PT Kalbe Farma Tbk. is a financially healthy and robust stock with a proven track record of outperformance. We all know Kalbe Farma, and having this large-cap to cushion your portfolio during a volatile period in the stock market isn’t a bad idea. Today I will give a high-level overview of the stock, and why I believe it’s still attractive.
PT Kalbe Farma Tbk., together with its subsidiaries, develops, manufactures, and trades in pharmaceutical products in Indonesia. Formed in 1966, and run by CEO – Vidjongtius, the company provides employment to 12.55k people and has a market cap of US$5.0b, putting it in the mid-cap category. Typically, large companies are well-established and highly resourced, meaning that stock market volatility may impact some short-term strategic decisions but unlikely to matter in the long run. Therefore, large-cap stocks are a safe bet to buy more of when the general market is selling off.
Currently Kalbe Farma has Rp260b on its balance sheet, which requires regular interest payments. This requires the business to have enough cash to meet these upcoming interest expenses. With interest income higher than interest payments, meeting these short-term debt obligations isn’t a problem for Kalbe Farma. Furthermore, its operating cash flows amply covers its total debt by more than 2x, which is higher than the bare minimum requirement of 0.2x. And, a given, its liquidity ratio holds up well with cash and other liquid assets exceeding upcoming liabilities, meaning PTKF.F’s financial strength will continue to let it thrive in a fickle market.
PTKF.F’s profit growth over the previous five years has been positive, with an average annual rate of 5.2%, overtaking the It has also returned an ROE of 17% recently, above the market return of 18%. Kalbe Farma’s strong performance over time is a demonstration of its ability to grow through cycles, raising my confidence in the company as a long-term investment.
Next Steps:Whether you’re convinced or not, the key takeaway here is that every stock gets hit in a bear market, but not every stock deserves the blow. When prices are dropping like flies, now is the time to do your research and buy at a discount. Kalbe Farma tick the boxes in terms of its scale, financial health and proven track record, but there are a few other things I have yet to consider. Below I’ve compiled a list of factors for you to continue your reading before you buy:
- Future Outlook: What are well-informed industry analysts predicting for PTKF.F’s future growth? Take a look at our free research report of analyst consensus for PTKF.F’s outlook.
- Valuation: What is PTKF.F worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether PTKF.F is currently mispriced by the market.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.