LPPF: Disruption From E-Commerce, Lower TP of Rp5,000/share
29 May 2019
LPPF: Disruption From E-Commerce, Lower TP of Rp5,000/share
To reflect lower than expected 1Q19 performance, we made a few adjustments to our projection, particularly on SSSG (from our previous expectation of 0% to -1%) and its profitability margins. Hence, we expect LPPF sales in 2019F/20F to grow by 1.1%/2.5% YoY on the back of conservative -1% and 1% SSSG, respectively, due to shadier outlook in department store concept amid wilder competition in fashion retail industry both in store or on the web, but we are optimistic on company’s next initiatives to reformat both the store size and assortments as well as expand more to specialty store concept. Our new target price of Rp5,000/ share, however, still offers a 34.8% upside, as we believe the stock has been oversold lately. Our TP implies PER and EV/EBITDA 2019F of 10.8x and 6.6x, respectively, while the stock is currently traded at 8.2x and 4.4x PER and EV/EBITDA 2019F.
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