02 July 2018

Ramayana Lestari (RALS IJ)

Re-initiate coverage
Sentosa
HOLD
Stock Data Stronger Lebaran 2018 sales
Target price (Rp) Rp1,400
Strong May18 performance on the back of stronger Lebaran.
Prior TP (Rp) n.a
Shareprice (Rp) Rp1,490 Growth is supported by higher THR and subsidy disbursement.
Upside/downside (%) (6.0) Significant growth can be seen in the retail industry as a whole.
Sharesoutstanding (m) 7,096 Re-initiate at HOLD with a TP of Rp 1,400 (based on target P/E of
Marketcap. (US$ m) 738 22.4x).
Free float (%) 34.9
Equity | Indonesia | Retail

Avg. 6m dailyT/O (US$ m) 0.1 Solid May18 performance. RALS has managed to book sales of Rp1.04tn
(+41.9% yoy) in May, mainly on the back of a stronger Lebaran season compared
Price Performance
to 2017. This brings their cumulative 5M18 sales to Rp3.1tn (+12.6% yoy) or
3M 6M 12M achieving 38% of the company’s target and 39% of ours. In addition, the
Absolute (%) 14.6 36.1 38.0 company also managed to achieve 5M18 SSSG of 9.3% (vs 5M17: 4.8%; 4M18: -
Relative to JCI (%) 20.8 44.8 38.2 0.8%), mainly supported by Java ex Jakarta with SSSG of 14%. Overall the
52w high/low (Rp) 1,490 - 860 company 5M18 performance is still in line with ours and the consensus’ FY18F
estimate.
130

120
Growth mainly driven by higher THR. This year the government has decided
110
to raise the THR given to civil servants in addition to the 13th take home pay.
100
According to the government, THR this year will equal to one month of take home
pay instead of equaling to one month of the core salary like in previous years. On
90
top of this increase in THR, civil servants will also receive the 13th take home
80
salary as well as government subsidies disbursements for the low-income families,
70
all of which are in Ramayana’s target market. Unlike last year, the government
Oct-17
Jul-17
Jul-17

Jan-18
Jan-18

Mar-18

Jun-18
Jun-18
Aug-17
Sep-17
Sep-17

Nov-17
Nov-17
Dec-17

Apr-18
Apr-18
May-18
Feb-18

has also assured the public that the THR will be distributed on-time this year. This
RALS-Rebase JCI Index-Rebase substantial increase in disposable income helped drove the sales for the company.
Major Shareholders
Significant growth in the retail industry. According to the Indonesian Retail
Ramayana Makmursentosa PT 55.9%
Association (Aprindo), overall retail sales this Lebaran season has spiked by
HSBC Holdings PLC 5.6%
+20% yoy. This growth was contributed largely by the tremendous growth in the
Paulus Tumewu 3.7% fashion segment growing at +60% yoy and was then followed by the cosmetic
Estimate Change; Vs. Consensus segment. In addition, they are also seeing a considerable increase in sales volume
2018F 2019F
in the industry as a whole, as many retailers are experiencing faster depletion in
their stock inventories compared to Lebaran in 2017 and 2016. This means that
Latest EPS (Rp) 63 72
consumer appetite and spending are starting to improve this year, hence we
Vs. Prior EPS (%) n.a n.a should also expect this positive performance to continue through June.
Vs. Consensus (%) (7.1) (2.7)
Valuation. We re-initiate coverage on RALS with a HOLD rating and TP of Rp
Source: Bloomberg
1,400, which is based on our target P/E of 22.4x. Currently the company is
trading at FY18F P/E of 22.2x and EV/EBITDA of 14.8x. We are still optimistic on
the company’s performance and initiatives going forward. However considering
the recent share price rally, we believe that at their current valuation the
company’s growth stories for this year have all been priced in, given near +40%
YTD growth.

Year To 31 Dec 2016A 2017A 2018F 2019F 2020F

Revenue (RpBn) 5,857 5,623 6,156 6,746 7,354
EBITDA (RpBn) 506 516 562 626 702
EBITDA Growth (%) 4.3 2.1 8.7 11.5 12.0
Net Profit (RpBn) 408 407 444 510 585
EPS (Rp) 57 57 63 72 82
EPS Growth (%) 21.4 (0.3) 9.1 15.1 14.5
Net Gearing (%) (18.1) (21.5) (24.9) (28.6) (32.4)
PER (x) 24.2 24.3 22.2 19.3 16.9
Elbert Setiadharma PBV (x) 3.0 2.8 2.7 2.5 2.3
PT Indo Premier Sekuritas Dividend Yield (%) 2.1 2.5 2.2 2.4 2.8
elbert.setiadharma@ipc.co.id EV/EBITDA (x) 17.4 16.5 14.8 12.9 11.1
+62 21 5793 1169 Source : RALS, IndoPremier Share Price Closing as of : 29-June-2018

Refer to Important disclosures in the last page of this report

RALS Re-initiate coverage

Fig. 1: RALS revenue and net margin forecast Fig. 2: Ramayana sales mix

Revenue (LHS) Net margin (RHS) Department store Supermarket

Rp Bn
8,000 8.0% 100%
7,000 7.0% 90%
31% 33% 33% 34%
80% 42%
6,000 6.0%
70%
5,000 5.0% 60%
4,000 4.0% 50%
5,857 6,746
3,000 5,533 6,156 3.0% 40%
5,623 69% 67% 67%
30% 66%
58%
2,000 2.0%
20%
1,000 1.0% 10%
- 0.0% 0%
2015 2016 2017 2018F 2019F 3M17 6M17 9M17 12M17 3M18

Source: IndoPremier Source: IndoPremier

Fig. 3: 2017 and YTD SSSG Fig. 4: Lebaran season sales trend

2017 2018 Sales

Rp Bn
15.0% 3,200 3,140
3,100
10.0% 3,000
2,893 2,911
2,900
2,800 2,764
5.0%
2,700 2,628
0.0% 2,600
Dec
Sep
Apr
Feb

Aug

Oct

2,500
Jan

Nov
Jun

Jul
Mar

May

-5.0% 2,400
2,300
2014 2015 2016 2017 2018F
-10.0%

Source: IndoPremier Source: IndoPremier

Fig. 5: 4Q rolling revenue and operating profit Fig. 6: RALS trailing P/E band

Revenue (LHS; rolling 4q) Oper. Profit (RHS; rolling 4q) PER Mean +1SD +2SD -1SD -2SD
30 100
80 28.00
20
60
10
40 23.00
0 20
0 18.00
-10
-20
-20 13.00
-40
-30 -60
8.00
2Q18F
2Q08

2Q09

2Q10

2Q11

2Q12

2Q13

2Q14

2Q15

2Q16

2Q17

Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18

Source: IndoPremier Source: IndoPremier

Refer to Important disclosures in the last page of this report 2

RALS Re-initiate coverage

Year To 31 Dec (RpBn) 2016A 2017A 2018F 2019F 2020F

Income Statement

Net Revenue 5,857 5,623 6,156 6,746 7,354

Cost of Sales (3,655) (3,410) (3,913) (4,289) (4,676)
Gross Profit 2,202 2,212 2,243 2,457 2,677
SG&A Expenses (1,844) (1,856) (1,847) (1,990) (2,133)
Operating Profit 358 356 396 467 545
Net Interest 97 90 93 95 98
Forex Gain (Loss) 0 0 0 0 0
Others-Net 10 20 20 20 20
Pre-Tax Income 465 467 509 582 663
Income Tax (57) (60) (66) (72) (78)
Minorities 0 0 0 0 0
Net Income 408 407 444 510 585

Balance Sheet

Cash & Equivalent 1,761 2,031 2,248 2,496 2,783

Receivable 51 57 59 65 71

Inventory 834 741 870 953 1,039

Other Current Assets 185 264 262 264 267

Total Current Assets 2,831 3,093 3,439 3,779 4,160

Fixed Assets - Net 1,279 1,235 1,200 1,185 1,181

Goodwill 0 0 0 0 0

Non Current Assets 537 563 591 649 695

Total Assets 4,647 4,892 5,229 5,612 6,037

ST Loans 0 0 0 0 0

Payable 966 1,005 0 1,239 1,351

Other Payables 43 44 32 35 38

Current Portion of LT Loans 0 0 0 0 0

Total Current Liab. 1,009 1,049 1,163 1,275 1,390

Long Term Loans 0 0 0 0 0

Other LT Liab. 301 349 349 349 349

Total Liabilities 1,310 1,398 1,512 1,624 1,739

Equity 90 83 83 83 83

Retained Earnings 3,247 3,412 3,635 3,906 4,215

Minority Interest 0 0 0 0 0

Total SHE + Minority Int. 3,337 3,494 3,718 3,989 4,298

Total Liabilities & Equity 4,647 4,892 5,229 5,612 6,037

Source : RALS,IndoPremier

Refer to Important disclosures in the last page of this report 3

RALS Re-initiate coverage

Year to 31 Dec 2016A 2017A 2018F 2019F 2020F

Cash Flow

Net Income (Excl.Extraordinary&Min.Int) 408 407 444 510 585

Depr. & Amortization 0 0 0 0 0
Changes in Working Capital 60 113 (14) 20 21

Others (33) (169) (159) (95) (98)

Cash Flow From Operating 435 351 271 435 507
Capital Expenditure (72) 18 8 (43) (43)
Others (76) (32) 48 62 64
Cash Flow From Investing (148) (15) 56 19 21
Loans 0 0 0 0 0
Equity 0 0 0 0 0
Dividends (207) (242) (219) (239) (275)
Others (178) 41 0 0 0
Cash Flow From Financing (385) (201) (219) (239) (275)
Changes in Cash (98) 135 108 215 253

Financial Ratios

Gross Margin (%) 37.6 39.3 36.4 36.4 36.4

Operating Margin (%) 6.1 6.3 6.4 6.9 7.4
Pre-Tax Margin (%) 7.9 8.3 8.3 8.6 9.0
Net Margin (%) 7.0 7.2 7.2 7.6 7.9
ROA (%) 8.8 8.5 8.8 9.4 10.0
ROE (%) 12.2 11.9 12.3 13.2 14.1
ROIC (%) 15.1 14.5 14.9 15.7 16.5

Acct. Receivables TO (days) 2.6 3.5 3.4 3.4 3.4

Acct. Receivables - Other TO (days) 0.0 0.0 0.0 0.0 0.0
Inventory TO (days) 4.4 4.3 4.9 4.7 4.7
Payable TO (days) 93.2 105.5 99.6 100.9 101.1
Acct. Payables - Other TO (days) 0.0 0.0 0.0 0.0 0.0

Debt to Equity (%) 0.0 0.0 0.0 0.0 0.0

Interest Coverage Ratio (x) 0.0 0.0 0.0 0.0 0.0
Net Gearing (%) (18.1) (21.5) (24.9) (28.6) (32.4)

Source : RALS,IndoPremier

Refer to Important disclosures in the last page of this report 4

 Head Office
PT INDO PREMIER SEKURITAS
Wisma GKBI 7/F Suite 718
Jl. Jend. Sudirman No.28
Jakarta 10210 - Indonesia
p +62.21.5793.1168
f +62.21.5793.1167

INVESTMENT RATINGS
BUY : Expected total return of 10% or more within a 12-month period
HOLD : Expected total return between -10% and 10% within a 12-month period
SELL : Expected total return of -10% or worse within a 12-month period

ANALYSTS CERTIFICATION.
The views expressed in this research report accurately reflect the analysts personal views about any and all of the subject securities or issuers; and no part of the
research analyst's compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed in the report.

DISCLAIMERS
This research is based on information obtained from sources believed to be reliable, but we do not make any representation or warranty nor accept any
responsibility or liability as to its accuracy, completeness or correctness. Opinions expressed are subject to change without notice. This document is prepared for
general circulation. Any recommendations contained in this document does not have regard to the specific investment objectives, financial situation and the
particular needs of any specific addressee. This document is not and should not be construed as an offer or a solicitation of an offer to purchase or subscribe or
sell any securities. PT. Indo Premier Sekuritas or its affiliates may seek or will seek investment banking or other business relationships with the companies in this
report.