Company Update  / Consumer Discretionary /  RALS IJ  /   Click here for full PDF version 
 Author(s):  Lukito Supriadi  ;Andrianto Saputra 

• RALS booked 1Q24 net profit of Rp107bn (+254% yoy) and came above ours/consensus estimate at 33/35% vs. 5yr average of 8%.
• Notably, Lebaran seasonality came earlier in March and as such, we expect a more even sales distribution between 1Q24-2Q24.
• Maintain our BUY call for RALS with TP of Rp660 with decent dividend yield expectation of 9.9% in FY24F.

1Q24 profit beat due to earlier Lebaran seasonality
1Q24 net profit stood at Rp107bn (+254% yoy), which is above our/consensus estimate at 33/35% (vs. 5yr avg exclude Covid period of 8%). Net revenue of Rp829bn (+42.0% yoy) was also above expectations at 27/29% of ours/consensus vs. 5yr average of 19%. It is worth noting that the Lebaran seasonality is brought forward by 10 days into March this year compared to last year, and we expect a more evenly distributed sales trend between 1Q24 and 2Q24. Our channel checks suggest a strong end-Mar24 post THR disbursement.
EBIT margin improvement due to operating leverage
GPM slightly declined by -68bps yoy, dragged by supermarket's lower GPM of 10.2% (vs. 1Q23's 11.7%). Overall opex rose 10.2% yoy, but declined in terms of opex/sales ratio to 21.1% (vs. 1Q23's 27.1%) due to the seasonally strong sales growth. This leads to a much improved EBIT margin of 7.1% in 1Q24 (vs. 1Q23's 1.8%). Below the operating line, finance income remained stable at Rp28bn (+8.4% yoy). Inventory days stood at 62 days as of Mar24, an improvement compared to 106 days in Mar23
Lebaran seasonality may peak in 2Q24F
Management has previously guided that they have no store expansion plans yet for FY24F, while continuing the store revitalization into a lifestyle-mall for select stores such as Ramayana Mal Garut - with more F&B offerings. While expecting a more robust 2Q24 due to the peak Lebaran seasonality, RALS ' 1H23-1H24 shall provide a more representative performance indication of FY24's Lebaran performance.
Maintain BUY call with unchanged TP of Rp660
Separately, we note RALS ' cash balance of Rp1.4tr as of Mar24 shall enable a healthy dividend payout, which is expected to be finalized on 17May24. We are expecting 9.9% dividend yield in FY24F. In sum, we maintain our BUY call for RALS with TP of Rp660, based on 12.2x FY24F P/E (-1s.d of its 5yr pre-Covid mean). Key risk is poor Lebaran performance in 2Q24F.


Sumber : IPS