ACE Hardware Indonesia
(ACES IJ)
4Q17 preview: Robust sales
Vigorous top line in 4Q17
ACES membukukan pendapatan sebesar IDR647bn pada Desember 2017, yang mana penjualan bulanan tertinggi selama beberapa tahun terakhir. Secara kumulatif pendapatan 4Q17 sebesar IDR1.1tr, tumbuh sebesar 6.4%QoQ dan 12.4%YoY. Secara kumulatif, ACES telah membukukan penjualan sebesar IDR5.78tr untuk FY17, melampaui perkiraan kami sebesar 2%.
Walaupun bottom line ACES belum dirilis, kami yakin bahwa perusahaan akan menghasilkan net profit yang inline dengan perkiraan kami karena: 1) ACES menerapkan skema biaya plus marjin (cost plus margin); 2) Rupiah cukup stabil selama 3Q (kami memperkirakan 3 bulan efeknya dari depresiasi Rupiah) dan; 3) ACES tidak memiliki pinjaman yang akan memberatkan biaya pinjaman bank. Jadi, saat kami menantikan rilis laporan keuangan FY17, kami memperkirakan margin perusahaan tetap stabil, dan semua sesuai dengan perkiraan kami.
Bulan Desember, ACES membukukan SSSG 17.6%, naik 5.1%p dari November dan 13.7%p lebih tinggi dari Desember 2016. Secara kumulatif, SSSG ACES pada 2017 sebesar 11.7%, jauh lebih tinggi dari perkiraan kami sebesar 7%. Luar Jawa membukukan SSSG tertinggi sebesar 13.8%, yang kami percaya karena efek dari kenaikan harga komoditas.
Purchasing power to stay strong going forward
Kami menyukai ACES karena neraca yang solid, ekspansi yang sehat, dan target pasar yang lebih resilient. Selain itu, kami memperkirakan marjin akan stabil seiring dengan stabilnya nilai tukar Rupiah dan daya beli masyarakat tingkat menengah. Dikarenakan harga saham ACES yang telah naik tajam dalam dua bulan terakhir, kami menurunkan rating kami untuk ACES menjadi trading buy, namun mempertahankan harga target kami sebesar IDR1,450.
Retail
Company Report January 23, 2018
(Downgrade)
Trading Buy
Target Price (12M, IDR)
1,450
Share Price (1/22/18, IDR)
1,215
Expected Return
19.3%
Consensus OP (18F, IDRtr) 1.0
EPS Growth (18F, %) 17.1
P/E (18F, x) 22.2
Industry P/E (18F, x) 45.6
Benchmark P/E (18F, x) 16.7
Market Cap (IDRbn) 20,837.3
Shares Outstanding (mn) 17,150.0
Free Float (mn) 6,865.0
Institutional Ownership (%) 23.2
Beta (Adjusted, 24M) 0.9
52-Week Low (IDR) 720
52-Week High (IDR) 1,425
(%) 1M 6M 12M
Absolute 6.6 8.5 65.3
Relative 2.1 -4.3 41.6
PT. Mirae Asset Sekuritas Indonesia
Trade
Christine Natasya +62-21-515-1140 (ext.: 233) [email protected]
FY (Dec.) 12/13 12/14 12/15 12/16 12/17F 12/18F
Revenue (IDRbn) 3,895.4 4,541.5 4,742.5 4,935.9 5,655.3 6,583.4 Gross Profit (IDRbn) 1,933.5 2,193.6 2,253.7 2,351.8 2,696.5 3,139.4 Operating Profit (IDRbn) 564.9 662.9 688.4 729.9 834.5 974.0 Net profit (IDRbn) 508.9 562.3 588.3 710.6 801.3 938.1
EPS (IDR) 29.7 32.8 34.3 41.4 46.7 54.7
BPS (IDR) 111.7 137.7 153.3 177.8 205.9 239.6
P/B (x) 10.9 8.8 7.9 6.8 5.9 5.1
P/E (x) 40.9 37.1 35.4 29.3 26.0 22.2
ROE 26.6 23.8 22.4 23.3 22.7 22.8
ROA 20.5 19.1 18.0 19.0 20.0 20.3
Note: NP refers to net profit attributable to controlling interests Source: Company data, Mirae Asset Sekuritas Indonesia Research
40 90 140 190 240
1/17 2/17 3/17 3/17 4/17 5/17 5/17 6/17 7/17 7/17 8/17 9/17 10/17 10/17 11/17 12/17 12/17 1/18
JCI ACES
(D-1yr=100)
Figure 1. Mirae Asset Sekuritas Indonesia Cartoon
Vigorous top line in 4Q17
ACES membukukan pendapatan sebesar IDR647bn pada Desember 2017, yang mana penjualan bulanan tertinggi selama beberapa tahun terakhir. Secara kumulatif pendapatan 4Q17 sebesar IDR1.1tr, tumbuh sebesar 6.4%QoQ dan 12.4%YoY. Secara kumulatif, ACES telah membukukan penjualan sebesar IDR5.78tr untuk FY17, melampaui perkiraan kami sebesar 2%.
Walaupun bottom line ACES belum dirilis, kami yakin bahwa perusahaan akan menghasilkan net profit yang inline dengan perkiraan kami karena: 1) ACES menerapkan skema biaya plus marjin (cost plus margin); 2) Rupiah cukup stabil selama 3Q (kami memperkirakan 3 bulan efeknya dari depresiasi Rupiah) dan; 3) ACES tidak memiliki pinjaman yang akan memberatkan biaya pinjaman bank. Jadi, saat kami menantikan rilis laporan keuangan FY17, kami memperkirakan margin perusahaan tetap stabil, dan semua sesuai dengan perkiraan kami.
Figure 2. Monthly revenue and SSSG Figure 3. Revenue vs. store count by year
Source: Company data, Mirae Asset Sekuritas Indonesia Research Source: Company data, Mirae Asset Sekuritas Indonesia Research
Figure 4. Quarterly revenue and YoY growth Figure 5. USD/IDR
Source: Company data, Mirae Asset Sekuritas Indonesia Research Source: Bloomberg, Mirae Asset Sekuritas Indonesia Research
13,312 13,531
12,900 13,100 13,300 13,500 13,700 13,900 14,100
01/16 04/16 07/16 10/16 01/17 04/17 07/17 10/17 (USD/IDR)
1,557
-1.8 24.5
12.4
-10 0 10 20 30 40 50 60
0 350 700 1,050 1,400 1,750
1Q11 4Q11 3Q12 2Q13 1Q14 4Q14 3Q15 2Q16 1Q17 4Q17
(IDRbn)
Revenue (L)
Revenue YoY growth (R)
(%)
5,780
26
144
0 20 40 60 80 100 120 140 160
0 1,500 3,000 4,500 6,000 7,500
2007 2009 2011 2013 2015 2017
(IDRbn)
Revenue (L) # of store (R)
Revenue (10 year CAGR growth) =20.6%
Number of store (10 year CAGR growth) =18.7%
(Unit)
647
0.7
5.0 10.5
9.7 11.7
0 3 6 9 12 15
0 200 400 600 800
1/16 4/16 7/16 10/16 1/17 4/17 7/17 10/17 Revenue (L) YTD Monthly SSSG (R) (%) (IDRbn)
Continued strength of same-store-sales growth
Bulan Desember, ACES membukukan SSSG 17.6%, naik 5.1%p dari November dan 13.7%p lebih tinggi dari Desember 2016. Secara kumulatif, SSSG ACES pada 2017 sebesar 11.7%, jauh lebih tinggi dari perkiraan kami sebesar 7%. Luar Jawa membukukan SSSG tertinggi sebesar 13.8%, yang kami percaya karena efek yang terlambat dari kenaikan harga komoditas.
Figure 6. ACES’ monthly SSSG Figure 7. ACES’ monthly SSSG by region
Source: Company data, Mirae Asset Sekuritas Indonesia Research Source: Company data, Mirae Asset Sekuritas Indonesia Research
Figure 8. ACES’ YTD SSSG Figure 9. ACES’ YTD SSSG by region
Source: Company data, Mirae Asset Sekuritas Indonesia Research Source: Company data, Mirae Asset Sekuritas Indonesia Research 0.7
5.0 10.5
9.7 11.0
11.7
0 2 4 6 8 10 12 14
1/16 3/16 5/16 7/16 9/16 11/16 1/17 3/17 5/17 7/17 9/17 11/17 (%)
5.1
-5.8
17.6
-10 -5 0 5 10 15 20 25
1/16 3/16 5/16 7/16 9/16 11/16 1/17 3/17 5/17 7/17 9/17 11/17
(%)
11.6 10.3 16.9
-15.0 -7.0 1.0 9.0 17.0 25.0 33.0
1/16 3/16 5/16 7/16 9/16 11/16 1/17 3/17 5/17 7/17 9/17 11/17 Jakarta Java -Ex Jakarta Ex Java (%)
9.5 12.0 13.8
0 3 6 9 12 15
1/16 3/16 5/16 7/16 9/16 11/16 1/17 3/17 5/17 7/17 9/17 11/17 Jakarta Java -Ex Jakarta Ex Java
(%)
Table 1. Stores that were closed and opened in 2017
Date Store count Location SQM
6-Jan-17 130th Tangerang
Metro Indah Mall (Bandung) Jakarta (Lotte Avenue)
Jakarta (Sunter) Jakarta (Marvel City ) Bandung (Java ex Jakarta)
Jakarta (Metro Sunter) Jakarta (Kalibata City)
1,000
16-Mar-17 131st 1,932
20-Apr-17 132nd 2,490
25-Apr-17 -132 (2,200)
26-May-17 132nd 2,563
31-May-17 -132 (1,616)
31-May-17 132nd 2,596
13-Jun-17 133th 1,710
16-Jun-17 134th Living Plaza Pasir Kaliki (Bandung) 3,132
14-Jul-17 135th Lippo Jember (East Java) 2,622
29-Aug-17 136th Linc Square Kemang Pratama (West Java) 1,974 2-Sep-17 137th Living Plaza Balikpapan (East Kalimantan) 4,367
29-Sep-17 138th Living Plaza Ciputat (Tangerang) 1,857
18-Oct-17 139th Bandung Electronic Centre 1,300
Source: Company data, Mirae Asset Sekuritas Indonesia Research
Purchasing power to stay strong going forward
Kami menyukai ACES karena neraca yang solid, ekspansi yang sehat, dan target pasar yang lebih resilient. Selain itu, kami memperkirakan marjin akan stabil seiring dengan stabilnya nilai tukar Rupiah dan daya beli masyarakat tingkat menengah. Dikarenakan harga saham ACES yang telah naik tajam dalam dua bulan terakhir, kami menurunkan rating kami untuk ACES menjadi trading buy, namun mempertahankan harga target kami sebesar IDR1,450.
Figure 10. ACES promotion (Jan. 9 – Feb. 6) Figure 11. ACES clearance sale on Christmas items
Source: Mirae Asset Sekuritas Indonesia Research Source: Mirae Asset Sekuritas Indonesia Research
Table 2. Timetable of ACES’ boom sales and other promotions Timetable
Year 1H 2H
2014 26 February 2014- 25 March 2014 24 September 2014- 28 October 2014 2015 4 March 2015 - 7 April 2015 16 September 2015- 25 October 2015 2016 09 March 2016 - 12 April 2016 21 September 2016- 25 October 2016 2017 29 March 2017 - 2 May 2017 13 September 2017- 17 October 2017
Source: Internet, Company data, Mirae Asset Sekuritas Indonesia Research
Figure 12. ACES’ forward P/E band
Source: Bloomberg, Company data, Mirae Asset Sekuritas Indonesia Research
-1 Std Dev Avg PER +1 Std Dev
-2 Std Dev +2 Std Dev
12 17 22 27 32
01/13 01/14 01/15 01/16 01/17 01/18
( x )
(ACES/Trading Buy/TP IDR1,450)
Income Statement (Summarized) Balance Sheet (Summarized)
Year end Dec 31 (IDRbn) 2015 2016 2017F 2018F IDRbn 2015 2016 2017F 2018F Revenue 4,743 4,936 5,655 6,583 Assets
COGS (2,489) (2,584) (2,959) (3,222) Cash and equivalents 622 704 824 1,114 Gross Profit 2,254 2,352 2,697 3,139 Receivables 18 31 27 32 Opex (1,565) (1,622) (1,862) (2,165) Inventories 1,522 1,590 1,621 1,765 Operating Profit 769 881 974 1,137 Others 305 497 456 513 Other income/(expenses) 81 151 139 163 Total current assets 2,467 2,822 2,929 3,424 Profit before income tax 737 863 988 1,159 Fixed assets - net 457 589 701 775 Income tax expenses (152) (157) (192) (225) Others 343 319 375 430 Minority interest (3) (4) (5) (4) Total non-current assets 800 909 1,078 1,207 Net profit 588 711 801 938 Total Asset 3,268 3,731 4,007 4,631 EBITDA 743 803 914 1,066 Liabilities and equity
ST bank loans and CM 23 5 11 13 Growth & margins 2015 2016 2017F 2018F Accounts payables 127 108 123 134
Growth (%) Others current liabilities 262 276 224 258
Revenue 4.4 4.1 14.6 16.4 Total current liabilities 412 389 358 405 EBITDA 1.4 8.0 13.8 16.6 Long term debt - - - -
Net profit 4.6 20.8 12.8 17.1 Others 226 294 117 117
Profitability (%) Total non-current liabilities 226 294 117 117
Gross margin 47.5 47.6 47.7 47.7 Total liabilities 639 682 475 522 Operating margin 16.2 17.8 17.2 17.3 Minority interests 1 (5) (3) (4) EBITDA margin 1.4 8.0 13.8 16.6 Shareholders' equity 2,629 3,049 3,532 4,109
Cash Flow (Summarized) Ratio analysis
Year end Dec 31 2015 2016 2017F 2018F Year end Dec 31 (IDRbn) 2015 2016 2017F 2018F
CF from operation Current ratio 6.0 7.3 8.2 8.5
Net profit 588 711 801 938 Quick ratio
Debt to equity 1.6
0.0 1.9
0.0 2.4
0.0 2.8 0.0 Depreciation/amortization 76 59 105 123
Change in working capitals (218) (71) (42) (158) Net debt to equity (0.2) (0.2) (0.2) (0.3)
Others 179 (115) (214) (57)
CF from operation 626 582 651 847 CF from Investments
Net capex (70) (190) (218) (198) CF from investments (70) (190) (218) (198)
CF from financing activity
Increase/(decrease) in debt
Increase/(decrease) in equity (4) (18) 6 2 Dividend payments (24) (6) 1 (0) CF from financing activity (273) (300) (263) (286) (320) (312) (361) (359) Increase (Decrease) in Cash 256 106 120 290 Beginning balance 391 622 704 824 Ending balance 622 704 824 1,114
Source: Mirae Asset Sekuritas Research
APPENDIX 1
Important Disclosures & Disclaimers
Stock Ratings Industry Ratings
Buy Relative performance of 20% or greater Overweight Fundamentals are favorable or improving
Trading Buy Relative performance of 10% or greater, but with volatility Neutral Fundamentals are steady without any material changes Hold Relative performance of -10% and 10% Underweight Fundamentals are unfavorable or worsening
Sell Relative performance of -10%
* Our investment rating is a guide to the relative return of the stock versus the market over the next 12 months.
* Although it is not part of the official ratings at Mirae Asset Sekuritas Indonesia, we may call a trading opportunity in case there is a technical or short-term material development.
* The target price was determined by the research analyst through valuation methods discussed in this report, in part based on the analyst’s estimate of future earnings.
The achievement of the target price may be impeded by risks related to the subject securities and companies, as well as general market and economic conditions.
Analyst Certification
Opinions expressed in this publication about the subject securities and companies accurately reflect the personal views of the Analysts primarily responsible for this report. PT. Mirae Asset Sekuritas Indonesia (“Mirae Asset Daewoo”) policy prohibits its Analysts and members of their households from owning securities of any company in the Analyst’s area of coverage, and the Analysts do not serve as an officer, director or advisory board member of the subject companies. Except as otherwise specified herein, the Analysts have not received any compensation or any other benefits from the subject companies in the past 12 months and have not been promised the same in connection with this report. No part of the compensation of the Analysts was, is, or will be directly or indirectly related to the specific recommendations or views contained in this report but, like all employees of Mirae Asset Daewoo, the Analysts receive compensation that is determined by overall firm profitability, which includes revenues from, among other business units, the institutional equities, investment banking, proprietary trading and private client division. At the time of publication of this report, the Analysts do not know or have reason to know of any actual, material conflict of interest of the Analyst or Mirae Asset Daewoo except as otherwise stated herein.
Disclaimers
This report is published by Mirae Asset Daewoo, a broker-dealer registered in the Republic of Indonesia and a member of the Indonesia Stock Exchange. Information and opinions contained herein have been compiled in good faith and from sources believed to be reliable, but such information has not been independently verified and Mirae Asset Daewoo makes no guarantee, representation or warranty, express or implied, as to the fairness, accuracy, completeness or correctness of the information and opinions contained herein or of any translation into English from the Indonesian language. In case of an English translation of a report prepared in the Indonesian language, the original Indonesian language report may have been made available to investors in advance of this report.
The intended recipients of this report are sophisticated institutional investors who have substantial knowledge of the local business environment, its common practices, laws and accounting principles and no person whose receipt or use of this report would violate any laws and regulations or subject Mirae Asset Daewoo and its affiliates to registration or licensing requirements in any jurisdiction shall receive or make any use hereof.
This report is for general information purposes only and it is not and shall not be construed as an offer or a solicitation of an offer to effect transactions in any securities or other financial instruments. The report does not constitute investment advice to any person and such person shall not be treated as a client of Mirae Asset Daewoo by virtue of receiving this report. This report does not take into account the particular investment objectives, financial situations, or needs of individual clients. The report is not to be relied upon in substitution for the exercise of independent judgment. Information and opinions contained herein are as of the date hereof and are subject to change without notice. The price and value of the investments referred to in this report and the income from them may depreciate or appreciate, and investors may incur losses on investments. Past performance is not a guide to future performance. Future returns are not guaranteed, and a loss of original capital may occur.
Mirae Asset Daewoo, its affiliates and their directors, officers, employees and agents do not accept any liability for any loss arising out of the use hereof.
Mirae Asset Daewoo may have issued other reports that are inconsistent with, and reach different conclusions from, the opinions presented in this report. The reports may reflect different assumptions, views and analytical methods of the analysts who prepared them. Mirae Asset Daewoo may make investment decisions that are inconsistent with the opinions and views expressed in this research report. Mirae Asset Daewoo, its affiliates and their directors, officers, employees and agents may have long or short positions in any of the subject securities at any time and may make a purchase or sale, or offer to make a purchase or sale, of any such securities or other financial instruments from time to time in the open market or otherwise, in each case either as principals or agents. Mirae Asset Daewoo and its affiliates may have had, or may be expecting to enter into, business relationships with the subject companies to provide investment banking, market-making or other financial services as are permitted under applicable laws and regulations.
No part of this document may be copied or reproduced in any manner or form or redistributed or published, in whole or in part, without the prior written consent of Mirae Asset Daewoo.
Disclosures
As of the publication date, PT. Mirae Asset Sekuritas Indonesia, and/or its affiliates do not have any special interest with the subject company and do not own 1% or more of the subject company's shares outstanding.
Distribution
United Kingdom: This report is being distributed by Mirae Asset Securities (UK) Ltd. in the United Kingdom only to (i) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”), and (ii) high net worth companies and other persons to whom it may lawfully be communicated, falling within Article 49(2)(A) to (E) of the Order (all such persons together being referred to as “Relevant Persons”). This report is directed only at Relevant Persons. Any person who is not a Relevant Person should not act or rely on this report or any of its contents.
United States: This report is distributed in the U.S. by Mirae Asset Securities (USA) Inc., a member of FINRA/SIPC, and is only intended for major institutional investors as defined in Rule 15a-6(b)(4) under the U.S. Securities Exchange Act of 1934. All U.S. persons that receive this document by their acceptance thereof represent and warrant that they are a major institutional investor and have not received this report under any express or implied understanding that they will direct commission income to Mirae Asset Daewoo or its affiliates. Any U.S. recipient of this document wishing to effect a transaction in any securities discussed herein should contact and place orders with Mirae Asset Securities (USA) Inc., which accepts responsibility for the contents of this report in the U.S. The securities described in this report may not have been registered under the U.S.
Securities Act of 1933, as amended, and, in such case, may not be offered or sold in the U.S. or to U.S. persons absent registration or an applicable exemption from the registration requirements.
Hong Kong: This document has been approved for distribution in Hong Kong by Mirae Asset Securities (HK) Ltd., which is regulated by the Hong Kong Securities and Futures Commission. The contents of this report have not been reviewed by any regulatory authority in Hong Kong. This report is for distribution only to professional investors within the meaning of Part I of Schedule 1 to the Securities and Futures Ordinance of Hong Kong (Cap. 571, Laws of Hong Kong) and any rules made thereunder and may not be redistributed in whole or in part in Hong Kong to any person.
All Other Jurisdictions: Customers in all other countries who wish to effect a transaction in any securities referenced in this report should contact Mirae Asset Daewoo or its affiliates only if distribution to or use by such customer of this report would not violate applicable laws and regulations and not subject Mirae Asset Daewoo and its affiliates to any registration or licensing requirement within such jurisdiction.
Mirae Asset Daewoo International Network
Mirae Asset Daewoo Co., Ltd. (Seoul) Mirae Asset Securities (HK) Ltd. Mirae Asset Securities (UK) Ltd.
Global Equity Sales Team Mirae Asset Center 1 Building 26 Eulji-ro 5-gil, Jung-gu, Seoul 04539 Korea
Suites 1109-1114, 11th Floor Two International Finance Centre 8 Finance Street, Central Hong Kong
China
41st Floor, Tower 42 25 Old Broad Street, London EC2N 1HQ United Kingdom
Tel: 82-2-3774-2124 Tel: 852-2845-6332 Tel: 44-20-7982-8000
Mirae Asset Securities (USA) Inc. Mirae Asset Wealth Management (USA) Inc. Mirae Asset Wealth Management (Brazil) CCTVM 810 Seventh Avenue, 37th Floor
New York, NY 10019 USA
555 S. Flower Street, Suite 4410, Los Angeles, California 90071 USA
Rua Funchal, 418, 18th Floor, E-Tower Building Vila Olimpia
Sao Paulo - SP 04551-060 Brasil
Tel: 1-212-407-1000 Tel: 1-213-262-3807 Tel: 55-11-2789-2100
PT. Mirae Asset Sekuritas Indonesia Mirae Asset Securities (Singapore) Pte. Ltd. Mirae Asset Securities (Vietnam) LLC Equity Tower Building Lt. 50
Sudirman Central Business District
Jl. Jend. Sudirman, Kav. 52-53 Jakarta Selatan 12190
Indonesia
6 Battery Road, #11-01 Singapore 049909 Republic of Singapore
7F, Saigon Royal Building 91 Pasteur St.
District 1, Ben Nghe Ward, Ho Chi Minh City Vietnam
Tel: 62-21-515-3281 Tel: 65-6671-9845 Tel: 84-8-3911-0633 (ext.110)
Mirae Asset Securities Mongolia UTsK LLC Mirae Asset Investment Advisory (Beijing) Co., Ltd Beijing Representative Office
#406, Blue Sky Tower, Peace Avenue 17 1 Khoroo, Sukhbaatar District Ulaanbaatar 14240 Mongolia
2401B, 24th Floor, East Tower, Twin Towers B12 Jianguomenwai Avenue, Chaoyang District Beijing 100022
China
2401A, 24th Floor, East Tower, Twin Towers B12 Jianguomenwai Avenue, Chaoyang District Beijing 100022
China
Tel: 976-7011-0806 Tel: 86-10-6567-9699 Tel: 86-10-6567-9699 (ext. 3300)
Shanghai Representative Office Ho Chi Minh Representative Office 38T31, 38F, Shanghai World Financial Center
100 Century Avenue, Pudong New Area Shanghai 200120
China
7F, Saigon Royal Building 91 Pasteur St.
District 1, Ben Nghe Ward, Ho Chi Minh City Vietnam
