Stung by Election Sentiment, Here are CLEO Stock Recommendations

January 24, 2024, 09.27 AM  | Reporter: Nadya Zahira
Stung by Election Sentiment, Here are CLEO Stock Recommendations

ILUSTRASI. PT Sariguna Primatirta Tbk (Tanobel Group), emiten produsen Air Minum Dalam Kemasan (AMDK) berhasil mencatatkan pertumbuhan meroket melampaui rata-rata industri dengan kenaikan penjualan sebesar 14,9% YoY di Semester-I 2023.

STOCK MARKET - JAKARTA. The bottled drinking water business is projected to increase in 2024, including the sales of PT Sariguna Primatirta Tbk (CLEO). This is a result of the simultaneous General Election held in Indonesia.

Analyst at PT Kanaka Hita Solvera (KHS) Andhika Cipta Labora said, CLEO's performance this year is predicted to rise along with its sales which also have the potential to increase up to 70%. This is driven by the political year which increases demand. 

“The bottled beverage business has good prospects in 2024, including CLEO due to the political year which increases demand and has the opportunity to improve CLEO's performance this year,” Andhika told, Tuesday (23/1).

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He mentioned, in 2023 alone per Q3-2023, CLEO's performance recorded good performance as profit increased by 35.7% year on year (YoY) compared to Q3-2022.

Andhika also recommends a buy on weakness for CLEO shares with a target price of Rp 730 per share. 

In line with this, Senior Investment Information at Mirae Asset Sekuritas Indonesia Nafan Aji Gusta also said that this year, CLEO's business performance and sales will increase. Reflecting on its very progressive business growth, both from the top line and bottom line aspects. 

“Especially the growth of its performance is also helped by the improving domestic economy due to the General Election this year,” Nafan told, Monday (22/1).

Nafan said, that CLEO's fundamental performance every year has shown intensive performance. 

In addition, CLEO has a business expansion plan by building a new factory, which will improve CLEO's performance to continue strengthening its sales, as this can also trigger an increase in revenue or income from the company itself.

“Indeed, we admit that the mineral water business in Tabah Air is in a state of oversupply, therefore its price is also very relatively affordable for the community,” he said. 

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According to him, CLEO's stock movement must be able to dominate its market share. However, the problem is CLEO has to face competition in the bottled mineral water industry. 

But apart from that, Nafan said, CLEO is predicted to still be able to increase the growth of its business performance this year.  Nafan also recommends a hold for CLEO shares, with a target price of Rp 680 per share. 

On the other hand, capital market observer & founder of WH-Project William Hartanto said, regarding CLEO shares, his recommendation is to buy with support at 635 and resistance at 735 with a target price of Rp 820 per share. 

PT Sariguna Primatirta Tbk (CLEO) itself is optimistic that it can meet the target of double-digit sales and net profit growth every year, including 2024. This optimism is supported by the active business expansion of this Tanobel Group entity.

Recently, entering 2024, CLEO has again disbursed a capex of Rp 300 billion to build three new drinking water factories in Palu, Pontianak, and Pekanbaru. The construction of these factories is accompanied by the addition of fleets and distribution branches.

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This aggressive expansion is carried out by CLEO to maximize the growth of the bottled drinking water market outside Java. Therefore, CLEO is optimistic that it can meet the target of double-digit growth on the top line and bottom line in 2024.

"In the last 5 years, CLEO has continued to record double-digit sales growth, exceeding the average growth of the bottled drinking water industry which is only around 5%," said CLEO's President Director Melisa Patricia Tanoko last Wednesday (17/1).

Reflecting on the financial report, CLEO's net sales grew 13.86% YoY to Rp 1.15 trillion per Q3-2023. At the same time, CLEO's net profit for the current period increased 35.69% YoY to Rp 204.82 billion.

Not only that, CLEO has also operated a drinking water factory in IKN Nusantara at the end of 2023. The location of this factory is 40 minutes from the zero point of IKN. In addition to IKN, this factory can serve the drinking water needs of the community up to Samarinda and Balikpapan.

"The operation of our factory in IKN is a strategic step in developing the distribution supply chain outside Java," added Melisa.

Now, CLEO operates 32 Cleo brand drinking water factories and is the bottled drinking water producer with the most factories in Indonesia.

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Throughout 2023, CLEO has invested Rp 300 billion for factory construction, machine addition, and sales network strengthening. A fund of Rp 300 billion will be disbursed again by CLEO entering 2024. 

One of them is aimed at building three new drinking water factories located in Palu, Central Sulawesi; Pontianak, West Kalimantan; and Pekanbaru, Riau. In addition, the funds will be used for the development of existing factories, the addition of machines for production increase and automation, and the addition of distribution networks.

Not only that, CLEO also continues to actively launch new products. Recently, CLEO released Cleo Platine Sparkling Water aimed at the upper-class consumer segment. This product is also to meet the demand for drinking water in premium hotels, restaurants, and cafes.

Editor: Hasbi Maulana

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