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

<p>Indonesia's leading mobile phone retailer <a href="https://www.smartkarma.com/entities/erajaya-swasembada-tbk-pt" target="_blank" rel="noopener">Erajaya Swasembada (ERAA IJ)</a> recently released a strong set of 1Q2021 results, with sales growth of +39% YoY to IDR10.85tn and net profit growth of +170.9% YoY to IDR278.2bn, with sales driven by cellular phones and tablets, the backbone of <a href="https://www.smartkarma.com/entities/erajaya-swasembada-tbk-pt" target="_blank" rel="noopener">Erajaya Swasembada (ERAA IJ)</a>'s business.</p>
<p>The only area seeing a decrease was the voucher segment, which decreased -28.3% YoY to IDR869.7bn.  This is not surprising given that most of the e-commerce players are now selling mobile phone credit as virtual products, making this space highly competitive.</p>
<p>The new iPhone 12 released at the end of 2020 had a positive impact on the company's 1Q2021 results. In addition, the positive performance was also driven by the new IMEI regulations, which blocks illegal cell phones, strengthening <a href="https://www.smartkarma.com/entities/erajaya-swasembada-tbk-pt" target="_blank" rel="noopener">Erajaya Swasembada (ERAA IJ)</a>'s top line.</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> also reported strong sales results during this year's Lebaran holiday period, without any impact from the mudik ban (going back to hometowns).</p>
<p>The company continues to open new sales outlets, opening 36 new outlets in 1Q2021. Apart from opening conventional outlets, <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 started to open outlets called Erafone Cloud Retail Partner based on the concept of a partnership with local investors but are still managed and operated by the Erafone team.</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 very interesting proxy and enabler for the digital economy, as the provider of equipment to fuel the growth and increased activity. The company trades on 11x FY21E PER and 9.4x FY22E PER, versus its 5-year average forward PER of 9.8x but we expect continuing positive growth, which could fuel a re-rating.</p>
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Indonesia's leading mobile phone retailer Erajaya Swasembada (ERAA IJ) recently released a strong set of 1Q2021 results, with sales growth of +39% YoY to IDR10.85tn and net profit growth of +170.9% YoY to IDR278.2bn, with sales driven by cellular phones and tablets, the backbone of Erajaya Swasembada (ERAA IJ)'s business.
The only area seeing a decrease was the voucher segment, which decreased -28.3% YoY to IDR869.7bn.  This is not surprising given that most of the e-commerce players are now selling mobile phone credit as virtual products, making this space highly competitive.
The new iPhone 12 released at the end of 2020 had a positive impact on the company's 1Q2021 results. In addition, the positive performance was also driven by the new IMEI regulations, which blocks illegal cell phones, strengthening Erajaya Swasembada (ERAA IJ)'s top line.
Erajaya Swasembada (ERAA IJ) also reported strong sales results during this year's Lebaran holiday period, without any impact from the mudik ban (going back to hometowns).
The company continues to open new sales outlets, opening 36 new outlets in 1Q2021. Apart from opening conventional outlets, Erajaya Swasembada (ERAA IJ) has started to open outlets called Erafone Cloud Retail Partner based on the concept of a partnership with local investors but are still managed and operated by the Erafone team.
Erajaya Swasembada (ERAA IJ) remains a very interesting proxy and enabler for the digital economy, as the provider of equipment to fuel the growth and increased activity. The company trades on 11x FY21E PER and 9.4x FY22E PER, versus its 5-year average forward PER of 9.8x but we expect continuing positive growth, which could fuel a re-rating.
  

Erajaya Swasembada (ERAA IJ) - The Empire Strikes Back

<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> released its results last week with 1Q2021 the best first-quarter pre-tax profit in two years, driven by a revival of customer sentiment across multi-categories including fashion, sports, lifestyle, kids, digital, and food &amp; beverage.</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> confirmed that its offline stores continued to see stronger sell through as footfall through malls continued to pick up. Digital sales were also a strong driver for growth, increasing to 10.9% of total sales in 1Q2021 and increasing by +300% YoY. The company's Unified Retail Strategy continues to bear fruit.</p>
<p>Management highlighted "slight shortfalls" primarily due to some supply chain challenges in 1Q2021, together with continuing COVID-19 restrictions on social distancing imposed by authorities but also due to the successes of 4Q2020.</p>
<p><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> outperformed management expectations in 1Q2021, with an improvement in business fundamentals in the quarter, with a favorable sell-through over Chinese New Year across running, home fitness, leisure, and loungewear, sandals, and kid's products.</p>
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<p style="text-align: left;"><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 13.1x FY22E PER and 11.0x FY23E PER, with forecast EPS growth of +56.5% and +18.9% for FY22E and FY23E respectively making it look interesting for long-term investors, given its 5-year average forward PER of 21x.</p>
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Mitra Adiperkasa (MAPI IJ) released its results last week with 1Q2021 the best first-quarter pre-tax profit in two years, driven by a revival of customer sentiment across multi-categories including fashion, sports, lifestyle, kids, digital, and food &amp; beverage.
Mitra Adiperkasa (MAPI IJ) confirmed that its offline stores continued to see stronger sell through as footfall through malls continued to pick up. Digital sales were also a strong driver for growth, increasing to 10.9% of total sales in 1Q2021 and increasing by +300% YoY. The company's Unified Retail Strategy continues to bear fruit.
Management highlighted "slight shortfalls" primarily due to some supply chain challenges in 1Q2021, together with continuing COVID-19 restrictions on social distancing imposed by authorities but also due to the successes of 4Q2020.
MAP Aktif Adiperkasa PT (MAPA IJ outperformed management expectations in 1Q2021, with an improvement in business fundamentals in the quarter, with a favorable sell-through over Chinese New Year across running, home fitness, leisure, and loungewear, sandals, and kid's products.

Mitra Adiperkasa (MAPI IJ) trades on 13.1x FY22E PER and 11.0x FY23E PER, with forecast EPS growth of +56.5% and +18.9% for FY22E and FY23E respectively making it look interesting for long-term investors, given its 5-year average forward PER of 21x.










Mitra Adiperkasa (MAPI IJ) - Unified in Retail

<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> booked a -23.6% Yoy decline in sales in 1Q2021, as SSSG declined by -36.4% YoY in 1Q2021 but an even greater -37.4% versus 1Q2019, which management is increasingly using as a benchmark. </p>
<p>The company saw its gross profit declined by -24.2% YoY in 1Q2021 and -41.0% versus 1Q2019 but there was some respite from the higher average basket size. </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>  suffered a net loss of (IDR95.4bn) during the 1Q2021 versus a profit of IDR143bn in 1Q2019. </p>
<p>In terms of geography,  Greater Jakarta saw the continuing impact from PSBB restriction and Sumatra was the best performing area. Segment-wise, children's clothing was the least impacted, whilst women's clothing and cosmetics saw the worst impact during 1Q2021.</p>
<p>The company operated a total of 147 stores in 1Q2021, with 23 of those on its watchlist for potential closure and 13 of those due to close after Lebaran.</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> is well prepared for the Lebaran festive period, which will likely be shorter than normal.  It has got its merchandise in early ahead of Lebaran given that mobility restrictions have been tightened over the holiday period.</p>
<p>The company continues to build on its Matahari Rewards program with 6.6m active members as of the end of March 2021.</p>
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<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 see increasing sales through digital channels but it is still working on its platform upgrade so the contribution remains relatively small.</p>
<p>The outlook is relatively uncertain for <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> with a shorter and more restrictive Lebaran period ahead, which is normally the peak season for the company's customer base to shop</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> looks cheap versus its peers but there remain risks to earnings over the Lebaran, which management openly admits are difficult to predict. Longer-term the recovery is likely to be protracted given further store closures and a lack of major sales through digital channels.</p>
<p>Valuations look relatively attractive versus history with the company trading on 13.1x FY21E PER and 7.2x FY22E PER versus its 5-year average forward PER of 12x but we would buy on weakness given some potentially choppy waters ahead.</p>
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Matahari Department Store (LPPF IJ) booked a -23.6% Yoy decline in sales in 1Q2021, as SSSG declined by -36.4% YoY in 1Q2021 but an even greater -37.4% versus 1Q2019, which management is increasingly using as a benchmark. 
The company saw its gross profit declined by -24.2% YoY in 1Q2021 and -41.0% versus 1Q2019 but there was some respite from the higher average basket size. 
Matahari Department Store (LPPF IJ)  suffered a net loss of (IDR95.4bn) during the 1Q2021 versus a profit of IDR143bn in 1Q2019. 
In terms of geography,  Greater Jakarta saw the continuing impact from PSBB restriction and Sumatra was the best performing area. Segment-wise, children's clothing was the least impacted, whilst women's clothing and cosmetics saw the worst impact during 1Q2021.
The company operated a total of 147 stores in 1Q2021, with 23 of those on its watchlist for potential closure and 13 of those due to close after Lebaran.
Matahari Department Store (LPPF IJ) is well prepared for the Lebaran festive period, which will likely be shorter than normal.  It has got its merchandise in early ahead of Lebaran given that mobility restrictions have been tightened over the holiday period.
The company continues to build on its Matahari Rewards program with 6.6m active members as of the end of March 2021.

Matahari Department Store (LPPF IJ) continues to see increasing sales through digital channels but it is still working on its platform upgrade so the contribution remains relatively small.
The outlook is relatively uncertain for Matahari Department Store (LPPF IJ) with a shorter and more restrictive Lebaran period ahead, which is normally the peak season for the company's customer base to shop
Matahari Department Store (LPPF IJ) looks cheap versus its peers but there remain risks to earnings over the Lebaran, which management openly admits are difficult to predict. Longer-term the recovery is likely to be protracted given further store closures and a lack of major sales through digital channels.
Valuations look relatively attractive versus history with the company trading on 13.1x FY21E PER and 7.2x FY22E PER versus its 5-year average forward PER of 12x but we would buy on weakness given some potentially choppy waters ahead.





Matahari Department Store (LPPF IJ) - Uncertain Waters Ahead of Lebaran

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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> released its results over the weekend for FY2020, which saw sales for the year falling by -31.4% YoY to IDR14.8tn. The company achieved a gross profit margin of 41.6%, an operating loss of IDR56.9bn, an EBITDA of IDR2.3tn, with an FY2020 net loss of IDR585bn.</p>
<p>The fall in sales reflected the impact of COVID-19 and the associated lockdowns. To offset this, the company focused on driving its sales online, which saw digital sales increase to 10.3% of revenues, an increase of +236% YoY.</p>
<p>On a more positive note, <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> saw its 4Q2020 sales increase by +35.6% QoQ versus 3Q2020, with its gross margin improvements and an operating profit of IDR357bn in 4Q2020 versus a loss of IDR113bn in 3Q2020. It also achieved a significant increase in EBITDA to IDR844bn versus IDR484bn in 3Q2020 plus a net profit of IDR87.2bn versus a net loss of IDR217bn on 3Q2020.</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> sales in 4Q2020 rose considerably in 4Q2020 due to the gradual re-opening of malls together with the impact of the company's Unified Retail Strategy centered around the company's MAP Club loyalty program, which already has 3.7m members.</p>
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<p>The company's sports and leisure subsidiary <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> saw an even more impressive performance in 4Q2020, with a +43.9% growth in net revenue in 4Q2020 versus 3Q2020.</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> remains one of our top picks to play the gradual recovery in consumer spending and increased mobility, which will help support the recovery in offline channels. At the same time, the company has adjusted through its Unified Retail Strategy to selling more through digital channels, which will continue to underpin future growth given the rapid shift in consumption habits to online channels.</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 22x FY21E per and 13.9x FY22E PER, as the company moved back to profit in FY21E and is forecast to grow EPS by +58% YoY FY22E. <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> 5-year average forward PER stands at 21x, making the company look attractive at these levels. </p>
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Mitra Adiperkasa (MAPI IJ) released its results over the weekend for FY2020, which saw sales for the year falling by -31.4% YoY to IDR14.8tn. The company achieved a gross profit margin of 41.6%, an operating loss of IDR56.9bn, an EBITDA of IDR2.3tn, with an FY2020 net loss of IDR585bn.
The fall in sales reflected the impact of COVID-19 and the associated lockdowns. To offset this, the company focused on driving its sales online, which saw digital sales increase to 10.3% of revenues, an increase of +236% YoY.
On a more positive note, Mitra Adiperkasa (MAPI IJ) saw its 4Q2020 sales increase by +35.6% QoQ versus 3Q2020, with its gross margin improvements and an operating profit of IDR357bn in 4Q2020 versus a loss of IDR113bn in 3Q2020. It also achieved a significant increase in EBITDA to IDR844bn versus IDR484bn in 3Q2020 plus a net profit of IDR87.2bn versus a net loss of IDR217bn on 3Q2020.
Mitra Adiperkasa (MAPI IJ) sales in 4Q2020 rose considerably in 4Q2020 due to the gradual re-opening of malls together with the impact of the company's Unified Retail Strategy centered around the company's MAP Club loyalty program, which already has 3.7m members.


The company's sports and leisure subsidiary MAP Aktif Adiperkasa PT (MAPA IJ) saw an even more impressive performance in 4Q2020, with a +43.9% growth in net revenue in 4Q2020 versus 3Q2020.
Mitra Adiperkasa (MAPI IJ) remains one of our top picks to play the gradual recovery in consumer spending and increased mobility, which will help support the recovery in offline channels. At the same time, the company has adjusted through its Unified Retail Strategy to selling more through digital channels, which will continue to underpin future growth given the rapid shift in consumption habits to online channels.
Mitra Adiperkasa (MAPI IJ) trades on 22x FY21E per and 13.9x FY22E PER, as the company moved back to profit in FY21E and is forecast to grow EPS by +58% YoY FY22E. Mitra Adiperkasa (MAPI IJ) 5-year average forward PER stands at 21x, making the company look attractive at these levels. 


Mitra Adiperkasa (MAPI IJ) - Shape-Shifting to Back in Black

<p>A follow-up 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 after it released results to get a better feel for its digital initiatives revealed continuing positive momentum behind the company's "Unified Retail" approach to its business, with its digital presence likely to continue to drive its future growth. </p>
<p>The company has already put through some aggressive inventory adjustments, which put it in a good position to benefit from the pick-up in sales towards the end of the year, without aggressive blanket promotions.</p>
<p>The drive online is being channeled through MAPclub, which now has 3.25m members, and is the largest loyalty program in Indonesia. This will continue to be a key growth driver for <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> in 2021.</p>
<p><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> will continue to benefit from increased health consciousness amongst Indonesians and has an even higher portion of its sales online than <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>. </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> will launch Boots and Amore Pacific brands in the coming year, which should boost growth and it has dropped some non-performing brands. DigiMAP, the company's online electronics platform, will also be an ongoing growth driver. </p>
<p>The company is trading on 24.9x FY21E PER and 15.8x FY22E PER versus its 3-year average forward PER of 21x and continues to be our top pick as a play on the retail recovery.</p>

A follow-up call with Mitra Adiperkasa (MAPI IJ) management after it released results to get a better feel for its digital initiatives revealed continuing positive momentum behind the company's "Unified Retail" approach to its business, with its digital presence likely to continue to drive its future growth. 
The company has already put through some aggressive inventory adjustments, which put it in a good position to benefit from the pick-up in sales towards the end of the year, without aggressive blanket promotions.
The drive online is being channeled through MAPclub, which now has 3.25m members, and is the largest loyalty program in Indonesia. This will continue to be a key growth driver for Mitra Adiperkasa (MAPI IJ) in 2021.
MAP Aktif Adiperkasa PT (MAPA IJ) will continue to benefit from increased health consciousness amongst Indonesians and has an even higher portion of its sales online than Mitra Adiperkasa (MAPI IJ). 
Mitra Adiperkasa (MAPI IJ) will launch Boots and Amore Pacific brands in the coming year, which should boost growth and it has dropped some non-performing brands. DigiMAP, the company's online electronics platform, will also be an ongoing growth driver. 
The company is trading on 24.9x FY21E PER and 15.8x FY22E PER versus its 3-year average forward PER of 21x and continues to be our top pick as a play on the retail recovery.

Mitra Adiperkasa (MAPI IJ) - Unifying with the Digital World

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) - The Empire Strikes Back

Erajaya recently released an impressive set of 1Q2021, driven by strong handsets sales, with a positive tailwind from the new rules on compulsory...

Angus Mackintosh