ACE Hardware Indonesia

ACE Hardware Indonesia (ACES IJ)

Getting into the festive mood Another strong month despite high base effect Untuk bulan Mei, ACES membukukan penjualan sebesar IDR465bn (+7.1%QoQ; +17.1%YoY). Secara kumulatif di 5M17, ACES membukukan pendapatan sebesar IDR2.18tr, melanjutkan pertumbuhan dua digitnya (+14.6% YoY) dari (+ 11.5% YoY) di 1Q17. Kuartal pertama 2017 merupakan pertumbuhan dua digit pertama kali sejak 3Q14. Hingga 5M17, penjualan ACES telah mencapai ± 41% dari perkiraan pendapatan bersih kami, yang menurut kami inline.

Retail Company Report June 22, 2017

Trading Buy

(Maintain) Target Price (12M, IDR)

1,240

Share Price (6/21/17, IDR)

1,080 14.8%

Expected Return

Meskipun adanya high base effect karena "boom sale" di bulan Maret sampai pertengahan April 2017, ACES masih membukukan pertumbuhan SSSG dua dijit sebesar 10.7% di bulan Mei (vs. 14.1% pada bulan April 2017), yang menunjukkan pemulihan daya beli konsumen yang berkelanjutan tahun ini. Menurut kami, stabilnya rupiah terhadap USD telah mendukung pemulihan ACES. Selanjutnya, kami juga mengharapkan performance yang baik di bulan Juni mengingat adanya tunjangan hari raya yang dapat membantu mendorong penjualan program diskon 50% ACES selama bulan Ramadan di bulan Juni.

Maintain Trading Buy with higher TP Consensus OP (17F, IDRbn)

843.8

EPS Growth (17F, %)

12

P/E (17F, x) Industry P/E (17F, x)

23.3 18.7

Benchmark P/E (17F, x) Market Cap (IDRbn)

16.4 18,522.0

Shares Outstanding (mn) Free Float (mn)

17,150.0 6,865.0

Institutional Ownership (%) Beta (Adjusted, 24M)

21.9 1.3

52-Week Low (IDR)

720

52-Week High (IDR)

1,110

(%) Absolute

1M 11.3

6M 37.6

12M 23.4

Relative

10.1

22.2

4.2

Selain itu, kita masih melihat ruang re-rating untuk ACES karena: 1) kemungkinan menguatnya Rupiah terhadap USD, 2) uptrend di SSSG, dan 3) cost of equity yang lebih rendah. Dengan kondisi tersebut, kami melakukan beberapa penyesuaian terhadap model kami: kami meningkatkan estimasi SSSG kami menjadi 4% (dari 2.5%), menurunkan tingkat risk free menjadi 7% (dari 7.5%), dan meningkatkan target multiple kami menjadi 29x (dari 28x). Kami memperoleh target harga baru yaitu IDR1,240, mencerminkan P/E 26.7x 2017F. Kami mempertahankan rating Trading Buy untuk ACES.

PT. Mirae Asset Sekuritas Indonesia Trade Christine Natasya +62-21-515-1140 (ext. 233) [email protected]

6/17

5/17

4/17

3/17

2/17

ACES

1/17

12/16

9/16

10/16

8/16

7/16

6/16

11/16

JCI

(D-1yr=100) 130 120 110 100 90 80 70

Di antara retail dibawah coverage kami, kami percaya ACES akan diuntungkan dari tingkat USD/IDR yang stabil, S&P upgrade, dan stabilnya inventori. Kami juga berharap penjualan boom sale di 2H yang biasanya terjadi pada bulan SeptemberOktober akan membantu penjualan ACES secara volume.

FY (Dec.)

12/13

12/14

12/15

12/16

Revenue (IDRbn)

3,895.4

4,541.5

4,742.5

4,935.9

5,450.3

6,029.7

Gross Profit (IDRbn)

1,933.5

2,193.6

2,253.7

2,351.8

2,598.7

2,875.4

Operating Profit (IDRbn)

564.9

662.9

688.4

729.9

804.2

892.1

Net profit (IDRbn)

508.9

562.3

588.3

710.6

796.1

883.7

EPS (IDR) BPS (IDR)

29.7 111.7

32.8 137.7

34.3 153.3

41.4 177.8

46.4 205.8

51.5 236.5

P/B (x) P/E (x)

9.7 36.4

7.8 32.9

7.0 31.5

6.1 26.1

5.2 23.3

4.6 21.0

ROE ROA

26.6 20.5

23.8 19.1

22.4 18.0

23.3 19.0

22.6 19.9

21.8 19.4

Note: NP refers to net profit attributable to controlling interests Source: Company data, Mirae Asset Sekuritas Indonesia Research

12/17F

PLEASE SEE ANALYST CERTIFICATIONS AND IMPORTANT DISCLOSURES & DISCLAIMERS IN APPENDIX 1 AT THE END OF REPORT.

12/18F

June 22, 2017

ACE Hardware Indonesia

Another strong month despite high base effect Untuk bulan Mei, ACES membukukan penjualan sebesar IDR465bn (+7.1%QoQ; +17.1%YoY). Secara kumulatif di 5M17, ACES membukukan pendapatan sebesar IDR2.18tr, melanjutkan pertumbuhan dua digitnya (+14.6% YoY) dari (+ 11.5% YoY) di 1Q17. Kuartal pertama 2017 merupakan pertumbuhan dua digit pertama kali sejak 3Q14. Hingga 5M17, penjualan ACES telah mencapai ± 41% dari perkiraan pendapatan bersih kami, yang menurut kami inline. Meskipun adanya high base effect karena "boom sale" di bulan Maret sampai pertengahan April 2017, ACES masih membukukan pertumbuhan SSSG dua dijit sebesar 10.7% di bulan Mei (vs. 14.1% pada bulan April 2017), yang menunjukkan pemulihan daya beli konsumen yang berkelanjutan tahun ini. Menurut kami, stabilnya rupiah terhadap USD telah mendukung pemulihan ACES. Selanjutnya, kami juga mengharapkan performance yang baik di bulan Juni mengingat adanya tunjangan hari raya yang dapat membantu mendorong penjualan program diskon 50% ACES selama bulan Ramadan di bulan Juni.

Figure 1. ACES’ revenue and YoY growth IDRbn

Sales (L)

Revenue YoY growth (R)

2,500

60% 2,179

50% 2,000 40% 1,500

30%

1,295 18%

1,000

14.6%

20%

11.5% 8%

7%

10%

8%

500 0%

1% -2%

-

-10%

Source: Company data, Mirae Asset Sekuritas Indonesia Research

Figure 3. Stable USD/IDR exchange rate


Mirae Asset Sekuritas Indonesia Research

05/17

01/17 03/17

11/16

09/16

07/16

05/16

03/16

01/16

05/17

03/17

01/17

11/16

09/16

07/16

05/16

03/16

01/16

11/15

09/15

07/15

05/15

03/15

01/15

11/14

09/14

07/14

05/14

03/14

01/14

-8%

11/15

-3%

09/15

2%

07/15

1%

05/15

2%

01/15 03/15

7%

11/14

10.7%

09/14

12%

15,000 14,500 14,000 13,500 13,000 12,500 12,000 11,500 11,000 10,500 10,000 07/14

14.1%

05/14

17%

17%

01/14 03/14

Figure 2. ACES’ monthly SSSG

Source: Bloomberg, Company data, Mirae Asset Sekuritas Indonesia Research

2

June 22, 2017


Figure 4. ACES’ boom sale (first half of 2016 & 2017)

Figure 5. ACES’ 50% discount program during Ramadan

Source: Internet, Company data, Mirae Asset Sekuritas Indonesia Research

Source: Mirae Asset Sekuritas Indonesia Research

Table 1. ACES’ boom sale timetable Timetable Year

1H

2H

2014

26 February 2014- 25 March 2014

24 September 2014- 28 October 2014

2015

4 March 2015 - 7 April 2015


2016

09 March 2016 - 12 April 2016


2017

29 March 2017 - 2 May 2017

TBA

Source: Internet, Company data, Mirae Asset Sekuritas Indonesia Research


3

June 22, 2017


Figure 6. ACES’ monthly SSSG by region Jakarta

Figure 7. ACES’ revenue and number of stores

Java -Ex Jakarta

The rest of revenue projection in 2017 (L) Sales (L) # of store (R)

IDRbn

Ex Java

6,000

10% 9%

8.6%

8%

8.2%

5,000

6.6%

4,000

Unit 160 134

129

140

Number of store (10 year CAGR growth) =18%

7%

120

Revenue (10 year CAGR growth) =20%

6%

100

5% 4%

3,000

80

3%

60

2%

2,000

1%

40

0%

1,000

26 20

-

0 2007

2008

2009

2010

2011

2012

2013

2014

2015



Figure 8. ACES’ monthly YTD SSSG

Figure 9. Stable gross profit margin

2016

5M17

%

9%

SSSG (Cummulative)

7.9%

54

8% 52

7% 50

6%

47.8

48

5%

4%

4%

46

3%

44

2% 42

1.4%

1%

0.7% 40

0% 1/16

3/16

5/16

7/16

9/16

11/16

1/17



3/17

5/17

4Q13

2Q14

4Q14

2Q15

4Q15

2Q16

4Q16


4

June 22, 2017


Table 2. Number of stores closed and opened in 2017F Date

Store count

6-Jan-17 16-Mar-17 20-Apr-17 25-Apr-17 26-May-17 31-May-17 31-May-17 13-Jun-17

Location

130th 131st 132nd -132 132nd -132 133th 134th

SQM

Tangerang Bandung (Java ex Jakarta) Jakarta (Lotte Avenue) Jakarta (Sunter) Jakarta (Marvel City ) Bandung (Java ex Jakarta) Jakarta (Metro Sunter) Jakarta (Kalibata City)

1,000 1,932 2,490 (2,200) 2,563 (1,616) 2,596 1,710


Maintain Trading Buy with higher target price Di antara retail dibawah coverage kami, kami percaya ACES akan diuntungkan dari tingkat USD/IDR yang stabil, S&P upgrade, dan stabilnya inventori. Kami juga berharap penjualan boom sale di 2H yang biasanya terjadi pada bulan September-Oktober akan membantu penjualan ACES secara volume.

Selain itu, kita masih melihat ruang re-rating untuk ACES karena: 1) kemungkinan menguatnya Rupiah terhadap USD, 2) uptrend di SSSG, dan 3) cost of equity yang lebih rendah. Dengan kondisi tersebut, kami melakukan beberapa penyesuaian terhadap model kami: kami meningkatkan estimasi SSSG kami menjadi 4% (dari 2.5%), menurunkan tingkat risk free menjadi 7% (dari 7.5%), dan meningkatkan target multiple kami menjadi 29x (dari 28x). Kami memperoleh target harga baru yaitu IDR1,240, mencerminkan P/E 26.7x 2017F. Kami mempertahankan rating Trading Buy untuk ACES. Table 3. Forecast revisions Old vs New Forecast

Old

New

Change (%p)

2017F

2018F

2017F

2018F

2017F

2018F

SSSG (%)

2.5%

3.0%

4.0%

4.0%

1.5

1.0

Revenue (IDRbn)

5,376

5,975

5,450

6,030

1.4

0.9

Gross profit (IDRbn)

2,563

2,849

2,599

2,875

1.4

0.9

OP (IDRbn)

793

884

804

892

1.4

0.9

Pretax profit (IDRbn)

969

1,082

982

1,092

1.3

0.9

Net income (IDRbn)

786

876

796

884

1.3

0.9

EBITDA (IDRbn)

865

965

877

973

1.3

0.8

New

Old

Change (%)



5

June 22, 2017


Figure 10. ACES’ share price exhibits strong correlation with USD/IDR exchange rate ACES' share price (R)

165

USD/IDR Currency (L)

125

155

120

145 115 135 110

125 115

105

105

Stable USD/IDR

95

100 95

85 90

75 65

85


Figure 11. ACES’ forward P/E Band (x)

32

+2 Std Dev

27 +1 Std Dev

22

Avg PER

-1 Std Dev 17

-2 Std Dev

12 Jan-13

Jan-14

Jan-15

Jan-16

Jan-17



6

June 22, 2017


(ACES/Trading Buy/TP IDR1,240)

Balance Sheet (Summarized)

Income Statement (Summarized) Year end Dec 31 (IDRbn)

Revenue COGS Gross Profit Opex Operating Profit Other income/(expenses) Profit before income tax Income tax expenses Minority interest Net profit EBITDA Growth & margins Growth (%) Revenue EBITDA Net profit Profitability (%) Gross margin Operating margin EBITDA margin

2015

2016

2017E

2018E

4,743 (2,489) 2,254 (1,565) 769 81 737 (152) (3) 588 743

4,936 (2,584) 2,352 (1,622) 881 151 863 (157) (4) 711 800

5,450 (2,852) 2,599 (1,794) 968 164 982 (190) (5) 796 877

6,030 (3,043) 2,875 (1,983) 1,071 179 1,092 (212) (4) 884 973

2015

2016

2017E

2018E

4.4 1.4 4.6

4.1 7.7 20.8

10.4 9.5 12.0

10.6 11.0 11.0

47.5 16.2 1.4

47.6 17.8 7.7

47.7 17.8 9.5

47.7 17.8 11.0

CF from operation Net profit Depreciation/amortization Change in working capitals Others CF from operation CF from Investments Net capex CF from investments

2015

2016

2017E

2018E

622 18 1,522 305 2,467 457 343 800 3,268

704 31 1,590 497 2,822 589 319 909 3,731

907 26 1,563 440 2,936 694 361 1,057 3,993

1,228 29 1,667 478 3,402 753 394 1,148 4,551

23 127 262 412 226 226 639 1 2,629

5 108 276 389 294 294 682 (5) 3,049

11 119 217 347 117 117 464 (3) 3,529

12 127 239 377 117 117 494 (4) 4,057

Year end Dec 31

2015

2016

2017E

2018E

Current ratio Quick ratio Debt to equity Net debt to equity

6.0 1.6 0.0 (0.2)

7.3 1.9 0.0 (0.2)

8.5 2.7 0.0 (0.3)

9.0 3.3 0.0 (0.3)

Assets Cash and equivalents Receivables Inventories Others Total current assets Fixed assets - net Others Total non-current assets Total Asset Liabilities and equity ST bank loans and CM Accounts payables Others current liabilities Total current liabilities Long term debt Others Total non-current liabilities Total liabilities Minority interests Shareholders' equity

Ratio analysis

Cash Flow (Summarized) Year end Dec 31 (IDRbn)

Year end Dec 31 (IDRbn)

2015

2016

2017E

2018E

588 76 (218) 179 626

711 59 (71) (115) 582

796 105 21 (199) 724

884 122 (111) (38) 857

(70) (70)

(190) (190)

(210) (210)

(181) (181)

Increase/(decrease) in debt Increase/(decrease) in equity Dividend payments CF from financing activity

(4) (24) (273) (300)

(18) (6) (263) (286)

6 2 (317) (310)

1 (0) (356) (355)

Increase (Decrease) in Cash Beginning balance Ending balance

256 391 622

106 622 704

203 704 907

321 907 1,228

CF from financing activity

Source: Mirae Asset Sekuritas Research


7

June 22, 2017


APPENDIX 1 Important Disclosures & Disclaimers Disclosures As of the publication date, PT. Mirae Asset Sekuritas Indonesia, and/or its affiliates do not have any special interest with the subject company and do not own 1% or more of the subject company's shares outstanding. Stock Ratings

Industry Ratings

Buy

Relative performance of 20% or greater

Overweight

Fundamentals are favorable or improving

Trading Buy

Relative performance of 10% or greater, but with volatility

Neutral

Fundamentals are steady without any material changes

Hold

Relative performance of -10% and 10%

Underweight

Fundamentals are unfavorable or worsening

Sell

Relative performance of -10%

* Our investment rating is a guide to the relative return of the stock versus the market over the next 12 months. * Although it is not part of the official ratings at Mirae Asset Sekuritas Indonesia, we may call a trading opportunity in case there is a technical or short-term material development. * The target price was determined by the research analyst through valuation methods discussed in this report, in part based on the analyst’s estimate of future earnings. The achievement of the target price may be impeded by risks related to the subject securities and companies, as well as general market and economic conditions. Analyst Certification Opinions expressed in this publication about the subject securities and companies accurately reflect the personal views of the Analysts primarily responsible for this report. PT. Mirae Asset Sekuritas Indonesia (“Mirae Asset Daewoo”) policy prohibits its Analysts and members of their households from owning securities of any company in the Analyst’s area of coverage, and the Analysts do not serve as an officer, director or advisory board member of the subject companies. Except as otherwise specified herein, the Analysts have not received any compensation or any other benefits from the subject companies in the past 12 months and have not been promised the same in connection with this report. No part of the compensation of the Analysts was, is, or will be directly or indirectly related to the specific recommendations or views contained in this report but, like all employees of Mirae Asset Daewoo, the Analysts receive compensation that is determined by overall firm profitability, which includes revenues from, among other business units, the institutional equities, investment banking, proprietary trading and private client division. At the time of publication of this report, the Analysts do not know or have reason to know of any actual, material conflict of interest of the Analyst or Mirae Asset Daewoo except as otherwise stated herein. Disclaimers This report is published by Mirae Asset Daewoo, a broker-dealer registered in the Republic of Indonesia and a member of the Indonesia Stock Exchange. Information and opinions contained herein have been compiled in good faith and from sources believed to be reliable, but such information has not been independently verified and Mirae Asset Daewoo makes no guarantee, representation or warranty, express or implied, as to the fairness, accuracy, completeness or correctness of the information and opinions contained herein or of any translation into English from the Indonesian language. In case of an English translation of a report prepared in the Indonesian language, the original Indonesian language report may have been made available to investors in advance of this report. The intended recipients of this report are sophisticated institutional investors who have substantial knowledge of the local business environment, its common practices, laws and accounting principles and no person whose receipt or use of this report would violate any laws and regulations or subject Mirae Asset Daewoo and its affiliates to registration or licensing requirements in any jurisdiction shall receive or make any use hereof. This report is for general information purposes only and it is not and shall not be construed as an offer or a solicitation of an offer to effect transactions in any securities or other financial instruments. The report does not constitute investment advice to any person and such person shall not be treated as a client of Mirae Asset Daewoo by virtue of receiving this report. This report does not take into account the particular investment objectives, financial situations, or needs of individual clients. The report is not to be relied upon in substitution for the exercise of independent judgment. Information and opinions contained herein are as of the date hereof and are subject to change without notice. The price and value of the investments referred to in this report and the income from them may depreciate or appreciate, and investors may incur losses on investments. Past performance is not a guide to future performance. Future returns are not guaranteed, and a loss of original capital may occur. Mirae Asset Daewoo, its affiliates and their directors, officers, employees and agents do not accept any liability for any loss arising out of the use hereof. Mirae Asset Daewoo may have issued other reports that are inconsistent with, and reach different conclusions from, the opinions presented in this report. The reports may reflect different assumptions, views and analytical methods of the analysts who prepared them. Mirae Asset Daewoo may make investment decisions that are inconsistent with the opinions and views expressed in this research report. Mirae Asset Daewoo, its affiliates and their directors, officers, employees and agents may have long or short positions in any of the subject securities at any time and may make a purchase or sale, or offer to make a purchase or sale, of any such securities or other financial instruments from time to time in the open market or otherwise, in each case either as principals or agents. Mirae Asset Daewoo and its affiliates may have had, or may be expecti ng to enter into, business relationships with the subject companies to provide investment banking, market-making or other financial services as are permitted under applicable laws and regulations. No part of this document may be copied or reproduced in any manner or form or redistributed or published, in whole or in part, without the prior written consent of Mirae Asset Daewoo.


8

June 22, 2017


Distribution United Kingdom: This report is being distributed by Mirae Asset Securities (UK) Ltd. in the United Kingdom only to (i) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”), and (ii) high net worth companies and other persons to whom it may lawfully be communicated, falling within Article 49(2)(A) to (E) of the Order (all such persons together being referred to as “Relevant Persons”). This report is directed only at Relevant Persons. Any person who is not a Relevant Person should not act or rely on this report or any of its contents. United States: This report is distributed in the U.S. by Mirae Asset Securities (USA) Inc., a member of FINRA/SIPC, and is only intended for major institutional investors as defined in Rule 15a-6(b)(4) under the U.S. Securities Exchange Act of 1934. All U.S. persons that receive this document by their acceptance thereof represent and warrant that they are a major institutional investor and have not received this report under any express or implied understanding that they will direct commission income to Mirae Asset Daewoo or its affiliates. Any U.S. recipient of this document wishing to effect a transaction in any securities discussed herein should contact and place orders with Mirae Asset Securities (USA) Inc., which accepts responsibility for the contents of this report in the U.S. The securities described in this report may not have been registered under the U.S. Securities Act of 1933, as amended, and, in such case, may not be offered or sold in the U.S. or to U.S. persons absent registration or an applicable exemption from the registration requirements. Hong Kong: This document has been approved for distribution in Hong Kong by Mirae Asset Securities (HK) Ltd., which is regulated by the Hong Kong Securities and Futures Commission. The contents of this report have not been reviewed by any regulatory authority in Hong Kong. This report is for distribution only to professional investors within the meaning of Part I of Schedule 1 to the Securities and Futures Ordinance of Hong Kong (Cap. 571, Laws of Hong Kong) and any rules made thereunder and may not be redistributed in whole or in part in Hong Kong to any person. All Other Jurisdictions: Customers in all other countries who wish to effect a transaction in any securities referenced in this report should contact Mirae Asset Daewoo or its affiliates only if distribution to or use by such customer of this report would not violate applicable laws and regulations and not subject Mirae Asset Daewoo and its affiliates to any registration or licensing requirement within such jurisdiction.

Mirae Asset Daewoo International Network Mirae Asset Daewoo Co., Ltd. (Seoul) Global Equity Sales Team Mirae Asset Center 1 Building 26 Eulji-ro 5-gil, Jung-gu, Seoul 04539 Korea

Mirae Asset Securities (UK) Ltd. 41st Floor, Tower 42 25 Old Broad Street, London EC2N 1HQ United Kingdom

Tel: 82-2-3774-2124

Mirae Asset Securities (HK) Ltd. Suites 1109-1114, 11th Floor Two International Finance Centre 8 Finance Street, Central Hong Kong China Tel: 852-2845-6332

Mirae Asset Securities (USA) Inc. 810 Seventh Avenue, 37th Floor New York, NY 10019 USA

Mirae Asset Wealth Management (USA) Inc. 555 S. Flower Street, Suite 4410, Los Angeles, California 90071 USA

Tel: 1-212-407-1000

Tel: 1-213-262-3807

Mirae Asset Wealth Management (Brazil) CCTVM Rua Funchal, 418, 18th Floor, E-Tower Building Vila Olimpia Sao Paulo - SP 04551-060 Brasil Tel: 55-11-2789-2100

PT. Mirae Asset Sekuritas Indonesia Equity Tower Building Lt. 50 Sudirman Central Business District Jl. Jend. Sudirman, Kav. 52-53 Jakarta Selatan 12190 Indonesia Tel: 62-21-515-3281

Mirae Asset Securities (Singapore) Pte. Ltd. 6 Battery Road, #11-01 Singapore 049909 Republic of Singapore

Mirae Asset Securities (Vietnam) LLC 7F, Saigon Royal Building 91 Pasteur St. District 1, Ben Nghe Ward, Ho Chi Minh City Vietnam

Tel: 65-6671-9845

Tel: 84-8-3911-0633 (ext.110)

Mirae Asset Securities Mongolia UTsK LLC

Mirae Asset Investment Advisory (Beijing) Co., Ltd

Beijing Representative Office

#406, Blue Sky Tower, Peace Avenue 17 1 Khoroo, Sukhbaatar District Ulaanbaatar 14240 Mongolia

2401B, 24th Floor, East Tower, Twin Towers B12 Jianguomenwai Avenue, Chaoyang District Beijing 100022 China

2401A, 24th Floor, East Tower, Twin Towers B12 Jianguomenwai Avenue, Chaoyang District Beijing 100022 China

Tel: 976-7011-0806

Tel: 86-10-6567-9699

Tel: 86-10-6567-9699 (ext. 3300)

Shanghai Representative Office

Ho Chi Minh Representative Office

38T31, 38F, Shanghai World Financial Center 100 Century Avenue, Pudong New Area Shanghai 200120 China

7F, Saigon Royal Building 91 Pasteur St. District 1, Ben Nghe Ward, Ho Chi Minh City Vietnam

Tel: 86-21-5013-6392

Tel: 84-8-3910-7715


Tel: 44-20-7982-8000

9

ACE Hardware Indonesia

Recommend Documents