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Sumber Alfaria Trijaya (AMRT IJ) (Buy) - Resetting expectations

Sumber Alfaria Trijaya (AMRT IJ) (Buy) - Resetting expectations

Consumer Durables JW SH SC 247 24th Mar, 2025

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Resetting expectations

Short-term setback results in earnings cut; maintain Buy with TP of IDR2,350

4Q24 result miss: lower GPM and higher-than-expected opex

AMRT’s sales growth in 2024 remained solid at +10% y-y, demonstrating its resilience despite a challenging macroeconomic backdrop. However, net margin declined by 50bp y-y, leading to an earnings miss. We believe the unexpected decline in GPM (-10bp y-y) was largely due to a higher-than-expected rollout of promotions, as maintaining SSSG momentum (+5.2% y-y in 2024) was a key priority for the company. Meanwhile, the overall increase in opex as a percentage of sales (+40bp y-y) was mainly attributed to investments in four additional DCs, chillers, and cash deposit machines.

Key for 2025F: Balancing between sales growth and profitability margin

We expect AMRT to focus this year on striking a better balance between promotional activities, sales growth, and profitability margin. However, achieving this will be challenging given weak consumer purchasing power. As a result, we lower our GPM expansion estimate to 10bs (from 20bp) for 2025F. While we expect opex as a percentage of sales to ease as the utilization of recent investments should improve, the higher-than-expected minimum wage increase (+6.5% y-y) could add further pressure. Consequently, we now anticipate flat y-y opex as a percentage of sales for 2025F.

Maintain Buy with lower TP of IDR2,350 (+21% upside)

We downgrade our 2025F/26F earnings assumptions by 21%/23%. We now base our TP on a 2025F P/E of 27.6x, equal to its five-year average (from 2025F P/E of 33.4x, +1 SD, previously). This adjustment reflects the lower earnings growth we now expect at +15% for 2024-2027F, compared to +19% for 2022-2024. AMRT’s average P/E in 2023-2024 was around 35x. Given the decline in growth expectations from 19% to 15%, a corresponding reduction in the target P/E to 27.6x (-21%) is justified, in our view. As a result, we lower our TP to IDR2,350 (from IDR3,600).

Despite this, we believe that AMRT continues to deserve a premium valuation due to its robust business model, duopoly market position, and resilience in challenging macroeconomic conditions. Evidenced by its continuous operating cashflow (OCF) expansion (Fig. 5). Key downside risks include prolonged weakness in consumer purchasing power, as well as the potential for significant foreign capital outflows, given that the local-to-foreign investor ratio in AMRT stands at approximately 1:8/9. The company’s ability to deliver higher growth could result in potential P/E rerating, in our view.

Year-end 31 DecFY24FY25FFY26FFY27F
Currency (IDR)ActualOldNewOldNewOldNew
Revenue (bn)118,227128,887129,515140,701143,0920157,019
Reported net profit (bn)3,1484,4743,5325,3324,09104,768
Normalised net profit (bn)3,1484,4743,5325,3324,09104,768
FD normalised EPS75.81107.7585.06128.4198.52114.83
FD norm. EPS growth (%)-7.518.812.219.215.816.6
FD normalised P/E (x)25.6–22.8–19.7–16.9
EV/EBITDA (x)11.0–9.8–8.5–7.2
Price/book (x)4.9–4.3–3.7–3.2
Dividend yield (%)1.5–1.4–1.6–1.8
ROE (%)20.424.120.124.220.320.5
Net debt/equity (%)net cashnet cashnet cashnet cashnet cashnet cash
Source: Company data, Verdhana estimates

Key data on Sumber Alfaria Trijaya

Income statement (IDRbn)
Year-end 31 Dec
FY23
FY24
FY25F
FY26F
FY27F
Revenue
106,945
118,227
129,515
143,092
157,019
Cost of goods sold
-83,879
-92,862
-101,669
-112,097
-122,748
Gross profit
23,066
25,365
27,846
30,995
34,272
SG&A
-19,780
-22,384
-24,369
-26,893
-29,406
Employee share expense
0
0
0
0
0
Operating profit
3,286
2,982
3,477
4,102
4,865
EBITDA
6,913
7,138
7,885
8,905
10,049
Depreciation
-1,516
-1,803
-1,903
-2,117
-2,309
Amortisation
-2,111
-2,354
-2,505
-2,686
-2,875
EBIT
3,286
2,982
3,477
4,102
4,865
Net interest expense
-87
-19
2
37
91
Associates & JCEs
0
0
0
0
0
Other income
1,134
1,103
1,175
1,256
1,340
Earnings before tax
4,333
4,066
4,654
5,395
6,297
Income tax
-848
-846
-968
-1,123
-1,310
Net profit after tax
3,484
3,220
3,686
4,273
4,987
Minority interests
-80
-72
-154
-182
-218
Other items
0
0
0
0
0
Preferred dividends
0
0
0
0
0
Normalised NPAT
3,404
3,148
3,532
4,091
4,768
Extraordinary items
0
0
0
0
0
Reported NPAT
3,404
3,148
3,532
4,091
4,768
Dividends
-1,020
-1,236
-1,143
-1,283
-1,486
Transfer to reserves
2,384
1,912
2,389
2,808
3,283
Valuations and ratios
Reported P/E (x)
23.7
25.6
22.8
19.7
16.9
Normalised P/E (x)
23.7
25.6
22.8
19.7
16.9
FD normalised P/E (x)
23.7
25.6
22.8
19.7
16.9
Dividend yield (%)
1.3
1.5
1.4
1.6
1.8
Price/cashflow (x)
11.8
10.0
9.8
8.6
7.8
Price/book (x)
5.6
4.9
4.3
3.7
3.2
EV/EBITDA (x)
11.5
11.0
9.8
8.5
7.2
EV/EBIT (x)
24.2
26.3
22.2
18.4
15.0
Gross margin (%)
21.6
21.5
21.5
21.7
21.8
EBITDA margin (%)
6.5
6.0
6.1
6.2
6.4
EBIT margin (%)
3.1
2.5
2.7
2.9
3.1
Net margin (%)
3.2
2.7
2.7
2.9
3.0
Effective tax rate (%)
19.6
20.8
20.8
20.8
20.8
Dividend payout (%)
30.0
39.3
32.4
31.4
31.2
ROE (%)
26.5
20.4
20.1
20.3
20.5
ROA (pretax %)
11.5
9.3
10.0
11.0
12.1
Growth (%)
Revenue
10.3
10.5
9.5
10.5
9.7
EBITDA
10.4
3.3
10.5
12.9
12.8
Normalised EPS
19.2
-7.5
12.2
15.8
16.6
Normalised FDEPS
19.2
-7.5
12.2
15.8
16.6
Source: Company data, Verdhana estimates
Cashflow statement (IDRbn)
Year-end 31 Dec
FY23
FY24
FY25F
FY26F
FY27F
EBITDA
6,913
7,138
7,885
8,905
10,049
Change in working capital
-1,291
177
199
391
403
Other operating cashflow
1,195
748
102
32
-58
Cashflow from operations
6,817
8,063
8,187
9,328
10,394
Capital expenditure
-4,725
-5,056
-5,724
-6,016
-6,318
Free cashflow
2,092
3,007
2,462
3,312
4,077
Reduction in investments
0
0
0
0
0
Net acquisitions
0
0
0
0
0
Dec in other LT assets
0
0
0
0
0
Inc in other LT liabilities
0
0
0
0
0
Adjustments
0
0
0
0
0
CF after investing acts
2,092
3,007
2,462
3,312
4,077
Cash dividends
-1,020
-1,236
-1,143
-1,283
-1,486
Equity issue
0
0
0
0
0
Debt issue
-1,510
-63
0
0
0
Convertible debt issue
0
0
0
0
0
Others
694
-937
0
0
0
CF from financial acts
-1,836
-2,236
-1,143
-1,283
-1,486
Net cashflow
256
771
1,319
2,029
2,591
Beginning cash
3,819
4,075
4,845
6,164
8,194
Ending cash
4,075
4,845
6,164
8,194
10,784
Ending net debt
-2,372
-3,350
-4,620
-6,598
-9,135
Balance sheet (IDRbn)
As at 31 Dec
FY23
FY24
FY25F
FY26F
FY27F
Cash & equivalents
4,075
4,845
6,164
8,194
10,784
Marketable securities
0
0
0
0
0
Accounts receivable
2,812
3,231
3,252
3,568
3,892
Inventories
0
0
0
0
0
Other current assets
10,440
12,265
12,746
14,003
15,287
Total current assets
17,326
20,341
22,162
25,764
29,964
LT investments
767
780
780
780
780
Fixed assets
8,053
9,002
10,010
10,920
11,755
Goodwill
0
0
0
0
0
Other intangible assets
0
0
0
0
0
Other LT assets
8,101
8,676
9,104
9,531
9,955
Total assets
34,246
38,798
42,057
46,995
52,454
Short-term debt
1,639
1,423
1,472
1,524
1,578
Accounts payable
0
0
13,649
15,049
16,478
Other current liabilities
15,624
18,045
5,097
5,662
6,243
Total current liabilities
17,263
19,469
20,218
22,234
24,299
Long-term debt
64
72
72
72
72
Convertible debt
0
0
0
0
0
Other LT liabilities
1,215
1,562
1,682
1,796
1,907
Total liabilities
18,541
21,102
21,972
24,102
26,278
Minority interest
1,232
1,318
1,318
1,318
1,318
Preferred stock
0
0
0
0
0
Common stock
2,895
2,895
2,895
2,895
2,895
Retained earnings
11,159
13,116
15,505
18,313
21,596
Proposed dividends
0
0
0
0
0
Other equity and reserves
419
366
366
366
366
Total shareholders' equity
14,473
16,378
18,767
21,575
24,857
Total equity & liabilities
34,246
38,798
42,057
46,995
52,454
Liquidity (x)
Current ratio
1.00
1.04
1.10
1.16
1.23
Interest cover
37.6
157.9
–
–
–
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)
81.97
75.81
85.06
98.52
114.83
Norm EPS (IDR)
81.97
75.81
85.06
98.52
114.83
FD norm EPS (IDR)
81.97
75.81
85.06
98.52
114.83
BVPS (IDR)
348.55
394.41
451.94
519.56
598.62
DPS (IDR)
24.57
29.77
27.53
30.89
35.78
Activity (days)
Days receivable
9.1
9.4
9.1
8.7
8.7
Days inventory
0.0
0.0
0.0
0.0
Days payable
60.3
0.0
24.5
46.7
46.9
Cash cycle
-51.3
9.4
-15.4
-38.0
-38.2
Source: Company data, Verdhana estimates
Company profileEstablished in 1989, AMRT business activities are managing a minimarket distribution network that sells basic daily needs for customers, at affordable prices, convenient shopping places, and easy to reach locations because most of AMRT's stores are located in residential areas and commercial. As of 9M22, AMRT has 20,015 stores spread across Indonesia.
Valuation MethodologyOur target price of IDR2,350 implies 2025F P/E multiple of 27.6x (equivalent to its five-year-average). The benchmark index of the stock is JCI Index.
Risks that may impede the achievement of the target priceKey downside risks include prolonged weakness in consumer purchasing power, as well as the potential for significant foreign capital outflows, given that the local-to-foreign investor ratio in AMRT stands at approximately 1:8/9
ESGAMRT carries out activities related to enviromental aspects to support sustainable business growth. As of 2021, since the implementation of plastic-reducing policy, AMRT has been able to reduce the use of shopping plastic bags by 18.8%. Other initiative done by AMRT is the reusing of wastewater. AMRT has twenty eight branches which reuse wastewater with a total volume of 5.81 Megaliters. Other waste treatment by AMRT is done by reducing the use of cashier paper receipts by 8.8%.

Fig. 1: AMRT 2024 result recap

AMRT IJ   QoQYoY  YoY12M24/12M24/
Profit and loss statement (IDRbn)4Q233Q244Q24(%)(%)12M2312M24(%)VerdhanaCons
Revenue26,92028,99830,0103.511.5106,945118,22710.5          99.7          99.5
COGS(20,751)(22,903)(23,513)2.713.3(83,879)(92,862)10.7  
Gross profit6,1696,0956,4976.65.323,06625,36510.0  
EBIT (incl. fee-based)1,44068790932.4(36.9)3,9713,713(6.5)          82.4          71.3
Other income/(expenses)          
Fee based income176186185(0.5)5.46857316.7  
Net financing income/(expense)(7)(8)(2)(70.7)(64.6)(87)(19)(78.4)  
Others9710848(55.4)(50.4)449372(17.2)  
Pre-tax profit1,53078695521.4(37.6)4,3334,066(6.2)  
Net profit1,21360574923.9(38.3)3,4043,148(8.0)          83.6          77.7
           
Gross margin (%)22.921.021.6  21.621.5   
EBIT margin (%)5.42.43.0  3.73.1   
Pre-tax margin (%)5.72.73.2  4.13.4   
Net margin (%)4.52.12.5  3.22.7   
           
 Dec-23Sep-24Dec-24       
Cash and equivalents4,0754,1614,845       
Total assets34,24636,63838,798       
Total liabilities18,54119,85421,102       
Interest bearing liabilities6300       
Equity14,47315,52116,378       
           
ROA (%)14.26.67.7       
ROE (%)33.515.618.3       
Gearing (%)0.40.00.0       
Net gearing (%)n.c.n.c.n.c.       
Note:  Consensus is using Bloomberg consensus estimates
Source: Company data, Bloomberg Finance L.P., Verdhana estimates

 

Fig. 2: Earnings changes table

Source: Company data, Verdhana estimates

 

Fig. 3: AMRT 2009-2024 GPM trend – The only GPM decline in 15 years. By improving its promotional and price adjustment strategy for 2025, the GPM uptrend should continue

Source: Company data, Verdhana research
Fig. 4: 2014-2017 AMRT SSSG – The company still delivered a 5% average SSSG despite +5% inflation and -15% USD/IDR decline, showing its resiliency in toughest macroeconomic conditions

Source: Company data, Verdhana research

 

Fig. 5: AMRT operating cash flow trend (IDRbn) – consistently generate strong cash flows

Source: Company data, Verdhana research
Fig. 6: AMRT P/E band

Source: Bloomberg Finance L.P., Verdhana estimates

 

Fig. 7: AMRT quarterly revenue

Source: Company data, Verdhana research
Fig. 8: AMRT quarterly gross profit

Source: Company data, Verdhana research

 

Fig. 9: AMRT quarterly opex as percentage of sales

Source: Company data, Verdhana research
Fig. 10: AMRT quarterly net profit

Source: Company data, 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
Reduced from IDR 3,600
IDR 2,350
Closing price
21 March 2025
IDR 1,940
Implied upside+21.1%
Market Cap (USD mn)4,883.8
ADT (USD mn)5.7

Relative performance chart



Source: LSEG, Verdhana
M cap (USDmn)
4,883.8
Free float (%)
47.3
3-mth ADT (USDmn)
5.7
(%)
1M
3M
12M
Absolute (IDR)
-22.7
-30.2
-33.1
Absolute (USD)
-23.6
-31.5
-36.5
Rel to Jakarta Stock Exchange Composite Index
-14.7
-19.8
-18.4

Research Analysts

Jody Wijaya (jody.wijaya@verdhana.id)

Sandy Ham (sandy.ham@verdhana.id)

Samuel Christian (samuel.christian@verdhana.id)

Tags: CONSUMER RELATED, AMRT, AMRT JK, AMRT IJ, Jody Wijaya, Sandy Ham, Samuel Christian
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