10 Januari 2022
Consumer Cyclical Sector Updates - January 10, 2022
Be Ready for a New Hope!
Well Handling of Covid-19 Nationally Brings a Better Outlook
• Statistics Indonesia announced that GDP in 3Q21 grew by +1.55% QoQ/+3.51% YoY. Wholesale Retail contributed by 13.10% of national GDP or equivalent to IDR369 trillion, followed by F&B which was contributed by 2.77% or reaching IDR73.78 trillion.
• We see a potential increase in retail and consumer cyclical which was supported by the sloping number of Covid-19 below 500 cases in a day and the recovery rate of Covid-19 patients by more than 95%.
• Manufacturing activities in Indonesia remained in expansionary mode and reported to reach above 50 points for 3 consecutive months since Sep-21. The drop in Covid-19 daily cases was the key driver behind improving manufacturing activities. On the other hand, the Consumer Confidence Index (IKK) significantly reached 113.4 (vs 95.5 in October-21) in line with the increase of mass mobility. Those condition took the cyclical sector revenue grew by +10,80% and the EPS numbers grew by +99.72% YoY in 9M21.
Is Offline Store more Attractive now?
• The government decided to implement PPKM level 1 for since January 03, 2022 to January 17, 2022 for Java and Bali and the reopening of public facilities with 75% capacity for restaurant, 100% for mall and public transport capacity. Meanwhile, Jakarta area decided to implement PPKM level 2.
• Currently, we saw our mobility is going better. Traffic in retail & recreation rose by +8% compared to baseline. We have made observations on Saturday, December 25 at 3.41 pm at Pondok Indah Mall and the results show that the level of occupancy is at 15.93% of the total capacity followed by the traffic at tenants capacity is at 85% level
• On the other hand, digitizing and conducting mergers and partnerships with tech companies by several cyclical sector companies and creating omni channels are made to expand market share and increase the company’s valuation. The average number of download apps for Indonesian cyclical retail platforms is+750,000 downloads.
Beware of the Omicron Variant!
• As of January 04, 2022, Omicron has spread to 164 countries (including Indonesia) with a total of 490,000 cases. Along with the increasing numbers of daily omicron transmission case, it might be trigger for the government pulls the emergency brake through tighter mobility restriction like the second wave of the Delta variant on July-21 to October-21.
• The government is actively accelerating and expanding the distribution of national vaccinations. The vaccination rate is kept at more than 1 million doses/day. Should the government maintain the vaccination rate at current level, we expect the herd immunity could be achieved in 1H22.
Overweight Recommendation for Consumer Cyclical Sector
Our recommendation is Overweight for consumer cyclical sector for FY22E. We believe that purchasing power will continue to grow in 1Q22 which is in line with the improving of mass mobility who tend to buy secondary products. We reiterated BUY for ERAA (TP IDR800); ACES (TP IDR1,500) RALS (TP IDR900), MAPI (TP IDR1,000).
Disclaimer On
ERAA
ACES
RALS
MAPI
