Pan-Asia Equity Bottom-up, Wickhams Hill

Lloyd Moffatt

Pan-Asia Equity Bottom-up

Equity Bottom-Up

<ul>
<li>Bank Rakyat’s (BBRI IJ) rights issue puts the largest listed Indonesian microlender BTPN Syariah (BTPS IJ) in the spotlight as PNM steps up to the plate to do some national service</li>
<li>Matahari Department Stores (LPPF IJ) is up 30% since we flagged a major buyback program on the back of solid 2Q21 results</li>
<li>The Hour Glass (HG SP) share price has started to react to an ongoing buyback, up 16% MTD on a further 710k shares repurchased</li>
</ul>


Bank Rakyat’s (BBRI IJ) rights issue puts the largest listed Indonesian microlender BTPN Syariah (BTPS IJ) in the spotlight as PNM steps up to the plate to do some national service
Matahari Department Stores (LPPF IJ) is up 30% since we flagged a major buyback program on the back of solid 2Q21 results
The Hour Glass (HG SP) share price has started to react to an ongoing buyback, up 16% MTD on a further 710k shares repurchased


Wickhams Hill Research | Under-The-Radar Issue 7

ASEAN Insight Provider, CrossASEAN Research

Angus Mackintosh

ASEAN Insight Provider

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

<p><a href="https://www.smartkarma.com/entities/pt-matahari-department-store" target="_blank" data-smartkarma-citation="entities:5230:1" rel="noopener">Matahari Department Store (LPPF IJ)</a> released its 2Q2021 results after market yesterday, which revealed a significant turnaround in the business, with the company returning to profitability both on EBITDA and net profit.</p><p>Management managed to navigate a tricky Lebaran holiday season successfully despite mudik bans and reduced operating hours,  flushing out most of its discontinued brands with only a little leftover in inventory, leading to healthier gross margins. </p><p><a href="https://www.smartkarma.com/entities/pt-matahari-department-store" target="_blank" data-smartkarma-citation="entities:5230:1" rel="noopener">Matahari Department Store (LPPF IJ)</a> continued to make good progress in key operational areas with its store enhancement work in progress, along with a re-organization of operating regions, more focused use of capex and continuing rationalization of underperforming stores.</p><p><a href="https://www.smartkarma.com/entities/pt-matahari-department-store" target="_blank" data-smartkarma-citation="entities:5230:1" rel="noopener"></a>The company has a new merchandising team in place with a focus on modernizing the mix of products with a focus on in-house brands such as Coles, Nevada, and Connexion.</p><section class="figure"></section><p><a href="https://www.smartkarma.com/entities/pt-matahari-department-store" target="_blank" data-smartkarma-citation="entities:5230:1" rel="noopener">Matahari Department Store (LPPF IJ)</a> continues to collaborate with <a href="https://www.smartkarma.com/entities/bank-nationalnobu-tbk-pt" target="_blank" data-smartkarma-citation="entities:17016:1" rel="noopener">Bank Nationalnobu (NOBU IJ)</a> and has seen a +59%  increase in the value of its investment since November 2020. We see this as a potentially positive collaboration but would not want to see any more significant capital commitments to the bank. </p><p>The company has seen a significant strengthening of its balance sheet for 1H2021, with <a href="https://www.smartkarma.com/entities/pt-matahari-department-store" target="_blank" data-smartkarma-citation="entities:5230:1" rel="noopener">Matahari Department Store (LPPF IJ)</a> now debt-free and in a net cash position.</p><p> No doubt there will be some disruption from Emergency PPKM measures in July and August but the performance in 2Q2021 has put the company on course for a strong recovery toward the end of the year, with a much healthier stores portfolio, with new stores added trading well with strong profitability.</p><section class="figure"></section><section class="figure"></section><section class="figure"></section><section class="figure"></section><section class="figure"><section class="figure"><figure class="editor-figure mceNonEditable"></figure></section><div>
<p><a href="https://www.smartkarma.com/entities/pt-matahari-department-store" target="_blank" data-smartkarma-citation="entities:5230:1" rel="noopener">Matahari Department Store (LPPF IJ)</a> looks like it has finally turned the corner after a strong performance over the Lebaran quarter and this turnaround has come slightly earlier than expected. </p>
<p>Valuations look attractive versus history with the company trading on 9.7x FY22E PER and 6.5x FY22E PER versus its 5-year average forward PER of 12x, making the company an attractive prospect in light of its turnaround.</p>
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Matahari Department Store (LPPF IJ) released its 2Q2021 results after market yesterday, which revealed a significant turnaround in the business, with the company returning to profitability both on EBITDA and net profit.Management managed to navigate a tricky Lebaran holiday season successfully despite mudik bans and reduced operating hours,  flushing out most of its discontinued brands with only a little leftover in inventory, leading to healthier gross margins. Matahari Department Store (LPPF IJ) continued to make good progress in key operational areas with its store enhancement work in progress, along with a re-organization of operating regions, more focused use of capex and continuing rationalization of underperforming stores.The company has a new merchandising team in place with a focus on modernizing the mix of products with a focus on in-house brands such as Coles, Nevada, and Connexion.Matahari Department Store (LPPF IJ) continues to collaborate with Bank Nationalnobu (NOBU IJ) and has seen a +59%  increase in the value of its investment since November 2020. We see this as a potentially positive collaboration but would not want to see any more significant capital commitments to the bank. The company has seen a significant strengthening of its balance sheet for 1H2021, with Matahari Department Store (LPPF IJ) now debt-free and in a net cash position. No doubt there will be some disruption from Emergency PPKM measures in July and August but the performance in 2Q2021 has put the company on course for a strong recovery toward the end of the year, with a much healthier stores portfolio, with new stores added trading well with strong profitability.
Matahari Department Store (LPPF IJ) looks like it has finally turned the corner after a strong performance over the Lebaran quarter and this turnaround has come slightly earlier than expected. 
Valuations look attractive versus history with the company trading on 9.7x FY22E PER and 6.5x FY22E PER versus its 5-year average forward PER of 12x, making the company an attractive prospect in light of its turnaround.




Matahari Department Store (LPPF IJ) - Turning Corners

External broker reports(aggregated public sources), Mirae Asset Securities

Mirae Asset Securities

External broker reports(aggregated public sources)

<p>2Q21: Bottom line turned positive and above expectation; Debt is fully repaid</p>
<div class="content-highlight"><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></div>

2Q21: Bottom line turned positive and above expectation; Debt is fully repaid
Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Matahari Department Stores (LPPF IJ) - 2Q21: Bottom Line Turned Positive and Above Expectation

<ul>
<li>We highlight Matahari Department Store (LPPF IJ), which is down more than 70% from its 2-year high and just announced a buyback of 15% outstanding shares on the back of the Riadys recently increasing their stake.</li>
<li>
<span style="font-size: var(--content-font-size);">Last week’s feature MNC Group announced a 1H21 results and in doing so </span><span style="font-size: var(--content-font-size);">reiterated their commitment to directing free-cash-flow to repaying debt, share buybacks and a </span>dividend that’s now yielding 12% based on FY22 Est.</li>
<li>Another hospital IPO in Indonesia caught our attention following the incredible 300%+ performance of the recently listed Bundamedik (BHMS IJ)</li>
</ul>


We highlight Matahari Department Store (LPPF IJ), which is down more than 70% from its 2-year high and just announced a buyback of 15% outstanding shares on the back of the Riadys recently increasing their stake.

Last week’s feature MNC Group announced a 1H21 results and in doing so reiterated their commitment to directing free-cash-flow to repaying debt, share buybacks and a dividend that’s now yielding 12% based on FY22 Est.
Another hospital IPO in Indonesia caught our attention following the incredible 300%+ performance of the recently listed Bundamedik (BHMS IJ)


Wickhams Hill Research | Under-The-Radar Issue 4

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Index Rebalance

<p>The LQ45 Index is a market cap weighted index of the 45 most liquid stocks listed on the Indonesia Stock Exchange (IDX). The LQ45 Index covers at least 70% of the stock market capitalization and transaction values in the Indonesia Stock Market.</p><p>The IDX has announced the changes to the LQ45 Index as a part of the August review. <a href="https://www.smartkarma.com/entities/barito-pacific-tbk-pt" target="_blank" data-smartkarma-citation="entities:8851:1" rel="noopener">Barito Pacific (BRPT IJ)</a> and <a href="https://www.smartkarma.com/entities/timah-persero-tbk-pt" target="_blank" data-smartkarma-citation="entities:11174:1" rel="noopener">Timah Persero (TINS IJ)</a> have been added to the index while <a href="https://www.smartkarma.com/entities/bank-tabungan-pensiunan-nasi" target="_blank" data-smartkarma-citation="entities:27088:1" rel="noopener">Bank BTPN Syariah (BTPS IJ)</a> and <a href="https://www.smartkarma.com/entities/ciputra-development-tbk-pt" target="_blank" data-smartkarma-citation="entities:5513:1" rel="noopener">Ciputra Development (CTRA IJ)</a> have been deleted from the index.</p><p>We expect the impact of passive funds (and active funds) will be quite high on <a href="https://www.smartkarma.com/entities/barito-pacific-tbk-pt" target="_blank" data-smartkarma-citation="entities:8851:1" rel="noopener">Barito Pacific (BRPT IJ)</a>, <a href="https://www.smartkarma.com/entities/bit-digital-inc" target="_blank" data-smartkarma-citation="entities:31155:1" rel="noopener">Bit Digital (BTBT US)</a> and <a href="https://www.smartkarma.com/entities/ciputra-development-tbk-pt" target="_blank" data-smartkarma-citation="entities:5513:1" rel="noopener">Ciputra Development (CTRA IJ)</a> and significantly lower on <a href="https://www.smartkarma.com/entities/timah-persero-tbk-pt" target="_blank" data-smartkarma-citation="entities:11174:1" rel="noopener">Timah Persero (TINS IJ)</a>.</p><p>The changes are effective after the close of trading on 30 July, so there are only 4 trading days before passive funds have to rebalance their portfolios. Active funds benchmarked to the LQ45 index will also trade over the next few days so as not to deviate too far from their benchmark.</p>

The LQ45 Index is a market cap weighted index of the 45 most liquid stocks listed on the Indonesia Stock Exchange (IDX). The LQ45 Index covers at least 70% of the stock market capitalization and transaction values in the Indonesia Stock Market.The IDX has announced the changes to the LQ45 Index as a part of the August review. Barito Pacific (BRPT IJ) and Timah Persero (TINS IJ) have been added to the index while Bank BTPN Syariah (BTPS IJ) and Ciputra Development (CTRA IJ) have been deleted from the index.We expect the impact of passive funds (and active funds) will be quite high on Barito Pacific (BRPT IJ), Bit Digital (BTBT US) and Ciputra Development (CTRA IJ) and significantly lower on Timah Persero (TINS IJ).The changes are effective after the close of trading on 30 July, so there are only 4 trading days before passive funds have to rebalance their portfolios. Active funds benchmarked to the LQ45 index will also trade over the next few days so as not to deviate too far from their benchmark.

LQ45 Index Rebalance: BRPT, TINS In; BTPS, CTRA Out

Indonesia

PT MDS Retailing Tbk is an Indonesian retail company that operates department store chains and online channels under the Matahari brand. It offers a diverse range of products including clothing, fashion apparel, accessories, bags, shoes, cosmetics, beauty products, and household appliances. The company also provides management consulting services. PT MDS Retailing Tbk was founded in 1958 and is headquartered in Tangerang, Indonesia.

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MDS Retailing (LPPF IJ)

Wickhams Hill Research | Under-The-Radar Issue 7

Bank Rakyat’s (BBRI IJ) rights issue puts the largest listed Indonesian microlender BTPN Syariah (BTPS IJ) in the spotlight as PNM steps up to the...

Lloyd Moffatt

Matahari Department Store (LPPF IJ) - Turning Corners

Matahari Department Store just announced 2Q2021 resluts, which showed a significant turnaround in the business, which we suggest is sustainable and...

Angus Mackintosh

Matahari Department Stores (LPPF IJ) - 2Q21: Bottom Line Turned Positive and Above Expectation

2Q21: Bottom line turned positive and above expectation; Debt is fully repaid

Mirae Asset Securities

Wickhams Hill Research | Under-The-Radar Issue 4

We highlight Matahari Department Store (LPPF IJ), which is down more than 70% from its 2-year high and just announced a buyback of 15% outstanding...

Lloyd Moffatt

LQ45 Index Rebalance: BRPT, TINS In; BTPS, CTRA Out

The LQ45 rebalance will be implemented at the close on 30 July. BRPT & TINS have been included, replacing BTPS & CTRA. There is a large impact on...

Brian Freitas

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