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RALS: What An Exceptional Year, Maintain NEUTRAL
12 Apr 2019

RALS: What An Exceptional Year, Maintain NEUTRAL

Despite the low single digit growth in FY18’s gross sales by 4.8% YoY to Rp8.54 trillion, we applaud company’s effort to boost its margins through tight discount policy, better store layout that creates bigger basket size and better sales productivity, as well as operational efficiencies. Demand-wise, in our view, despite the potential electricity and fuel price hike (which likely will occur in 2H19) as well as weak commodity prices YTD, the consumption of low-income segment this year will continue to grow, particularly due to increase of employment in formal sector and increasing portion of government’s social assistance program (Program Keluarga Harapan/ PKH and Dana Desa). To reflect much-better than expected profitability margins, we revisit our projection and come up with higher TP of Rp1,800/ share. Maintain NEUTRAL.

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