Indonesia Daily Focus November 25, 2020
Supra Boga Lestari (RANC IJ) – Bloom amidst the gloom
Supra
Boga Lestari (RANC IJ/Not Rated) is a leading premium supermarket chain
operator which is widely known for its two main brands, namely Ranch
Market and Farmers Market, targeting mid-to-high income households.
RANC
benefits from the rising spending on staples and fresh produce during
the early implementation of large-scale social restrictions (PSBB) back
in April in most big cities in Indonesia.
As
PSBB has been relaxed, high-end shopping centers, where most of RANC’s
stores are located, fare better at retaining traction compared to those
lower-end ones.
Modern
trade has gained higher market share during this pandemic year with
super/hypermarkets underperforming minimarkets. Despite this, RANC
managed to see impressive sales growth, thanks to its locations inside
most of prime locations in Indonesia. As of 9M20, RANC managed to book
sales of IDR2,302bn (+29.1% YoY) and a net profit of IDR65bn (+78.3%
YoY) despite poor macro backdrop.
Assuming
annualized 20F EPS of IDR55/share and conservative EPS growth of 5% YoY
for 21F due to 20F high base, RANC is currently trading at 21F P/E of
7.1x, close to its -1 SD and 68% discount to average retailer peers’
valuation.
We
view RANC as a rare play considering its low stock turnover and
liquidity. RANC is considered a small cap with market cap of below
IDR1tr and floating share of 25.2%.
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