, booming, nor recession. Thus, the defensive nature of consumer goods issuers because the demand for their products is stable in all business cycles, making growth topline and bottom linestable even with the strict enforcement of the PSBB in the second quarter.

Apart from that, the stimuli that the government makes to encourage public consumption should also have a positive impact on consumer goods issuers.

Likewise, Mirae Asset Sekuritas analysts Hariyanto Wijaya and Emma A. Fauni assessed that consumer goods issuers will be the sector that is least affected by the PSBB implementation. Mirae Asset Sekuritas made INDF and ICBP shares of choice this month.

Hariyanto and Emma assessed that ICBP and INDF should have posted positive performance during the current PSBB. This is because the work from home (WFH) rule should have a positive impact on the demand for staple goods.