19 Jan Shinhan Research – Innovate to sustain the growth
INOV booked revenue of IDR 380bn (+27.8% YoY) in 9M19, in line with our estimates by achieving 72.5% run-rate against the full-year projection. Solid top-line growth was mainly supported by the double-digit growth in the sales of fiber by 36.4% YoY, with a contribution to total net sales reached 79%, up from 74% recorded in 9M18. We believe the increase was due to growing demand from export, representing around ~30% of total revenue, as the company manages to capture the opportunity from China’s waste import ban and the country’s ongoing trade conflict with the US. The sales from homeware segment declined by -22.5% YoY, we suggest that it was caused by the shifting in sales mix as 68.1% are sold directly to its customer, while 31.9% are sold to affiliated parties in 9M19, lower compared to 34.8% in 9M18. Sales of non-woven products grew by 12.0% YoY and become the second-largest contributor to total net sales with 16%, relatively stable from 18% in 9M18 along with its versatility to be used in various industries such as geotextile and automotive.