Mid-High Resilience and Strategic Shifts to Propel Growth
Key Takeaways:
▪️ We expect that mid-high retailers remain upbeat in FY24F, we notice that only the mid-high class (income >IDR5mn) witnessed an uptick in consumption and savings, making it fairly resilient.
▪️ Notably, the occupancy rate in the mid-high retail space in 9M23 was 84.6% (vs 90.4% in 4Q19), we expect continued improvement in the occupancy rate for mid-high retail space, supported by: 1) the festive season momentum in 2Q24; 2) the presence of new brand portfolios; 3) attractive promotions during payday.
▪️ We favor ERAA and RALS which have minimal exposure to the exchange rate, serving as a cushion against GPM. Meanwhile, with the likelihood of improving FX rate, we expect further improvement in GPM for MAPI and ACES in FY24F.
▪️ The addition of shopping centers (such as Menara Jakarta Shopping Mall and Pakuwon Mall Bekasi) with an estimated 330k sqm in the Jakarta and Greater Jakarta areas is likely to open up more tenant prospects for retailers in our coverage.
▪️ We reiterate an Overweight outlook for the retail sector in FY24F. Our top picks are MAPI, ERAA, ACES. Downside risks include: 1) muted purchasing power among mid-high consumers; 2) higher-than-expected rental costs; 3) tight competition from other brands.
Disclaimer On
