Company Update / Consumer Discretionary / IJ / Click here for full PDF version
Author(s): Lukito Supriadi - +62 21 5088 7168 ext. 716; Andrianto Saputra
- posted 1Q24 net profit of Rp890bn (+15% yoy), in-line with ours at 23%, but below consensus estimate at 20% vs. 5yr average of 25%.
- has proven its resilience in both inflationary and non-inflationary backdrop, which warrants its current valuation premium.
- However, its normalizing EPS growth trajectory and stable ROE outlook underpin our downgrade rating to HOLD with unchanged TP of Rp2,900.
1Q24: profit was below consensus but in-line with ours
posted 1Q24 net profit of Rp890bn (+14.8% yoy), which is in-line with ours at 23%, but below with consensus estimate at 20% (vs. 5yr avg. of 25%). Sales grew by +12% yoy on the back of SSSG which we estimated at high-single digit for Alfamart. We note there was a slight shift of Lebaran seasonality. GPM was stable at 21.8% (+2bps yoy) and seems to have normalized from 4Q23's 22.9% which was driven by higher commercial back margin realization.
Opex/sales ratio and NPM were stable
Additionally, opex/sales ratio was well maintained at 18.8% (vs. 1Q23's 18.9%). Overall salary/sales ratio declined by -27bps yoy to 10.1%, but other opex items such as utilities and rent rose slightly as % of sales. Below the operating line, fee-based income grew 7.5% yoy. This has led to a stable net profit margin of 3.0% (+7bps yoy).
is a defensive and resilient proxy in consumer
's margin profile proven to be resilient regardless of the inflationary backdrop as it continues to grab additional market share ( and ) in the Indonesia' FMCG retail industry (FY20: 13.4% to FY23's 15.0%). This has led to a spectacular EPS growth CAGR of 47.5% between FY20-23, which results in ROE accretion from FY20's 15% to FY23's 26.5%. This underlying strong performance warrants 's current valuation premium of 31.4x FY24F P/E, in our view.
Slower earnings growth outlook underpins our downgrade to HOLD
Nonetheless, we foresee that its future EPS growth trajectory FY23-26 CAGR of +16.6% is an indication of normalization compared to FY20-23's EPS CAGR of 47.5%. We also note that 's ROE trend is likely to be more stable (FY23: 26.5% and FY26F: 28.8%). With 's current share price having reached our TP, we downgrade to HOLD with unchanged TP of Rp2,900 based on 31.0x FY24F P/E (+0.5s.d. from its 5yr mean). We may be more conservative than consensus' estimate, especially in the area of margin expansion.
Sumber : IPS
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