Disappointing Results and Lack of Innovation
Key Takeaways:
• RALS booked a net sales of IDR1.1tn in 2Q23, increased +85% QoQ but fell -13.9% YoY, leading to 1H23’s revenue of IDR1.7tn (-10.3% YoY), reflecting 44.7%/47.9% of our/cons for FY23E.
• Meanwhile, net profit in 2Q23 was recorded at IDR216.7bn, up +622.0% QoQ but down -15.4% YoY, accumulating to a net profit of IDR246.7bn in 1H23, a decrease of -13.8% YoY, reflecting our/cons estimates of 57.7%/63.6% of the FY23E target (compared to a 5Y avg. of 66.8%).
• Management targets a +5.0% YoY growth in gross sales to IDR5.2tn in FY23E, but we are pessimistic about achieving this goal. In 1H23, gross sales were only IDR2.9tn, implying only 55% of the target (vs 62% at the pre-pandemic level).
• We realized that RALS has largely taken longer to recover from the pandemic than other retailers given the lack of additional stores opening (97 outlets in 1H23 vs 99 in FY22). This contradicts our expectations that Ramayana's store operations could reach 108 outlets in FY23E, acting as an acceleration engine.
• We reiterate a HOLD recommendation for RALS with a lower TP of IDR 525, implying PE/PBV of 10.6x/1.0x in FY23E. We trimmed revenue/net profit figures in FY23E by -27.9%/26.6%, respectively.
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