Undying Growth Momentum
Key Takeaways :
▪️ In FY22, HRTA managed to secure a revenue of IDR6.9tn, surging +32.1% YoY (vs IDR5.2tn in FY21). The net profit came in at IDR254.1bn or grew 30.7% YoY (vs IDR194.4tn in FY21).
▪️ The growth was seen from all segments; wholesaler sales soared 32.1% YoY, sales from own stores rose 26.4% YoY, sales from franchise picked up 30.4% YoY and the pawn business contributed a 32.1% YoY growth. The pure gold (99.9%) product sales has catapulted +52% YoY in FY22 and contributed 43.3% to the revenue mix.
▪️ HRTA managed to thin down the cash conversion cycle (CCC) to 173.8 days compared to its closest global proxy (Chow Tai Fook) of 247.9 days, rendering their first positive operating cash flow of IDR31.2bn
▪️ They secured a new contract with Kundan Refinery in India with an added earnings potential of IDR400bn for FY23E.
▪️ HRTA is well positioned to reap a 31% revenue growth (c. IDR9tn) with a net profit of c. IDR329bn in FY23E.
We recommend HRTA with a BUY call and a target price of IDR560 (58% upside), implying a PE of 2.9x/2.3x and PBV of 0.5x/0.4x for FY23E/FY24F. HRTA is currently traded at the 0-STD of its 5-year P/E band average. Risks to our call include: 1) delay in contract with Kundan Group, 2) higher than expected US inflation rate and 3) gold/raw materials supply constraints.
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