NH Korindo Sekuritas Indonesia
However,
the upbeat consignment sales of 41.2% whittled away the net
sales by 2.6% y
-
y into IDR1.05 trillion
.
On the other side, the decline in direct purchase sales sent gross margin
and net margin higher into 39.6% and 1.4% respectively. In light of its plan
to raise the consignment sales in 2018, we project that
the 2018’s net sales
hardly grows significantly
.
Boosting Stores Expansion ahead of Ramadhan Season
Ahead of Ramadhan season,
it launched 3 new stores with lifestyle
concept in April–May
. Of notes, the 3 stores are located in greater Jakarta
areas— contribute 37% to its overall gross sales in 1Q18.
The 3 new stores certainly boost sales during Ramadhan season, yet in low
season, its contribution to sales remains opaque. We further overview that
its focus on lifestyle
-
concept stores likely takes effect on long
-
term
performance.
Target Price of IDR1,400
A Glance at RALS
RALS is a retail
-
based company selling apparels and accessories through Ramayana
Department Store, and selling groceries through Spar Supermarket. Targeting the low
-middle class consumers, it operates 116 stores: 76 stores situated in Java Island and 40
stores situated outside Java Island.
To cushion the sluggish market circumstances, RALS cooperating with F&B tenants,
cinemas, and specialties shops offers a lifestyle
-
based concept through Ramayana Prime
Store; indeed, it cooperates with Lazada, Tokopedia, and Shopee to target the e
-commerce segment.
Indonesia’s Retail Industry in ASEAN
Indonesia is the home to the biggest population in ASEAN. It furthers Indonesia into the
lucrative market for the retail business
. LPPF, RALS, MAPI with their stores across
Indonesia dominate the retail market in Indonesia.
The Indonesian Retailers Association (Aprindo) targets the growth of 9% in the 2018’s
retail business. The authorities' policies leaving electricity tariffs and subsidized
petroleum prices unchanged until 2019 are takeaway catalysts for the recovery in
consumers’ purchasing power until 2019.
The retail industry in ASEAN market is sluggish, marking the negative sales growth figures
in Singapore and Thailand, for instance. This backdrop causes the retailers in ASEAN to
strictly curb the operational cost
with a view to balancing market. Nonetheless, in 2017,
most of the retailers consistently posted high price
-
earnings ratio and two
-
digit ROE. In
the margin outlook, Indonesia retailers succeeded in
posting higher margin than its
ASEAN peers’ margins
are.
ASEAN Retailers
Source: Bloomberg, NHKS research
Company
Market Cap
(USD mn)
Total Asset
(USD mn)
Sales
Growth
Gross
Margin
Operating
Margin
ROE
P/E
P/BV
Dividend
Yield
LPPF
1,901
399
1.28%
62.5%
23.7%
81.7%
14.0x
10.4x
5.0%
RALS
693
360
-
4.00%
39%
6.7%
12.2%
22.2x
2.6x
2.6%
MAPI
975
841
15.24%
48%
6.9%
16.4%
21.9x
3.1x
0.5%
Singapore
Metro Holdings
717
1,114
-
15.12%
7%
-
1%
13.6%
5.0x
0.7x
4.3%
Malaysia
Parkson Holdings Bhd
109
2,270
2.07%
N/A
-
3%
-
7.7%
N/A
0.2x
N/A
Thailand
Robinson PCL
2,188
846
-
0.34%
25%
-
1%
16.9%
25.1x
4.1x
2.0%
Philippines
Source: Company, NHKS research
Source: Company, NHKS research
Source: Company, NHKS research
Store Sales Growth (YTD) | 2016
-
2018
Operational Performance
Gross Sales (IDR bn)| 1Q16
-
1Q18
Net Sales by Geography in First Quarter (IDR bn)
Source: Company, NHKS research
Net Profit (IDR bn)| 1Q16
-
1Q18
Source: Company, NHKS research
Source: Company, NHKS research
Multiple Valuation
Forward P/E band | Last 2 years
Dynamic Forward P/E band | Last 2 years
Rating and target price
Date
Rating
Target Price
Last Price
Consensus
vs Last Price
vs Consensus
04/04/2018
Hold
1,450
1,310
1,338
+10.7%
+8.4%
05/15/2018
Hold
1,400
1,380
1,420
+1.4%
-
1.4%
Closing and Target Price
Source: NHKS research
Analyst Coverage Rating
Source: Bloomberg
Source: NHKS research
Source: NHKS research
NH Korindo Sekuritas Indonesia (NHKS) stock ratings
1. Period: End of year target price
2. Rating system based on a stock’s absolute return from the date of publication
