Matahari Putra Prima (MPPA IJ)

Transcription

1 Equity Research Results Note Wednesday, 21 February 2018 SELL Maintain Last price (IDR) 476 Target Price (IDR) 350 Upside/Downside -36.1% Previous Target Price (IDR) 350 Stock Statistics Sector Bloomberg Ticker Retail MPPA IJ No of Shrs (mn) 5,378 Mkt. Cap (IDR bn/usdmn) 2,291/169 Avg. daily T/O (IDR bn/usdmn) 4.9/0.4 Major shareholders PT Multipolar Tbk 50.2% Prime Star Investment Pte. Ltd. 26.1% Estimated free float 23.7% EPS Consensus(IDR) 2017F 2018F 2019F Danareksa (7.6) Consensus (23.0) Danareksa/Cons (66.8) (16.2) MPPA relative to JCI Index Matahari Putra Prima (MPPA IJ) Under pressure from stiff competition 3Q17 was another challenging quarter for MPPA. The poor performance during the quarter translated into significant net losses of IDR386bn in 9M17 - worse than our forecast. At the top line, the 3Q17 revenues were very sluggish (-14.2% yoy), below our estimate, owing mostly to tighter competition in the hypermarket business, we believe, in addition to the impact of last year s weak purchasing power. The recent reduction in the prices of around 5,000 of its SKU, especially of FMCG items, put pressure on the 3Q17 gross and operating margins. Maintain SELL. Significant net losses in 3Q17. MPPA posted significant net losses of IDR216bn in 3Q17 (vs. a net profit of IDR8bn in 3Q16). This poor performance translated into a large net loss of IDR386bn in 9M17 (vs. a net profit of IDR33bn in 9M16), below our estimate and the consensus. The losses were reflected in negative net margins: -7.5% in 3Q17 and -4.0% in 9M17 much worse than expected. Disappointing 3Q17 revenues due to stiff competition and weak purchasing power. The 3Q17 revenues were sluggish at IDR2.9tn, -14.2% yoy and -19.9% qoq. This poor performance translated into 9M17 revenues of IDR13.5tn, -6.7% yoy, reaching 70.9% of our full year estimate i.e. below our expectation. For the most part we attribute the poor performance to: 1) weak purchasing power during the period and 2) tighter competition in the hypermarket business. This prompted the company to lower the prices of around 5,000 of its SKU - especially of FMCG items to have more competitive pricing in relation to the prices offered at minimarkets like Alfamart and Indomart. This, however, squeezed the margins. In 3Q17, the gross margin only reached 12.3% (3Q16: 14.6%), lower than our estimate. Large 3Q17 operating losses and higher net gearing. The sluggish sales coupled with the poor gross margins led to large operating losses in 3Q17 of IDR259bn (3Q16: operating profits of IDR45bn), marked by high salary and rental expenses. In turn, this translated into large operating losses in 9M17 (the operating margin was -4.6%). Meanwhile, net gearing increased to 0.6x in 9M17 from 0.2x in 9M16 depicting weaker financial liquidity. On a positive note, however, inventory days dropped to 86 days in 9M17 from 93 days in 9M16. Source : Bloomberg SELL with a TP of IDR350. We maintain our SELL call on MPPA with a TP of IDR350 based on DCF valuation (WACC: 12.8%; terminal growth: 3%) implying 45x P/E 2018F. The risks to our call include easing competition from minimarkets, higher-than-expected GDP growth and stronger purchasing power. x x Adeline Solaiman (62-21) ext.3503 adeline.solaiman@danareksa.com Natalia Sutanto (62-21) ext.3508 natalia.sutanto@danareksa.com Key Financials Year to 31 Dec 2015A 2016A 2017F 2018F 2019F Revenue, (IDRbn) 13,802 13,527 13,552 13,989 14,535 EBITDA, (IDRbn) EBITDA Growth, (%) (30.9) (17.9) (55.2) Net profit (IDRbn) (41) EPS (IDR) (7.6) EPS growth (%) (59.8) (82.7) (206.4) (202.3) 34.8 BVPS, (IDR) DPS, (IDR) (43.9) (22.8) (3.6) 0.0 (3.9) PER (x) n/m PBV (x) Dividend yield (%) (10.3) (5.4) (0.8) 0.0 (0.9) EV/EBITDA (x) Source : MPPA, Danareksa Estimates See important disclosure at the back of this report 1

2 Exhibit 1. REVENUE AND GROWTH Exhibit 2. NET PROFIT AND GROWTH Exhibit 3. MARGINS Exhibit 4. GEARING LEVEL Exhibit 5. DCF Net present value (IDRbn) 2018F 2019F 2020F 2021F 2022F 2023F 2024F 2025F 2026F 2027F 2028F Net present value estimate Cash flow multiple Discount 12.8% Free cash flow Operating profit (-) Tax (14) (19) (45) (68) (91) (114) (138) (161) (184) (207) (225) Operating profit after tax (+) Amortization and depreciation Gross cash flow ,010 1,071 (-) Capital expenditures (420) (436) (460) (487) (514) (541) (569) (597) (625) (654) (682) (+) Incremental working capital Free cash flow PV of free cash WACC 12.8% Total PV of free cash WACC 12.8% 1,159 PV residual WACC 12.8% 1,666 Corporate WACC 12.8% (IDRbn) 2,825 Shareholder value WACC 12.8% 1,955 Net debt, 2017F 540 Non controlling interest - Equity value 1,415 Net equity value per share 263 Cash & cash equivalents 330 Equity value Shareholder WACC 12.8% 1,955 TP 350 Source: Company, Danareksa Sekuritas Estimates See important disclosure at the back of this report 2

3 Exhibit 6. 3Q17 results 3Q16 2Q17 3Q17 qoq yoy 9M16 9M17 yoy 2017F A/F Revenues, IDRbn 3,373 3,616 2, % -14.2% 10,296 9, % 13, % Gross profits, IDRbn % -28.0% 1,592 1, % 2, % Operating profits, IDRbn (259) n/a n/a 98 (440) n/a 28 n/a Pretax profits, IDRbn 22 6 (291) n/a n/a 36 (523) n/a (55) n/a Net profits, IDRbn 8 7 (216) n/a n/a 33 (386) n/a (41) n/a Gross margins 14.6% 15.7% 12.3% 15.5% 14.1% 16.2% Operating margins 1.3% 0.9% -8.9% 1.0% -4.6% 0.2% Pretax margins 0.7% 0.2% -10.1% 0.3% -5.4% -0.4% Net margins 0.2% 0.2% -7.5% 0.3% -4.0% -0.3% Inventory days Source: Company, Danareksa Sekuritas Estimates See important disclosure at the back of this report 3

4 Exhibit 7. Income Statement Revenue 13,802 13,527 13,552 13,989 14,535 COGS (11,534) (11,233) (11,357) (11,625) (12,078) Gross profit 2,269 2,294 2,196 2,364 2,456 EBITDA Oper. profit Interest income Interest expense (46) (83) (96) (99) (100) Forex Gain/(Loss) Income From Assoc. Co s Other Income (Expenses) (14) Pre-tax profit (55) Income tax (50) (63) 14 (14) (19) Minority interest Net profit (41) Core Net Profit (41) Exhibit 8. Balance Sheet Cash & cash equivalent Receivables Inventory 2,498 2,747 2,542 2,554 2,675 Other Curr. Asset Fixed assets - Net 1,462 1,576 1,779 1,989 2,207 Other non-curr.asset 861 1,024 1,153 1,162 1,170 Total asset 6,033 6,702 6,928 7,252 7,504 ST Debt Payables 1,763 2,318 2,349 2,555 2,673 Other Curr. Liabilities Long Term Debt Other LT. Liabilities Total Liabilities 3,519 4,272 4,559 4,840 5,058 Shareholder'sFunds 2,514 2,430 2,370 2,411 2,447 Minority interests Total Equity & Liabilities 6,033 6,702 6,928 7,252 7,504 See important disclosure at the back of this report 4

5 Exhibit 9. Cash Flow Net income (41) Depreciation and Amort Change in Working Capital (563) OtherOper. Cash Flow (147) Operating Cash Flow (180) Capex (422) (399) (407) (420) (436) Others Inv. Cash Flow (23) (152) (114) 9 10 Investing Cash Flow (445) (551) (521) (411) (426) Net change in debt New Capital Dividend payment (236) (123) (19) 0 (21) Other Fin. Cash Flow (52) (53) (50) Financing Cash Flow 362 (7) 140 (23) (21) Net Change in Cash (264) (100) Cash - begin of the year Cash - end of the year Exhibit 10. Key Ratios Year to 31 Dec 2015A 2016A 2017F 2018F 2019F Growth (%) Sales 1.6 (2.0) EBITDA (30.9) (17.9) (55.2) Operating profit (50.4) (46.9) (83.8) Net profit (59.8) (82.7) (206.4) (202.3) 34.8 Profitability (%) Gross margin EBITDA margin Operating margin Net margin (0.3) ROAA (0.6) ROAE (1.7) Leverage Net Gearing (x) Interest Coverage (x) Source : MPPA, Danareksa Estimates See important disclosure at the back of this report 5