Company Report | Nov 21, 2018
TP to Consensus Price -5.3%
vs. Last Price +14.3%
Shares data
Last Price (IDR) 1,325
Price date as of Nov 19, 2018 52 wk range (Hi/Lo) 1,500 / 925
Ramayana Lestari Sentosa Tbk | Summary (IDR bn)
2017 2018E 2019F 2020F
Gross Sales 8,146 8,496 8,769 9,111
Gross Sales growth -1.1% 4.3% 3.2% 3.9%
EBITDA 560 768 862 928
Net Profit 407 596 695 759
EPS (IDR) 60 89 103 113
EPS growth -0.5% 46.6% 16.6% 9.2%
BVPS (IDR) 520 568 627 686
EBITDA margin 6.9% 9.0% 9.8% 10.2%
NPM 5.0% 7.0% 7.9% 8.3%
Dividend yield 3.3% 3.3% 4.1% 4.5%
Source: Company Data, Bloomberg, NHKS Research
YTD 1M 3M 12M
Abs. Ret. 10.4% 10.9% 7.3% 38.0% Rel. Ret. 15.9% 8.0% 5.4% 38.8% Boosted by SSSG Performance of September 2018
RALS’s 3Q18 revenues were at IDR1.50 trillion (+6.5% y-y): the highest growth
figure in 2018. In 9M18, its gross sales grew to IDR6.68 trillion (+4.5% y-y). The
increase in top line, coupled with the decrease of 6.5% y-y in COGS,
spurring the gross profit margin to 29.5% (vs. 26.8% in 9M17). Its September’s
SSSG consistently gearing higher to 11% was underlined by SSSG of 12.2% in
Java Island, non-greater Jakarta.
The strategy of rejuvenation of groceries stores in 2017 caused the groceries
store segment to post the growth of 10.3% q-q to IDR23 billion in EBIT. This performance caused the 3Q18 EBIT to buoy to IDR2 billion, in a stark contrast to the 3Q17 loss of IDR47.9 billion. The 3Q18 net profit also grew to IDR41 billion.
To Launch Two Stores in 4Q18
In 4Q18, RALS plans to launch two new stores in Java Island non-greater
Jakarta (September’s SSSG of 12.2%) completing 3 new stores launched in
1H18. Besides, RALS will keep increasing its margins by performing efficiencies and keeping COGS in check.
The government’s plan to increase the regional minimum wage (UMR) by 8% in
2019, coupled with a number of the government’s subsidy projects can trigger
the improvement in RALS’s consumer purchasing power. In contrary, the
increase in UMR is likely to stunt EBIT margins in 2019. Besides, it also
faces the challenge of downbeat commodities’ prices prevalent in out Java.
Target Price of IDR1,515
We use an estimate of the forward P/E of 13.5x (0.3 SD lower than the last 4
-year estimate). The target price implies a 2019E P/E of 14.7x. Now, RALS is traded at a2019E P/E of 12.8x.
Michael Tjahjadi
+62 21 797 6202, ext:114Source: Company, NHKS Research
RALS Quarterly Net Sales by Region (IDR bn)
Source: Company, NHKS Research
RALS Quarterly Gross Sales (IDR bn) | 3Q16 - 3Q18
Margin Ratios | 3Q17 - 3Q18
Source: Company, NHKS Research
Supermarket Segment’s EBIT (IDR bn) | 3Q16 - 3Q18
Source: Company, NHKS Research
Performance Highlights
RALS Quarterly Net Profit (IDR bn) | 3Q16 - 3Q18
Source: Company, NHKS Research
RALS’ Segment Contribution | 3Q16 - 3Q18
3Q18 review (IDR bn)
Source: Bloomberg, NHKS research
3Q17 4Q17 1Q18 2Q18 Actual Estimate 3Q18 y 4Q18E
-y q-q surprise
Gross Margin -Revised 29.8% 30.2% 30.2%
-Previous 29.9% 29.9% 30.1%
EBIT -Revised 592 694 760
-Previous 602 608 691
-Change -1.6% 14.0% 9.9%
EBIT Margin -Revised 7.0% 7.9% 8.3%
-Previous 7.1% 7.0% 7.7%
EBITDA -Revised 768 862 928
-Previous 778 778 858
-Change -1.3% 10.8% 8.1%
EBITDA Margin -Revised 9.0% 9.8% 10.2%
-Previous 9.2% 8.9% 9.5%
Net Profit -Revised 596 695 759
-Previous 632 651 707
-Change -5.7% 6.7% 7.3%
Net Margin -Revised 7.0% 7.9% 8.3%
-Previous 7.5% 7.5% 7.9%
ASEAN Retailers Company
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 119 stores: 79 stores situated in Java Island
and 40 stores situated outside Java Island.
To jostle for making profit amid the sluggish retail sector, RALS cooperates with F&B tenants, cinemas, and specialties shops to
offer a lifestyle-based concept through Ramayana Prime Store; indeed, it cooperates with Lazada, Tokopedia, and Shopee to
target the e-commerce segment.
Indonesia-based 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 large number of the middle to low consumer segment across Indonesia is an opportune chance for retailers such as RALS.
The retail industry in ASEAN market is sluggish, for example the negative sales growth Singapore and Thailand based retail industries. This backdrop urge the retailers in ASEAN to strictly curb the operational cost with a view to balancing market. In the
margin outlook, Indonesia retailers are successful in posting higher margin than its ASEAN peers’ margins are.
Source: Bloomberg
SM Investments Corp 21,583 19,205 7,700 678 7.04% 8.8% 10.69% 32.1x 3.3x
Multiple Valuation
Forward P/E band | Last 4 yearsSource: NHKS research
Dynamic Forward P/E band | Last 4 years
Source: NHKS research
Rating and Target Price Update
Target Price RevisionDate Rating Target Price Last Price Consensus vs Last Price vs Consensus
04/04/2018 Hold 1,450 (Dec 2018) 1,310 1,338 +10.7% +8.4%
05/15/2018 Hold 1,400 (Dec 2018) 1,380 1,420 +1.4% -1.4%
09/21/2018 Hold 1,525 (Dec 2019) 1,350 1,306 +13.0% -4.9%
11/19/2018 Hold 1,515 (Dec 2019) 1,325 1,601 +14.3% -5.3%
Source: NHKS research, Bloomberg
Closing and Target Price
Source: NHKS research Analyst Coverage Rating
Source: Bloomberg
NH Korindo Sekuritas Indonesia (NHKS) stock ratings
1. Period: End of year target price
Summary of Financials
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