Company Update : ACES, Going above and beyond
Friday, January 11, 2019       14:03 WIB

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Going above and beyond
  1. Indication of an exceptional FY18 performance.
  2. Maintaining strong SSSG throughout FY18.
  3. Strong momentum to continue into 2019.
  4. We maintain BUY on with higher TP of Rp2,000.

Exceptionally robust FY18 sales. reported gross sales of Rp836bn in Dec18 (+29% yoy; +44% mom) and Rp7.1tn cumulatively in 12M18 (+23% yoy). The company recorded their strongest monthly sales throughout the year in Dec18, which even managed to substantially beat their Lebaran sales (Jun18 sales: Rp663bn). In terms of expansion, the company had also considerably surpassed their initial store opening target of only 15 new stores. By the end of 2018, they have opened 33 new stores (including 5 Ace Express stores), more than double their initial expansion target. This is a very impressive feat by the company, considering the high base they already achieved last year, managing to surpass our expectations yet again. Having said that, we continue to be bullish on going forward, mainly on the back of a robust FY18 performance and the company's aggressive expansion this year.
Managed to maintain high SSSG in 2018. Despite ' high base in 2017, the company was still able to maintain strong double digit SSSG throughout the year in 2018. Moreover to everyone's surprise, they even managed to surpass their 12M17 SSSG of 11.7%, reporting a record high 12M18 SSSG of 13.5%. As we previously mentioned, this was mainly supported by an outstanding performance in Dec18, which also managed to record the highest monthly SSSG throughout the year at 19.0% (vs. Nov18: 11.1%; Dec17: 17.6%). Ex. Java contributed the strongest growth in 2018 recording SSSG of 16.5%, which was mainly driven by the commodity recovery outside Java.
Strong momentum expected to carryover. With the company's aggressive expansion last year, we should expect it to continue into 2019, albeit slight slowdown should be anticipated. According to the management's initial guidance, they are planning to open around 20 new stores this year. This is slightly higher compared to the company's 2018 guidance of 15 new stores, but fairly lower than their actual openings of 33 stores. We believe that will most likely surpass their 2019 target, though we are doubtful that the company will open as many stores as last year. We also have to take into account scarcity of new retail space.
Valuation. We slightly raise our revenue and earnings forecast for FY18F/FY19F, on the back of stronger than expected FY18 sales and SSSG . We reiterate our BUY call on with a higher TP of Rp2,000 (based on a target P/E of 26.5x), justified by steady sales growth and outstanding SSSG .


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