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Map Aktif Adiperkasa (MAPA IJ) (Buy) - Emerging stronger

Map Aktif Adiperkasa (MAPA IJ) (Buy) - Emerging stronger

Retail JW SH SC 509 4th Nov, 2024

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Emerging stronger

Maintain Buy with higher TP of IDR1,430; roll forward base year to 2025F

3Q24 review: Within expectations

Overall, the results were in line with our expectations, as we believe that 2Q24 marked the lowest margin point for the year (read Lowest margin for the year). GPM improved q-q by +150bp, as the company completed its overseas inventory clearance in July while opex as a percentage of sales continued their quarterly recovery trend due to cost-cutting initiatives.

Further upside likely from potential SSSG resurgence

We anticipate continued improvement in GPM in 4Q24F, as we do not expect significant clearance activities and project 4Q to be MAPA's strongest quarter for the year. Although 3Q24 same-store sales growth (SSSG) remained at +4.5% y-y (+3.6% y-y for 9M24), we believe there's potential for SSSG to recover to management’s previous target of mid-to-high single-digit range for 2025F, driven by a lower base performance in 2024F and potentially better consumer buying power. This implies potential upside for the share price as we currently still forecast mid-single-digit SSSG for 2025-2026F, lower than the company’s medium-to-longer-term target of mid-to-high single-digit growth.

Maintain Buy with higher TP of IDR1,430 (+32% upside)

We raise our FY24F/25F/26F EPS estimates by +8%/+3%/+4%, following the stronger earnings recovery in 3Q24, which we believe marked the bottom of the margin cycle for the year in the second quarter. Consequently, we raise our target price to IDR1,430 (from IDR1,000), rolling forward our valuation base to 2025F with an unchanged target multiple of 20.6x 2025F P/E.

We believe that overall margins should continue to recover in 4Q24F as we expect more full-price sales after the inventory clearance ended in July 2024 and higher traffic towards the year-end holiday season. In the medium to longer term, the story of increasing adoption of sports and activewear, expansion into overseas markets, and potentially better consumer buying power next year should continue to position MAPA as the fastest-growing retailer in terms of revenue, with a 23% CAGR over 2023-2026F (compared to the retailers’ average of 14%). Currently, the stock is trading at 15.6x 2025F P/E.

Year-end 31 DecFY23FY24FFY25FFY26F
Currency (IDR)ActualOldNewOldNewOldNew
Revenue (bn)13,55916,94516,94520,84620,84625,29825,298
Reported net profit (bn)1,3881,3701,4801,9141,9782,4422,527
Normalised net profit (bn)1,3881,3701,4801,9141,9782,4422,527
FD normalised EPS48.7148.0551.9167.1469.3985.6688.65
FD norm. EPS growth (%)18.1-1.46.639.733.727.627.7
FD normalised P/E (x)22.3–20.9–15.6–12.2
EV/EBITDA (x)13.4–11.0–8.4–6.4
Price/book (x)5.4–4.3–3.4–2.6
Dividend yield (%)0.4––––––
ROE (%)27.321.523.023.824.223.924.3
Net debt/equity (%)net cashnet cashnet cashnet cashnet cashnet cashnet cash
Source: Company data, Verdhana estimates

Key data on Map Aktif Adiperkasa

Income statement (IDRbn)
Year-end 31 Dec
FY22
FY23
FY24F
FY25F
FY26F
Revenue
9,801
13,559
16,945
20,846
25,298
Cost of goods sold
-5,111
-6,961
-8,981
-11,048
-13,408
Gross profit
4,690
6,597
7,964
9,798
11,890
SG&A
-3,116
-4,564
-5,777
-6,991
-8,335
Employee share expense
0
0
0
0
0
Operating profit
1,574
2,033
2,187
2,806
3,555
EBITDA
1,778
2,293
2,723
3,467
4,369
Depreciation
-204
-260
-537
-661
-814
Amortisation
0
0
0
0
0
EBIT
1,574
2,033
2,187
2,806
3,555
Net interest expense
-55
-114
-162
-111
-122
Associates & JCEs
0
0
0
0
0
Other income
18
-52
-34
-34
-34
Earnings before tax
1,537
1,868
1,991
2,661
3,399
Income tax
-363
-484
-516
-690
-881
Net profit after tax
1,174
1,384
1,475
1,971
2,518
Minority interests
1
5
5
7
9
Other items
0
0
0
0
0
Preferred dividends
0
0
0
0
0
Normalised NPAT
1,175
1,388
1,480
1,978
2,527
Extraordinary items
0
0
0
0
0
Reported NPAT
1,175
1,388
1,480
1,978
2,527
Dividends
0
-114
0
0
0
Transfer to reserves
1,175
1,274
1,480
1,978
2,527
Valuations and ratios
Reported P/E (x)
26.3
22.3
20.9
15.6
12.2
Normalised P/E (x)
26.3
22.3
20.9
15.6
12.2
FD normalised P/E (x)
26.3
22.3
20.9
15.6
12.2
Dividend yield (%)
–
0.4
–
–
–
Price/cashflow (x)
18.8
24.1
15.8
16.3
12.4
Price/book (x)
6.9
5.4
4.3
3.4
2.6
EV/EBITDA (x)
16.7
13.4
11.0
8.4
6.4
EV/EBIT (x)
18.9
15.1
13.6
10.4
7.9
Gross margin (%)
47.9
48.7
47.0
47.0
47.0
EBITDA margin (%)
18.1
16.9
16.1
16.6
17.3
EBIT margin (%)
16.1
15.0
12.9
13.5
14.1
Net margin (%)
12.0
10.2
8.7
9.5
10.0
Effective tax rate (%)
23.6
25.9
25.9
25.9
25.9
Dividend payout (%)
0.0
8.2
0.0
0.0
0.0
ROE (%)
30.6
27.3
23.0
24.2
24.3
ROA (pretax %)
29.3
25.8
21.5
24.2
26.2
Growth (%)
Revenue
62.2
38.3
25.0
23.0
21.4
EBITDA
251.1
29.0
18.8
27.3
26.0
Normalised EPS
368.8
18.1
6.6
33.7
27.7
Normalised FDEPS
368.8
18.1
6.6
33.7
27.7
Source: Company data, Verdhana estimates
Cashflow statement (IDRbn)
Year-end 31 Dec
FY22
FY23
FY24F
FY25F
FY26F
EBITDA
1,778
2,293
2,723
3,467
4,369
Change in working capital
-127
-964
-62
-744
-850
Other operating cashflow
-6
-47
-707
-828
-1,028
Cashflow from operations
1,646
1,282
1,954
1,894
2,491
Capital expenditure
-341
-816
-956
-1,178
-1,246
Free cashflow
1,305
465
998
716
1,245
Reduction in investments
Net acquisitions
0
0
0
0
0
Dec in other LT assets
Inc in other LT liabilities
Adjustments
-89
-362
-101
-117
-133
CF after investing acts
1,216
103
897
600
1,112
Cash dividends
0
-114
0
0
0
Equity issue
0
0
0
0
0
Debt issue
0
0
0
0
0
Convertible debt issue
0
0
0
0
0
Others
-537
-232
12
12
12
CF from financial acts
-537
-346
12
12
12
Net cashflow
679
-242
909
612
1,124
Beginning cash
662
1,342
1,099
2,008
2,620
Ending cash
1,342
1,099
2,008
2,620
3,744
Ending net debt
-1,243
-368
-1,277
-1,889
-3,013
Balance sheet (IDRbn)
As at 31 Dec
FY22
FY23
FY24F
FY25F
FY26F
Cash & equivalents
1,342
1,099
2,008
2,620
3,744
Marketable securities
0
0
0
0
0
Accounts receivable
447
609
653
791
948
Inventories
2,733
4,315
4,546
5,593
6,787
Other current assets
313
419
523
644
781
Total current assets
4,834
6,442
7,731
9,647
12,260
LT investments
0
0
0
0
0
Fixed assets
880
1,814
2,234
2,751
3,183
Goodwill
0
0
0
0
0
Other intangible assets
0
0
0
0
0
Other LT assets
1,712
2,548
2,649
2,766
2,899
Total assets
7,426
10,804
12,613
15,164
18,342
Short-term debt
99
731
731
731
731
Accounts payable
994
1,498
1,653
2,023
2,446
Other current liabilities
1,053
1,435
1,597
1,788
2,005
Total current liabilities
2,146
3,664
3,981
4,542
5,181
Long-term debt
0
0
0
0
0
Convertible debt
0
0
0
0
0
Other LT liabilities
807
1,263
1,280
1,299
1,320
Total liabilities
2,953
4,926
5,261
5,841
6,501
Minority interest
15
179
174
167
158
Preferred stock
0
0
0
0
0
Common stock
1,111
1,111
1,111
1,111
1,111
Retained earnings
3,289
4,563
6,043
8,021
10,548
Proposed dividends
0
0
0
0
0
Other equity and reserves
58
24
24
24
24
Total shareholders' equity
4,458
5,699
7,178
9,156
11,683
Total equity & liabilities
7,426
10,804
12,613
15,164
18,342
Liquidity (x)
Current ratio
2.25
1.76
1.94
2.12
2.37
Interest cover
28.7
17.9
13.5
25.2
29.2
Leverage
Net debt/EBITDA (x)
net cash
net cash
net cash
net cash
net cash
Net debt/equity (%)
net cash
net cash
net cash
net cash
net cash
Per share
Reported EPS (IDR)
41.24
48.71
51.91
69.39
88.65
Norm EPS (IDR)
41.24
48.71
51.91
69.39
88.65
FD norm EPS (IDR)
41.24
48.71
51.91
69.39
88.65
BVPS (IDR)
156.41
199.92
251.84
321.23
409.88
DPS (IDR)
0.00
4.00
0.00
0.00
0.00
Activity (days)
Days receivable
14.2
14.2
13.6
12.6
12.5
Days inventory
179.0
184.8
180.6
167.5
168.5
Days payable
62.7
65.3
64.2
60.7
60.8
Cash cycle
130.4
133.7
130.0
119.4
120.2
Source: Company data, Verdhana estimates
Company profileMAPA is the biggest activewear retailer in Indonesia. The company currently serves customers in Indonesia and several other countries in ASEAN region (the Philippines, Vietnam, Thailand, and Singapore)
Valuation MethodologyOur target price of IDR1,430 is based on 2025F target P/E of 20.6x. The benchmark index of the stock is JCI
Risks that may impede the achievement of the target priceDownside risks are elevated inventory days due to product trend fluctuations and a slower opex recovery in the overseas market.
ESGMAPA is the biggest activewear retailer in Indonesia. The company is known for its good corporate governance as it has never done any related-party transaction. MAPA also has a relatively strong labor management initiative. Several things that MAPA can improve is more data and transparency regarding in their annual report on sustainable sourcing initiatives, efforts to minimize potential harm from chemical substances of concern, and carbon footprint.
Fig. 1: Results recap table

MAPA IJ       QoQ YoY     YoY 9M24/ 9M24/
Profit and loss statement (IDRbn) 3Q23 2Q24 3Q24 (%) (%) 9M23 9M24 (%) Verdhana Consensus
Revenue 3,614 4,194 4,533 8.1 25.4 9,584 12,420 29.6           73.3           73.1
COGS (1,867) (2,303) (2,420) 5.1 29.6 (4,901) (6,648) 35.6    
Gross profit 1,746 1,891 2,113 11.7 21.0 4,684 5,772 23.2    
EBIT 557 509 655 28.6 17.6 1,451 1,569 8.1           74.7           75.4
Other income/(expenses)                    
Net financing income/(expense) (27) (43) (44) 1.3 62.1 (67) (131) 94.5    
Net forex gain/(losses) (5) (30) 59 n.a. n.a. (3) 18 n.a.    
Others (22) (1) (4) 255.3 (82.9) (28) (0) (99.3)    
Pre-tax profit 503 435 667 53.3 32.6 1,353 1,456 7.6    
Net profit 391 305 515 68.5 31.8 1,039 1,102 6.0           80.4           77.8
                     
Gross margin (%) 48.3 45.1 46.6     48.9 46.5      
EBIT margin (%) 15.4 12.1 14.4     15.1 12.6      
Pre-tax margin (%) 13.9 10.4 14.7     14.1 11.7      
Net margin (%) 10.8 7.3 11.4     10.8 8.9      
                     
Balance sheet (IDRbn) Sep-23 Jun-24 Sep-24              
Cash and equivalents 617 987 1,155              
Inventories 4,056 4,844 5,057              
Total assets 9,243 12,042 12,306              
Total liabilities 3,749 5,710 5,502              
Interest bearing liabilities 328 1,083 853              
Equity 5,316 6,164 6,635              
                     
Inventory Days 182.0 180.0 187.6              
ROA (%) 16.9 10.1 16.7              
ROE (%) 29.4 19.8 31.0              
Gearing (%) 6.2 17.6 12.9              
Net gearing (%) n.c. 1.6 n.c.              
Note:  Consensus is from Bloomberg consensus estimates
Source: Company data, Bloomberg Finance L.P., Verdhana estimates

 

Fig. 2: 4Q24F forecast

  9M23 9M24 y-y 4Q23 4Q24F y-y 2024F y-y
Revenue 9,584 12,420 29.6% 3,974 4,525 13.8% 16,945 25.0%
Gross Profit 4,684 5,772 23.2% 1,914 2,192 14.5% 7,964 20.7%
EBIT 1,451 1,569 8.1% 582 618 6.1% 2,187 7.6%
NPAT 1,039 1,102 6.0% 349 378 8.2% 1,480 6.6%
                 
GPM 48.9% 46.5%   48.1% 48.4%   47.0%  
EBIT Margin 15.1% 12.6%   14.6% 13.6%   12.9%  
NPM 10.8% 8.9%   8.8% 8.4%   8.7%  
Source: Company data, Verdhana estimates

 

Fig. 3: Quarterly SSSG trend — Recovery trend on track

Source: Company data, Verdhana research
Fig. 4: 9M24 sales split based on region and y-y growth

Source: Company data, Verdhana research

 

Fig. 5: Quarterly revenue (IDR mn)

Source: Company data, Verdhana research
Fig. 6: Quarterly gross profit (IDR mn)

Source: Company data, Verdhana research

 

Fig. 7: Quarterly opex as % of revenue

Source: Company data, Verdhana research
Fig. 8: Quarterly net profit (IDR mn)

Source: Company data, Verdhana research

 

Fig. 9: MAPA — P/E band

Source: Bloomberg Finance L.P., Verdhana estimates
Fig. 10: MAPA — ownership summary

Source: KSEI, Verdhana research

INVESTMENT RATINGS
A rating of ‘Buy’, indicates that the analyst expects the stock to outperform the Benchmark over the next 12 months. A rating of ‘Neutral’, indicates that the analyst expects the stock to perform in line with the Benchmark over the next 12 months. A rating of ‘Reduce’, indicates that the analyst expects the stock to underperform the Benchmark over the next 12 months. A rating of ‘Suspended’, indicates that the rating, target price, and estimates have been suspended temporarily to comply with applicable regulations and/or firm policies. Securities and/or companies that are labelled as ‘Not Rated’ or ‘No Rating’ are not in regular research coverage. Benchmark is Indonesia Composite Index (‘IDX Composite’). A ‘Target Price’, if discussed, indicates the analyst’s forecast for the share price with a 12-month time horizon, reflecting in part of the analyst’s estimates for the company’s earnings, and may be impeded by general market and macroeconomic trends, and by other risks related to the company or the market in general. 

GENERAL DISCLOSURE/DISCLAIMER 
This report is prepared by PT Verdhana Sekuritas Indonesia (“PTVSI”) a securities company registered in Indonesia, supervised by Indonesia Financial Services Authority (OJK) and a member of the Indonesia Stock Exchange (IDX).

This report is intended for client of PTVSI only and no part of this document may be (i) copied, photocopied or duplicated in any form or by any means or (ii) redistributed without the prior written consent of PTVSI.

The research set out in this report is based on information obtained from sources believed to be reliable, but PTVSI do not make any representation or warranty as to its accuracy, completeness or correctness. The information in this report is subject to change without notice, its accuracy is not guaranteed, it may be incomplete or condensed and it may not contain all material information concerning the company (or companies) referred to in this report. Any information, valuations, opinions, estimates, forecasts, ratings or targets herein constitutes a judgment as of the date of this report is published, and there is no assurance that future results or events will be consistent.


This report is not to be construed as an offer or a solicitation of an offer to buy or sell any securities or financial products. PTVSI and its associates, its directors, and/or its employees may from time to time have interests in the securities mentioned in this report or it may or will engage in any securities transaction or other capital market services for the company (companies) mentioned herein.

ANALYST CERTIFICATION
The research analyst primarily responsible for the content of this report and certifies that the views about the companies including their securities expressed in this report accurately reflect his/her personal views.  The analyst also certifies that no part of his/her compensation was, is, or will be, directly, or indirectly, related to specific recommendations or views expressed in this report.


RESTRICTIONS ON DISTRIBUTION

By accepting this report, the recipient hereof represents and warrants that you are entitled to receive such report in accordance with the restrictions and agrees to be bound by the limitations contained herein. Neither this report nor any copy hereof may be distributed except in compliance with applicable Indonesian capital market laws and regulations. 

Rating Table

Rating
Remains
Buy
Target price
Increased from IDR 1,000
IDR 1,430
Closing price
1 November 2024
IDR 1,085
Implied upside+31.8%
Market Cap (USD mn)1,968.0
ADT (USD mn)1.6

Relative performance chart


Source: LSEG, Verdhana

M cap (USDmn)
1,968.0
Free float (%)
23.7
3-mth ADT (USDmn)
1.6
(%)
1M
3M
12M
Absolute (IDR)
16.7
26.2
46.6
Absolute (USD)
12.8
30.3
48.6
Rel to Jakarta Stock Exchange Composite Index
18.5
23.7
33.6


Research Analysts

Jody Wijaya (jody.wijaya@verdhana.id), 

Sandy Ham (sandy.ham@verdhana.id)

Samuel Christian (samuel.christian@verdhana.id)

Tags: Retail, MAPA, MAPA JK, MAPA IJ, Jody Wijaya, Sandy Ham, Samuel Christian
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