Daily Brief Indonesia: Sido Muncul, Medco Energi and more

• Sido Muncul recently released its 1H2022, which reflected some impact from inflationary pressure impacting the purchasing power of its customer base, especially for herbal products.
• The company’s food and beverage division and notably energy drinks saw some impact from a slowdown due to consumers taking a longer Lebaran break this year but saw strong exports.
• Sido Muncul (SIDO IJ) saw a sharp correction post its numbers but we would expect some recovery in 1H2022 and a resumption of growth in FY2023 plus valuations are attractive.

Medco Energi’s H1/22 results were strong as expected. This was supported by increased production following the ConocoPhillips Indonesia (CIHL) acquisition in March, as well as the high oil-price environment. We expect the company to deleverage further going forward, supported by earnings growth, strong OCF generation and debt repayments. The full-year FCF deficit should also narrow to a mildly negative level. We note positively management’s intentions to reduce debt, including to fully repay the USD 850 mn in debt taken on for the CIHL acquisition by 2024. Cash/ST Debt was inadequate, but we do not foresee any near-term refinancing risks.