Ramayana Lestari Sentosa Tbk (RALS)
Ramayana Lestari Sentosa (RALS) Tbk
Still Banks on Cost Control Company Report | Nov 21, 2018 Boosted by SSSG Performance of September 2018
RALS’s 3Q18 revenues were at IDR1.50 trillion (+6.5% y-y): the highest growth
Hold
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, Dec 2019 TP (IDR) 1,515
spurring the gross profit margin to 29.5% (vs. 26.8% in 9M17). Its September’s
Consensus Price (IDR) 1,601
SSSG consistently gearing higher to 11% was underlined by SSSG of 12.2% in TP to Consensus Price -5.3%
vs. Last Price +14.3% Java Island, non-greater Jakarta.
The strategy of rejuvenation of groceries stores in 2017 caused
the groceries Shares data
store segment to post the growth of 10.3% q-q to IDR23 billion in EBIT. This Last Price (IDR) 1,325
performance caused the 3Q18 EBIT to buoy to IDR2 billion, in a stark contrast to
Price date as of Nov 19, 2018
the 3Q17 loss of IDR47.9 billion. The 3Q18 net profit also grew to IDR41 billion. 52 wk range (Hi/Lo) 1,500 / 925
Free float (%)
36.7 To Launch Two Stores in 4Q18 Outstanding sh.(mn) 7,096
In 4Q18, RALS plans to launch two new stores in Java Island non-greater Market Cap (IDR bn) 9,402 Jakarta (September’s SSSG of 12.2%) completing 3 new stores launched in
Market Cap (USD mn) 644
1H18. Besides,
RALS will keep increasing its margins by performing efficiencies Avg. Trd Vol - 3M (mn)
4.3 and keeping COGS in check. Avg. Trd Val - 3M (bn)
5.5 Foreign Ownership 31.0%
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
Trade, Services & Investment
the improvement in RALS’s consumer purchasing power. In contrary,
the Retail increase in UMR is likely to stunt EBIT margins in 2019. Besides, it also
Bloomberg RALS IJ faces the challenge of downbeat commodities’ prices prevalent in out Java. Reuters RALS.JK
Target Price of IDR1,515 Share Price Performance
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.
Ramayana Lestari Sentosa Tbk | Summary (IDR bn) 2017 2018E 2019F 2020F
Gross Sales 8,146 8,496 8,769 9,111
Gross Sales growth 4.3% 3.2% 3.9%
- -1.1%
EBITDA 560 768 862 928 Net Profit 407 596 695 759 EPS (IDR)
60 89 103 113
EPS growth 46.6% 16.6% 9.2%
- -0.5%
YTD
1M
3M
12M
BVPS (IDR) 520 568 627 686
Abs. Ret. 10.4% 10.9% 7.3% 38.0%
EBITDA margin 6.9% 9.0% 9.8% 10.2%
Rel. Ret. 15.9% 8.0% 5.4% 38.8%
NPM 5.0% 7.0% 7.9% 8.3% ROE 11.9% 16.3% 17.3% 17.2% ROA 8.5% 11.6% 12.5% 12.6% ROIC 9.4% 12.9% 13.6% 13.7% P/E 19.8x 14.9x 12.8x 11.7x P/BV 2.3x 2.3x 2.1x 1.9x
Michael Tjahjadi
EV/EBITDA 12.9x 9.4x 8.0x 7.1x
- 62 21 797 6202, ext:114
DPS (IDR)
40 44 54 59
[email protected] Dividend yield 3.3% 3.3% 4.1% 4.5%
Source: Company Data, Bloomberg, NHKS Research Please consider the rating criteria & important disclaimer
Source: 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
Source: Company, NHKS Research
3Q18 review (IDR bn)
3Q18
3Q17
4Q17
1Q18
2Q18
4Q18E Actual Estimate y-y q-q surprise
Gross Sales 1,409 1,751 1,520 3,661 1,500 1,487 6.5% -59.0% 0.9% 1,815
2.8% 525
Gross Profit 388 480 416 1,138 451 439 16.1% -60.4%
Gross Margin 27.6% 27.4% 27.3% 31.1% 30.1% 29.5% 2.5% 0.6% 28.9%
- 1.0% EBIT (48) 10 (7) 579 2 (5) N/A -99.7% N/A 19
EBIT Margin -3.4% 0.6% -0.5% 15.8% 0.1% -0.3% 3.5% -15.7% 0.5% 1.0%
EBITDA (3) 55 37 622 46 39 N/A -92.7% 16.9% 63
EBITDA Margin -0.2% 3.1% 2.5% 17.0% 3.0% 2.6% 3.2% -13.9% 0.4% 3.5%
Net Profit (1) 39 15 471 41 50 N/A -91.3% -18.0% 69
Net Margin -0.1% 2.2% 1.0% 12.9% 2.7% 3.4% 2.8% -10.1% -0.6% 3.8% Source: Bloomberg, NHKS research Earnings revision (IDR bn) 2018E 2019F 2020F
8,496 8,769 9,111
- Revised Gross Sales >Previous 8,469 8,701 8> -Change 0.3% 0.8% 1.3%
- Revised Gross Profit
- Previous 2,533 2,605 2,709
- Change -0.1% 1.7% 1.5%
- Revised 29.8% 30.2% 30.2% Gross Margin
- Previous EBIT -Revised 592 694> -Previous 602 608
- Change -1.6% 14.0% 9.9%
- Previous 7.1% 7.0% 7.7% EBITDA -Revised 768 862> -Previous 778 778
- Change -1.3% 10.8% 8.1%
- Previous 9.2% 8.9% 9.5%
- Revised
- -Previous 632 651 707
- -Change -5.7% 6.7% 7.3%
- Revised 7.0% 7.9% 8.3% Net Margin
- Previous
- 2.5% -4.30% Parkson Holdings Bhd
- 4.9% 09/21/2018 Hold 1,525 (Dec 2019) 1,350 1,306 +13.0% 11/19/2018 Hold 1,515 (Dec 2019) 1,325 1,601 +14.3% -5.3%
2,530 2,650 2,748
29.9% 29.9% 30.1%
7.0% 7.9% 8.3%
EBIT Margin -Revised
9.0% 9.8% 10.2%
EBITDA Margin -Revised
Net Profit 596 695 759
7.5% 7.5% 7.9%
Source: NHKS research
RALS at A Glance
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.
ASEAN Retailers Company Market Revenue Net Profit Net Profit Asset Net ROE P/E Company Cap LTM LTM Growth P/BV (USD mn) Margin LTM LTM (USD mn) (USD mn) (USD mn) LTM Indonesia
LPPF 897 399 737 136 -0.86% 18.5% 85.6% 6.9x 5.3x RALS 644 360 411 41 36.52% 9.9% 15.7% 15.7x 2.4x MAPI 910 841 1,326 46 91.23% 3.5% 14.0% 22.9x 2.6x
Singapore
Metro Holdings 665 1,299 112 132 168.81% 118.4% 10.49% 5.1x 0.6x
Malaysia
90 2,219 978 (24) 17.75% N/A 0.2x
Thailand
Robinson PCL 2,205 846 823 91 0.33% 11.0% 17.88% 24.6x 4.2x
Philippines
SM Investments Corp 21,583 19,205 7,700 678 7.04% 8.8% 10.69% 32.1x 3.3x
Source: Bloomberg
Multiple Valuation Forward P/E band | Last 4 years Dynamic Forward P/E band | Last 4 years Source: NHKS research 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%
Source: NHKS research, Bloomberg Analyst Coverage Rating Closing and Target Price Source: Bloomberg
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
Buy : Greater than +15%
Hold : -15% to +15% Sell : Less than -15% Summary of Financials
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