Outstanding First-Half Growth Secured
Key Takeaways:
• HRTA booked a revenue of IDR6.1tn in 1H23 (+91.9% YoY vs IDR3.2tn in 1H22), reflecting a run-rate of 50.3% from MNCS’s FY23E forecast. This massive growth was primarily driven by HRTA export activity, which impacted the company's pure gold sales volume (+71.9% YoY) and ASP (+12.5% YoY).
• Overall, HRTA’s net profit came in at IDR185.5bn in 1H23, up by 39.3% YoY, exceeding our run-rate by 54.2% accompanied by profitability margins softening (GPM/OPM/NPM in 1H23 recorded at 8.2%/6.3%/3% vs 1H22’s 11.4%/8.9%/4.2%), which was in-line as the export sales came in with a trade-off of lower margins.
• The company still faces growth opportunities from robust domestic market demands, particularly from the retail segment which still have plenty of room for growth (the segment revenue shot up +176% YoY in 1H23) accompanied by 2H seasonality demand.
• We slightly up-revise this year’s revenue projection to IDR12.4tn (previously IDR12.3tn), while acknowledging increased projected finance costs (+31% YoY) to soften the bottom-line; rendering a +33.1% YoY bottom line growth to IDR337bn (NPM of 2.7%).
• Our recommendation remains BUY for HRTA with a target price (TP) of IDR560 (19% upside), implying a PE of 7.6x/5.8x and PBV of 1.3x/1.1x for FY23E/FY24F. Risks to our call include: 1) prolonged higher for longer interest rates, 2) gold/raw materials supply constraints, and 3) lower-than-expected domestic demand.
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