Company Report | Sept 24, 2018
Ramayana Lestari Sentosa Tbk | Summary (IDR bn)
2017 2018E 2019F 2020F
RALS succeeded to post the equal buoyance in 2Q18. The sales upbeat by 4.5% y-y to IDR3.7 trillion and COGS downbeat by 0.44% y-y were logical takeaways for the upbeat margin and profit performance. The net profit was also rosier by 28.8% y-y to IDR471 billion.
On the other side, the momentum of 2018’s Idul Fitri occurred earlier than 2017’s Idul Fitri shifted the purchasing trend. June’s sales were downbeat by 7% y-y to IDR2.04 trillion, but May’s sales were steep high by 41.9% y-y to IDR1.04 trillion. RALS’s sales in Java, Bali, and Nusa Tenggara, contributing more than 65% to the overall sales, were buoyant by 7.3% y-y.
Bolstered by Consignment Sales and Supermarket Closure
RALS increased further its consignment segment; for example, 2Q18’s consignment sales grew by 12.1% y-y to IDR1.64 trillion, the highest figures to date and contributing 44.9% to the overall sales. The growth was also capable of cushioning the slight decline in the direct purchases sales.
Another to increasing consignment sales, the wit decision to shut its 18 supermarkets also boosted the profit before tax on groceries business segment to IDR20.9 billion as the highest figures after recent-year loss.
Lack of Expansive Plans
Overseeing 1H18’s sales buoyant by 3.9% y-y to IDR5.2 billion, we projects that RALS is likely successful in accomplishing its 2018’ conservative growth target of 1.5% y-y. The downbeat sales expenses of groceries segment possibly boost its margin in ahead years. However, we pity RALS’s lack of expansive plans in light of a steep hike in its time deposits from IDR1.76 trillion in 1Q18 to IDR2.66 trillion in 2Q18.
Target Price of IDR1,525
We use an estimate of the forward P/E of 15.9x (0.4SD higher than the last 4-year P/E). The target price implies a 2018E P/E of 16.2x. Now, RALS is traded at a 2018E P/E of 14.4x.
Michael Tjahjadi
+62 21 797 6202, ext:114
Source: Company, NHKS Research
RALS Quarterly Net Sales by Region (IDR bn)
Source: Company, NHKS Research
RALS Quarterly Gross Sales (IDR bn) | 1Q16 - 2Q18
Margin Ratios | 1Q17 - 2Q18
Source: Company, NHKS Research
Supermarket Segment’s EBIT (IDR bn) | 1Q17 - 2Q18
Source: Company, NHKS Research
Performance Highlights
RALS Quarterly Net Profit (IDR bn) | 1Q16 - 2Q18
Source: Company, NHKS Research
RALS’ Segment Contribution | 1Q16 - 2Q18
2Q18 review (IDR bn)
Source: Bloomberg, NHKS research
2Q17 3Q17 4Q17 1Q18 Actual Estimate 2Q18 y 3Q18E
-y q-q surprise
Sales 3,503 1,409 1,751 1,520 3,661 3,727 4.5% 140.8% -1.8% 1,487
Gross Profit 969 388 480 416 1,138 1,035 17.4% 173.9% 10.0% Gross Margin 27.7% 27.6% 27.4% 27.3% 31.1% 27.8% 3.4% 3.8% 3.3% 29.5%
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.
Multiple Valuation
Forward P/E band | Last 4 years
Source: NHKS research
Dynamic Forward P/E band | Last 4 years
Source: NHKS research
Rating and Target Price Update
Target Price Revision
Date 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%
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
2. Rating system based on a stock’s absolute return from the date of publication
Summary of Financials
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