MAPI’s solid 9M18 core net profit of Rp691bn (+87% yoy) exceeded
expectations. This was on the back of strong 8% 9M18 SSSG.
Restructuring at its department store unit lifted its EBIT margin from 0.2% in
9M17 to 7.5% in 9M18, leading to a 90bp yoy EBIT margin rise for MAPI.
MAPI's strong fundamentals justified its 29% share price increase YTD.
Maintain Add and Rp1,000 TP.
9M18 results: strong operations and lower tax rate boosted profits
● 9M18 core net profit (excluding non-cash and one-off items, i.e. gain from land sale
and amortisation expenses) was at Rp691bn (+87% yoy), above expectations at 84%
of our and 112% of Bloomberg consensus full-year estimates (vs. 67% in 2017). 9M18
tax rate normalised to 28% of PBT (vs. 44% of PBT in 9M17), following its financial
restructuring, resulting in a huge improvement in core earnings.
● 9M18 gross sales were Rp15,889bn (+17% yoy), on the back of 8% 9M18 SSSG (flat
from 8% in 1H18). This was in line at 72%/73% of our/consensus FY18 estimates.
● F&B and department store SSSG improved to 7% and 5% respectively in 9M18, from
6% and 4% in 1H18. Specialty stores’ 9M18 SSSG was flat yoy but solid at 10%.
● 9M18 GPM dropped 120bp yoy to 40.7%; we believe that was mainly due to more
promotional events in 1Q and 3Q18, as well as rupiah's depreciation against US$. We
note that c.50% MAPI’s COGS are US$-linked.
● Nevertheless, EBIT margin improved 90bp yoy to 6.7% in 9M18 as department stores'
EBIT margin significantly improved to 7.5% during the period (vs. 0.2% in 9M17),
although the EBIT margins of specialty stores and F&B declined to 7.5% and 8.3%
respectively, from 8.1% and 8.8% in 9M17.
● 3Q18 core net profit was at Rp102bn (+32% yoy). This was on the back of Rp5,372bn
3Q18 gross sales (+17% yoy).
Maintain Add, with unchanged Rp1,000 TP
● MAPI’s share price re-rated 29% YTD, the most among retailers under our coverage.
Nevertheless, its strong 87% yoy earnings growth in 9M18 seems to justify its
dominance. We believe MAPI could continue to delivery strong earnings until end of
FY19F, which should serve as further re-rating catalyst.
● We maintain our FY18 forecasts of 18% gross sales growth and 49% earnings growth,
as well as our SOP-based target price of Rp1,000. MAPI’s current valuation implies an
undemanding 12.5 CY19F P/E.
● Risks to our call include weakening purchasing power amid rupiah depreciation
against US$ which may negatively impact its sales growth, as well as its GPM to some
extent.
by : Kevie ADITYA
T (62) 21 3006 1738
E kevie.aditya@cgs-cimb.com
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