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

Equity Bottom-Up

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<p>A conversation with Indonesia's No.1 retailer and distributor of mobile phones, revealed the company has employed a similar strategy during the most recent round of Emergency PPKM measures in Indonesia as during the PSBB mobility measures last year. This time around the company and the customers are better prepared to deal with the measures. <a href="https://www.smartkarma.com/entities/erajaya-swasembada-tbk-pt" target="_blank" data-smartkarma-citation="entities:18869:1" rel="noopener">Erajaya Swasembada (ERAA IJ)</a> has continued to pursue its mobile selling, online promotions, and sales through third-party marketplaces.</p>
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<p>Despite malls being shut staff have still been able to operate from the company's stores providing mobile phone service and set-up services for consumers in the home.</p>
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<p>The company continues to see the  average price for its products continue to rise due to customers seeking to upgrade their handsets plus opting for larger screens given work and school from home</p>
<p>In a new retail venture, <a href="https://www.smartkarma.com/entities/erajaya-swasembada-tbk-pt" target="_blank" rel="noopener"><span data-preserver-spaces="true">Erajaya Swasembada (ERAA IJ)</span></a><span data-preserver-spaces="true"> is now working together with JD Sports Fashion Plc to expand its business into the fashion retail segment. </span></p>
<p><a href="https://www.smartkarma.com/entities/erajaya-swasembada-tbk-pt" target="_blank" rel="noopener">Erajaya Swasembada (ERAA IJ)</a> is also expanding to take up a niche in the beauty sector by establishing a flagship outlet, The Face Shop Indonesia.</p>
<p><a href="https://www.smartkarma.com/entities/erajaya-swasembada-tbk-pt" target="_blank" data-smartkarma-citation="entities:18869:1" rel="noopener">Erajaya Swasembada (ERAA IJ)</a> remains a key enabler for the growth in the Indonesian digital economy, as the largest mobile phone retailer, selling most major brands including the more affordable Chinese brands, which are appealing to the mass-market consumer.</p>
<p>The company trades on very reasonable valuations with a stable growth outlook, with a likely pick up in growth in the next few months and into next year as PPKM restrictions are relaxed and malls are reopened.</p>


A conversation with Indonesia's No.1 retailer and distributor of mobile phones, revealed the company has employed a similar strategy during the most recent round of Emergency PPKM measures in Indonesia as during the PSBB mobility measures last year. This time around the company and the customers are better prepared to deal with the measures. Erajaya Swasembada (ERAA IJ) has continued to pursue its mobile selling, online promotions, and sales through third-party marketplaces.

Despite malls being shut staff have still been able to operate from the company's stores providing mobile phone service and set-up services for consumers in the home.



The company continues to see the  average price for its products continue to rise due to customers seeking to upgrade their handsets plus opting for larger screens given work and school from home
In a new retail venture, Erajaya Swasembada (ERAA IJ) is now working together with JD Sports Fashion Plc to expand its business into the fashion retail segment. 
Erajaya Swasembada (ERAA IJ) is also expanding to take up a niche in the beauty sector by establishing a flagship outlet, The Face Shop Indonesia.
Erajaya Swasembada (ERAA IJ) remains a key enabler for the growth in the Indonesian digital economy, as the largest mobile phone retailer, selling most major brands including the more affordable Chinese brands, which are appealing to the mass-market consumer.
The company trades on very reasonable valuations with a stable growth outlook, with a likely pick up in growth in the next few months and into next year as PPKM restrictions are relaxed and malls are reopened.

Erajaya Swasembada (ERAA IJ) - Better Reception Ahead

<p><a href="https://www.smartkarma.com/entities/mitra-adiperkasa-tbk-pt" target="_blank" data-smartkarma-citation="entities:18684:1" rel="noopener">Mitra Adiperkasa (MAPI IJ)</a> reported an impressive set of 1H2021 results but has obviously seen a significant negative impact from the government's imposition of mobility restrictions under Emergency PPKM. This led to the closure of around 70% of the malls in the country in  July, more especially in Java and Bali, where the majority of the company's stores are located.  </p>
<p>Our post-results conversation with management suggests we are coming out of this difficult period and should expect a gradual recovery in the coming months.</p>
<p>The company's Unified Retail Strategy continues to bear fruit with online mono-brand and multi-brand sites both doing well. </p>
<p>July was most severely impacted this year given the mall closures but consumers are showing less anxiety this year to the lock-down measures and restrictions started to ease from 10th August.</p>
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<p>The company also went into 3Q2021 with very healthy inventories given it had flushed out old inventory over Lebaran. It has also shortened its purchasing strategy, which will allow more flexibility.</p>
<p><a href="https://www.smartkarma.com/entities/mitra-adiperkasa-tbk-pt" target="_blank" data-smartkarma-citation="entities:18684:1" rel="noopener">Mitra Adiperkasa (MAPI IJ)</a> is also more focused on building out its health &amp; beauty exposure opening three Boots stores with plans for six by the end of 2021 and may open more in 2022.</p>
<p>Department stores have been quite hard hit during the pandemic but <a href="https://www.smartkarma.com/entities/mitra-adiperkasa-tbk-pt" target="_blank" data-smartkarma-citation="entities:18684:1" rel="noopener">Mitra Adiperkasa (MAPI IJ)</a> plans to increase the level of cross-selling its own brands within department stores.</p>
<p>Food &amp; Beverage has held up relatively well, with more delivery sales for Starbucks, which now makes up 20% of total Starbucks sales. Source: <a href="https://www.smartkarma.com/entities/pt-map-boga-adiperkasa-utama-tbk" target="_blank" data-smartkarma-citation="entities:24207:1" rel="noopener">Pt Map Boga Adiperkasa Utama Tbk (MAPB IJ)</a> </p>
<p><a href="https://www.smartkarma.com/entities/mitra-adiperkasa-tbk-pt" target="_blank" data-smartkarma-citation="entities:18684:1" rel="noopener">Mitra Adiperkasa (MAPI IJ)</a> trades on 14.9x FY22E PER versus its 5-year average forward PER of 21x, which looks attractive in light of the expected recovery and the success of its digital strategies, which are helping to boost sales and profitability.</p>
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Mitra Adiperkasa (MAPI IJ) reported an impressive set of 1H2021 results but has obviously seen a significant negative impact from the government's imposition of mobility restrictions under Emergency PPKM. This led to the closure of around 70% of the malls in the country in  July, more especially in Java and Bali, where the majority of the company's stores are located.  
Our post-results conversation with management suggests we are coming out of this difficult period and should expect a gradual recovery in the coming months.
The company's Unified Retail Strategy continues to bear fruit with online mono-brand and multi-brand sites both doing well. 
July was most severely impacted this year given the mall closures but consumers are showing less anxiety this year to the lock-down measures and restrictions started to ease from 10th August.



The company also went into 3Q2021 with very healthy inventories given it had flushed out old inventory over Lebaran. It has also shortened its purchasing strategy, which will allow more flexibility.
Mitra Adiperkasa (MAPI IJ) is also more focused on building out its health &amp; beauty exposure opening three Boots stores with plans for six by the end of 2021 and may open more in 2022.
Department stores have been quite hard hit during the pandemic but Mitra Adiperkasa (MAPI IJ) plans to increase the level of cross-selling its own brands within department stores.
Food &amp; Beverage has held up relatively well, with more delivery sales for Starbucks, which now makes up 20% of total Starbucks sales. Source: Pt Map Boga Adiperkasa Utama Tbk (MAPB IJ) 
Mitra Adiperkasa (MAPI IJ) trades on 14.9x FY22E PER versus its 5-year average forward PER of 21x, which looks attractive in light of the expected recovery and the success of its digital strategies, which are helping to boost sales and profitability.




Mitra Adiperkasa (MAPI IJ) - One Step Beyond

<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

<p><a href="https://www.smartkarma.com/entities/mitra-adiperkasa-tbk-pt" target="_blank" data-smartkarma-citation="entities:18684:1" rel="noopener">Mitra Adiperkasa (MAPI IJ)</a> announced a strong set of numbers for 2Q2021, which reflect the positive impact of the company's unified retail strategy over the past year. </p>
<p>The company's 2Q2021 revenue was the highest quarterly revenue and profit over the last 2-years, boosted by the company's digital retail strategy and strong demand for the company's extensive brand portfolio. </p>
<p>The company booked +130% YoY net sales growth in 2Q2021 (from a low base) but with the company's EBITDA margin rising significantly versus 1Q2021.</p>
<p>The company's e-commerce sales jumped +27% QoQ in 2Q2021 and +38% YoY in 1H2021 but it also saw more traffic in malls as restrictions were lifted during 2Q2021 also boosted by Lebaran.</p>
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<p><a href="https://www.smartkarma.com/entities/mitra-adiperkasa-tbk-pt" target="_blank" data-smartkarma-citation="entities:18684:1" rel="noopener">Mitra Adiperkasa (MAPI IJ)</a> will continue to commit resources to MAPClub in developing its Artificial Intelligence (AI), Machine Learning (ML), digital analytics capabilities, and further consolidation of consumer data via multiple social and -e-commerce platforms.</p>
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<p>The company will face a significant negative impact from the Emergency PPKM measures which have closed malls in many cities, with some offset from its digital strategy but all the same 3Q2021 will see a negative performance. The company is in a much better position to weather this current lockdown given the ongoing success of its unified retail strategy. Looking beyond this difficult period, we expect to see a strong recovery in 4Q2021 and continue to recommend buying <a href="https://www.smartkarma.com/entities/mitra-adiperkasa-tbk-pt" target="_blank" data-smartkarma-citation="entities:18684:1" rel="noopener">Mitra Adiperkasa (MAPI IJ)</a> at these levels for the recovery.</p>

Mitra Adiperkasa (MAPI IJ) announced a strong set of numbers for 2Q2021, which reflect the positive impact of the company's unified retail strategy over the past year. 
The company's 2Q2021 revenue was the highest quarterly revenue and profit over the last 2-years, boosted by the company's digital retail strategy and strong demand for the company's extensive brand portfolio. 
The company booked +130% YoY net sales growth in 2Q2021 (from a low base) but with the company's EBITDA margin rising significantly versus 1Q2021.
The company's e-commerce sales jumped +27% QoQ in 2Q2021 and +38% YoY in 1H2021 but it also saw more traffic in malls as restrictions were lifted during 2Q2021 also boosted by Lebaran.



Mitra Adiperkasa (MAPI IJ) will continue to commit resources to MAPClub in developing its Artificial Intelligence (AI), Machine Learning (ML), digital analytics capabilities, and further consolidation of consumer data via multiple social and -e-commerce platforms.



The company will face a significant negative impact from the Emergency PPKM measures which have closed malls in many cities, with some offset from its digital strategy but all the same 3Q2021 will see a negative performance. The company is in a much better position to weather this current lockdown given the ongoing success of its unified retail strategy. Looking beyond this difficult period, we expect to see a strong recovery in 4Q2021 and continue to recommend buying Mitra Adiperkasa (MAPI IJ) at these levels for the recovery.

Mitra Adiperkasa (MAPI IJ) - Caught in a Squall but Blue Skies Ahead

<p>A recent call with <a href="https://www.smartkarma.com/entities/mitra-adiperkasa-tbk-pt" target="_blank" data-smartkarma-citation="entities:18684:1" rel="noopener">Mitra Adiperkasa (MAPI IJ)</a> management revealed continuing momentum behind the recovery that began in 4Q2020 with growth is back on track and its digital strategy continuing to develop and bear fruit.</p>
<p>The company continues to roll out new stores this year with plans to open a total of 180 new stores. During 1Q2021, the company opened 39 stores and closed 52 underperforming stores. </p>
<p>Store openings are focused on sportswear under <a href="https://www.smartkarma.com/entities/map-aktif-adiperkasa-pt" target="_blank" data-smartkarma-citation="entities:27291:1" rel="noopener">MAP Aktif Adiperkasa PT (MAPA IJ)</a> and fashion, where <a href="https://www.smartkarma.com/entities/mitra-adiperkasa-tbk-pt" target="_blank" data-smartkarma-citation="entities:18684:1" rel="noopener">Mitra Adiperkasa (MAPI IJ)</a> plans to open 65 and 45 new stores respectively but it is also pushing its Apple reseller DigiMap and in addition plans to open a total of 10 Boots stores this year</p>
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<p><a href="https://www.smartkarma.com/entities/mitra-adiperkasa-tbk-pt" target="_blank" data-smartkarma-citation="entities:18684:1" rel="noopener">Mitra Adiperkasa (MAPI IJ)</a> will also open six new Food Hall supermarket outlets this year, which currently has 33 branches.</p>
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<p><a href="https://www.smartkarma.com/entities/mitra-adiperkasa-tbk-pt" target="_blank" data-smartkarma-citation="entities:18684:1" rel="noopener">Mitra Adiperkasa (MAPI IJ)'s</a> digital strategy remains very much intact and continues to grow through the company's MAP Club membership scheme which now has 3.8m active members. It has also moved to collaborate with a fintech on a pay-later installment scheme. </p>
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<p><a href="https://www.smartkarma.com/entities/mitra-adiperkasa-tbk-pt" target="_blank" data-smartkarma-citation="entities:18684:1" rel="noopener">Mitra Adiperkasa (MAPI IJ)</a> trades at a significant discount to its historical valuations and with strong forecast future growth, making it look attractive at these levels, especially in light of the impending recovery and its successful digital strategy. It remains a core proxy for the recovery in consumer spending in Indonesia, which is underway.</p>
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A recent call with Mitra Adiperkasa (MAPI IJ) management revealed continuing momentum behind the recovery that began in 4Q2020 with growth is back on track and its digital strategy continuing to develop and bear fruit.
The company continues to roll out new stores this year with plans to open a total of 180 new stores. During 1Q2021, the company opened 39 stores and closed 52 underperforming stores. 
Store openings are focused on sportswear under MAP Aktif Adiperkasa PT (MAPA IJ) and fashion, where Mitra Adiperkasa (MAPI IJ) plans to open 65 and 45 new stores respectively but it is also pushing its Apple reseller DigiMap and in addition plans to open a total of 10 Boots stores this year

Mitra Adiperkasa (MAPI IJ) will also open six new Food Hall supermarket outlets this year, which currently has 33 branches.



Mitra Adiperkasa (MAPI IJ)'s digital strategy remains very much intact and continues to grow through the company's MAP Club membership scheme which now has 3.8m active members. It has also moved to collaborate with a fintech on a pay-later installment scheme. 

Mitra Adiperkasa (MAPI IJ) trades at a significant discount to its historical valuations and with strong forecast future growth, making it look attractive at these levels, especially in light of the impending recovery and its successful digital strategy. It remains a core proxy for the recovery in consumer spending in Indonesia, which is underway.


Mitra Adiperkasa (MAPI IJ) - Mercury Rising

Indonesia

PT Mitra Adiperkasa Tbk is a leading lifestyle retailer in Indonesia, operating a diversified portfolio of over 3,800 retail stores across various categories including sports, fashion, department stores, kids, food & beverage, and lifestyle products. The company also acts as a distributor for several international brands. It was incorporated in 1995 and is headquartered in Jakarta Pusat, Indonesia.

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Mitra Adiperkasa (MAPI IJ)

Erajaya Swasembada (ERAA IJ) - Better Reception Ahead

Erajaya Swasembada (ERAA IJ) remains a key enabler for the growth of the Indonesian digital economy as the largest mobile phone retailer in the...

Angus Mackintosh