EQUITY RESEARCH

LPPF - Result Update - 05 March 2019

CIPTADANA SEKURITAS ASIA

BUY Matahari Department Store

In-line results, earning missed due to impairment loss
TP: Rp5,250 (+22.7%)

Sector Retail In-line FY18 results, earning missed

Matahari Department Store (LPPF) booked Rp10.2 tn of net revenue in 2018 (+2.2% YoY/
Bloomberg Ticker LPPF IJ
+33% QoQ). This represented 99% and 98% of our and consensus estimate. FY18 Gross
Share Price Performance
profit margin came at 62.3% (-22bps YoY / -41bps QoQ). Operating expense increased by
5.1% YoY, dragging down the FY18 operating income to Rp2.3 tn (-3.3% YoY/ +154% QoQ),
Last price (Rp) 4,280 forming 98% and 97% of our and the street estimate. Under the operating line, there was
Avg. daily T/O (Rpbn/USDmn) 61.5/4.4 an impairment loss amounting to Rp770 bn due to investment in PT Global Ecommerce
Indonesia (parent company of Mataharimall.com). Hence, net profit decreased by 42.2%
3m 6m 12m
YoY to Rp1.1 tn, forming only 57% and 63% of our and consensus estimate. Excluding the
Absolute (%) -13.0 -34.2 -63.1 impairment loss, net profit would have come at Rp1.9 tn (-2.1% YoY/ +147% QoQ),
Relative to JCI (%) -18.1 -44.2 -62.2 representing 96% and 108% of our and consensus forecast. Overall, we believe FY18
results were broadly in-line with our expectations given that revenue and operating
52w High/Low price (Rp) 11,975/4,260 income met 98% and 97% of our FY18F figures.

14,000 20% SSSG slowing in 4Q18

10% LPPF reported 3.5% SSSG in 2018 vs. -1.2% in 2017, mostly dominated by the growth in
12,000
0% Outside Java region by 4.1%, followed by Jakarta with 3.6%, and Java by 2.3%. However,
10,000
-10%
on quarterly basis, SSSG declined to 0.9% in 4Q18 vs. 3.7% in 4Q17, we see this was due to
8,000 weak sales performance in Java region (-0.6% SSSG), compared to Outside Java and
-20%
6,000
-30%
Jakarta region, as they booked 0.7% and 1.2% respectively in 4Q18. During 4Q18, the
4,000 -40%
company had opened 2 new large format stores and 3 new specialty stores, bringing the
2,000 -50%
FY18 total stores to 159 (from 155 stores in December 2017). In 2019, the company guided
0 -60%
to open 4-6 new stores and close 2-3 stores. In addition, the company will allocate Rp400
to Rp500 bn of capex and additional Rp 200bn for 2019.
Dec-18

Feb-19
Oct-18
Sep-18

Nov-18
Aug-18
Mar-18

Jul-18
May-18
May-18
Apr-18

Jan-19
Jun-18

Lower dividend payout to 50%

LPPF
Outstanding shrs (mn)
Mkt. Cap (Rpbn/USDmn)
Estimated free float (%)
Major shareholders
PT Multipolar Tbk
Public
The company decided to lower the dividend payout to 50% from 70% previously. The
1yr Rel. to JCI (RHS)
dividend will not include the Rp769 bn impairment loss. Dividend per share will be Rp319,
2,918 or at 7.5% dividend yield. This decision made to support the company’s growth strategies
especially for the store expansions.
12,489/884
82.5 LPPF share buybacks
The company had perform 67 mn of share buyback, with the average price of Rp 4825.52,
amounting to Rp324 bn, we see this as a positive catalyst for the stock price, as we believe
17.5% the recent stock fall does not entirely fundamental driven, while the operational result was
82.5% still in line and we expect on the gradual improvement.

Maintain BUY on lower DCF-based TP of Rp5,250/sh

We tone down our 2019-20F earnings estimate by 9%-8%, as we reduce the SSSG
EPS Consensus assumption for 2019F/2020F to 2.5% and 3% from 3.5% and 3.5% respectively. We also
Ciptadana Cons. % Diff add 3 new stores assumption for 2019. These together resulted to lower TP of Rp5,250/sh
but we maintain our Buy rating on still attractive upside potential. We believe LPPF trades
2019F 648.1 668.2 -3.0 at an attractive valuation of 6.6-6.4x 2019-20F PER while the company has a strong
2020F 673.0 645.9 4.2 balance sheets.
2021F 679.6 629.3 8.0 Exhibit 1 : Financial Highlights
Year to 31 Dec 2017A 2018A 2019F 2020F 2021F
Revenue (Rpbn) 10,024 10,245 10,628 11,078 11,501
Operating profit (Rpbn) 2,409 2,330 2,421 2,514 2,538
Net profit (Rpbn) 1,907 1,097 1,891 1,964 1,983
EPS (Rp) 653.6 376.1 648.1 673.0 679.6
EPS growth (%) -5.6 -42.5 72.3 3.8 1.0

Robert Sebastian EV/EBITDA (x) 4.1 4.4 4.0 3.8 3.5

+62 21 2557 4800 ext.760 PER (x) 6.5 11.4 6.6 6.4 6.3

sebastianrobert@ciptadana.com PBV (x) 5.4 6.9 4.0 3.0 2.4

Dividend yield (%) 11.5 10.3 7.5 7.6 7.9
ROE (%) 81.9 60.4 61.1 47.7 38.8
http://www.ciptadana.com
Source : LPPF, Ciptadana Estimates

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 EQUITY RESEARCH
LPPF - Result Update - 05 March 2019
CIPTADANA SEKURITAS ASIA

Exhibit 2 : FY18 result

Rp (bn) FY18 FY17 YoY 4Q18 3Q18 QoQ FY18F FY18/FY18F Cons
Net revenue 10,245 10,024 2.2% 2,468 1,862 33% 10,332 99% 10,490 98%
COGS (3,867) (3,762) 2.8% (975) (728) 34%
Gross profit 6,378 6,262 1.9% 1,493 1,134 32%
Gross profit margin (%) 62.3 62.5 -0.22 60.5 60.9 -0.41

Operating expense (4,048) (3,853) 5.1% (1,021) (948) 8%

Operating income 2,330 2,409 -3.3% 472 186 154% 2,388 98% 2,414 97%
Operating income margin (%) 22.7 24.0 -1.29 19.1 10.0 9.12

Loss on Equity Investment (770)

Other gains (losses) - net 7 (32) (6) (3)

Finance income 40 37 7 11
Finance costs (31) (18) (9) (6)
Finance income (expense) - net 8.5 19 (2) 5

Profit before tax 1,575 2,396 -34.2% (307) 188 N/A 2,431 65% 2,142 74%
Income tax expense (478) (489) (91) (37)
Net profit 1,097 1,906 -42.5% (398) 151 N/A 1,935 57% 1,735 63%
Net profit margin (%) 10.7 19.0 -8.31 -16.1 (4) N/A

Source : LPPF, Ciptadana Estimates

Exhibit 3 : Key Changes

(in Rp bn) New 19F Old 19F Change New 20F Old 20F Change
Net revenue 10,628 10,850 -2.0% 11,078 11,231 -1.4%
COGS (4,091) (4,095) -0.1% (4,293) (4,254) 0.9%
Gross profit 6,538 6,755 -3.2% 6,785 6,977 -2.8%
GPM (%) 61.5 62.3 -0.7 61.3 62.1 -0.9
Operating profit 2,421 2,560 -5.4% 2,514 2,650 -5.1%
OPM (%) 22.8 23.6 -0.81 22.7 23.6 -0.9
Net income 1,891 2,069 -8.6% 1,964 2,142 -8.3%
NPM (%) 17.8 19.1 -1.3 17.7 19.1 -1.3

Previous New
2019F 2020F 2021F 2019F 2020F 2021F
Key Drivers
New space added (sqm) 6000 6000 6000 14000 10000 6,000
New stores open (unit) 1 1 1 3 2 1
SSSG 3.5% 3.5% 3.5% 2.5% 3% 3%

Source : LPPF, Ciptadana Estimates

Please see analyst certification and other important disclosures at the back of this report 3
 EQUITY RESEARCH
LPPF - Result Update - 05 March 2019
CIPTADANA SEKURITAS ASIA

Exhibit 4 - Income Statement

Year to 31 Dec (Rpbn) 2017A 2018A 2019F 2020F 2021F
Revenue 10,024 10,245 10,628 11,078 11,501
COGS -3,762 -3,867 -4,091 -4,293 -4,519
Gross profit 6,262 6,378 6,538 6,785 6,982
Oper. expenses -3,853 -4,048 -4,116 -4,271 -4,444
Oper. profit 2,409 2,330 2,421 2,514 2,538
EBITDA 2,663 2,565 2,625 2,632 2,673
Interest income 38 40 32 33 35
Interest expense -18 -31 0 0 0
Other income (exp.) -32 -763 3 3 3
Pre-tax profit 2,396 1,575 2,456 2,550 2,575
Income tax -489 -478 -565 -587 -592
Minority interest 0 0 0 0 0
Net profit 1,907 1,097 1,891 1,964 1,983

Exhibit 5 - Balance Sheet

Year to 31 Dec (Rpbn) 2017A 2018A 2019F 2020F 2021F
Cash & cash equivalent 1,583 1,184 2,040 2,616 3,222
Acct, receivables 134 129 123 136 137
Inventory 1,005 1,291 1,491 1,588 1,659
Other curr, asset 251 410 457 464 484
Total current asset 2,974 3,014 4,112 4,803 5,502
Fixed assets - net 974 1,249 1,577 2,012 2,452
Other non-curr.asset 1,480 773 790 841 864
Total asset 5,427 5,036 6,479 7,656 8,818

ST debt + curr. maturity 0 0 0 0 0

Acct, payable 1,645 1,698 1,792 1,883 1,981
Advances received 0 0 0 0 0
Other curr. liab 966 1,042 1,081 1,133 1,173
Long term debt 0 0 0 0 0
Other non-curr, liab, 489 481 508 525 548
Total liabilities 3,099 3,221 3,382 3,541 3,702
Shareholder equity 2,328 1,816 3,097 4,115 5,116
Minority interest 0 0 0 0 0
Total liab + SHE 5,427 5,036 6,479 7,656 8,818

Exhibit 6 - Per Share Data

(Rp) 2017A 2018A 2019F 2020F 2021F
EPS 653.6 376.1 648.1 673.0 679.6
BVPS 797.8 622.3 1,061.3 1,410.3 1,753.4
DPS 491.6 440.7 319.9 324.0 336.5
FCF per share 447.0 414.9 502.5 521.2 544.2

Source : LPPF, Ciptadana Estimates

Please see analyst certification and other important disclosures at the back of this report 4
 EQUITY RESEARCH
LPPF - Result Update - 05 March 2019
CIPTADANA SEKURITAS ASIA

Exhibit 7 - Cash Flow

Year to 31 Dec (Rpbn) 2017A 2018A 2019F 2020F 2021F
Net income 1,907 1,097 1,891 1,964 1,983
Depreciation 254 235 203 118 135
Chg in working cap. -1 -160 -96 17 45
Other -608 549 -1 -24 -1
CF-Oper activities 1,552 1,721 1,998 2,074 2,162

Capital expenditure -248 -511 -531 -553 -575

Others 0 0 0 0 0
CF-Investing activities -248 -511 -531 -553 -575

Net change in debt 0 0 0 0 0

Net change in equity 0 0 0 0 0
Dividend payment -1,434 -1,286 -934 -946 -982
Other financing 0 -324 324 0 0
CF-Financing activities -1,434 -1,609 -610 -946 -982

Net cash flow -130 -399 856 575 606

Cash - begin of the year 1,713 1,583 1,184 2,040 2,616
Cash - end of the year 1,583 1,184 2,040 2,616 3,222

Exhibit 8 - Key Ratios

Year to 31 Dec 2017A 2018A 2019F 2020F 2021F
Growth
Revenue (%) 1.3 2.2 3.7 4.2 3.8
Operating profit (%) -4.7 -3.3 3.9 3.8 0.9
Net profit (%) -5.6 -42.5 72.3 3.8 1.0
Profitability Ratios
Gross margin (%) 62.5 62.3 61.5 61.3 60.7
Operating margin (%) 24.0 22.7 22.8 22.7 22.1
EBITDA margin (%) 26.6 25.0 24.7 23.8 23.2
Net margin (%) 19.0 10.7 17.8 17.7 17.2
ROA (%) 35.1 21.8 29.2 25.6 22.5
ROE (%) 81.9 60.4 61.1 47.7 38.8
Liquidity Ratios
Current ratio (x) 1.1 1.1 1.4 1.6 1.7
Quick ratio (x) 0.8 0.6 0.9 1.1 1.2
Cash conversion cycle (days) 41.1 67.0 77.4 78.7 77.0
Activity Ratio
Inventory turnover (days) 97.6 121.8 133.0 135.0 134.0
Receivable turnover (days) 3.8 4.7 4.3 4.3 4.3
Payable turnover (days) 60.2 59.5 59.9 60.5 61.3
Solvency Ratio
Interest cover (x) 145.7 82.3 n.m n.m n.m
Debt to equity ratio (x) 0.0 0.0 0.0 0.0 0.0
Net debt to equity (x) Net Cash Net Cash Net Cash Net Cash Net Cash

Source : LPPF, Ciptadana Estimates

Please see analyst certification and other important disclosures at the back of this report 5
 EQUITY RESEARCH
LPPF - Result Update - 05 March 2019
CIPTADANA SEKURITAS ASIA

EQUITY RESEARCH

HEAD OF RESEARCH ANALYST ANALYST

Arief Budiman Erni Marsella Siahaan, CFA Yasmin Soulisa
Strategy, Automotive, Heavy Equipment, Banking Property, Plantations
Construction, Oil & Gas T +62 21 2557 4800 ext 919 T +62 21 2557 4800 ext 799
T +62 21 2557 4800 ext 819 E siahaanerni@ciptadana.com E soulisayasmin@ciptadana.com
E budimanarief@ciptadana.com

ECONOMIST ANALYST ANALYST

Imanuel Reinaldo Fahressi Fahalmesta Stella Amelinda
T +62 21 2557 4800 ext 820 Cement, Toll Road, Poultry Consumer, Cigarette
E reinaldoimanuel@ciptadana.com T +62 21 2557 4800 ext 735 T +62 21 2557 4800 ext 740
E fahalmestafahressi@ciptadana.com E amelindastella@ciptadana.com

ANALYST ANALYST ANALYST

Robert Sebastian Thomas Radityo Gani
Retail, Healthcare Coal, Metal Mining Telco, Tower, Media
T +62 21 2557 4800 ext 760 T +62 21 2557 4800 ext 739 T +62 21 2557 4800 ext 734
E sebastianrobert@ciptadana.com E radityothomas@ciptadana.com E gani@ciptadana.com

TECHNICAL ANALYST RESEARCH ASSISTANT

Trevor Gasman Sumarni
T +62 21 2557 4800 ext 934 T +62 21 2557 4800 ext 920
E gasmantrevor@ciptadana.com E sumarni@ciptadana.com

EQUITY SALES

Co HEAD OF INSTITUTIONAL SALES Co HEAD OF INSTITUTIONAL SALES

Dadang Mulyana The Fei Ming
Plaza ASIA Office Park unit 2 Plaza ASIA Office Park unit 2
Jl. Jend. Sudirman Kav. 59 Jl. Jend. Sudirman Kav. 59
Jakarta - 12190 Jakarta - 12190
T +62 21 2557 4800 ext 838 T +62 21 2557 4800 ext 807
F +62 21 2557 4900 F +62 21 2557 4900
E mulyanadadang@ciptadana.com E thefeiming@ciptadana.com

SURABAYA
BRANCH OFFICES

JAKARTA - MANGGA DUA JAKARTA - PURI KENCANA SURABAYA

Komplek Harco Mangga Dua Perkantoran Puri Niaga III Intiland Tower Surabaya
Rukan Blok C No.10 Jl. Puri Kencana Blok M8 No.2E Ground Floor Suite 5 & 6
Jl. Mangga Dua Raya Kembangan Jl. Panglima Sudirman 101-103
Jakarta - 10730 Jakarta - 11610 Surabaya - 60271
T +62 21 600 2850 T +62 21 5830 3450 T +62 31 534 3938
F +62 21 612 1049 F +62 21 5830 3449 F +62 31 534 3886

Please see analyst certification and other important disclosures at the back of this report 6
 EQUITY RESEARCH
LPPF - Result Update - 05 March 2019
CIPTADANA SEKURITAS ASIA

Analyst Certification

Each contributor to this report hereby certifies that all the views expressed accurately reflect his or her personal views about the
companies, securities and all pertinent variables. It is also certified that the views and recommendations contained in this report are not
and will not be influenced by any part or all of his or her compensation.

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This report does not constitute an offer to buy or sell any security/instrument, invitation to offer or recommendation to enter into any
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The information contained in this report is based on material we believe to be reliable; however, we do not represent that it is accurate,
current, complete, or error free. Assumptions, estimates and opinions contained in this report constitute our judgment as of the date of the
document and are subject to change without notice. Any projections are based on a number of assumptions as to market conditions and
there can be no guarantee that any projected results will be achieved. Past performance is not a guarantee of future results. PT
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RELIANCE ON THIS REPORT OR FOR THE RELIABILITY, ACCURACY, COMPLETENESS OR TIMELINESS THEREOF.

Disclaimer: This document is not intended to be an offer, or a solicitation of an offer, to buy or sell relevant securities (i.e. securities
mentioned herein or of the same issuer and options, warrants or rights to or interest in any such securities). The information and opinions
contained in this document have been compiled from or arrived at in good faith from sources believed to be reliable. No representation or
warranty, expressed or implied, is made by PT CIPTADANA SEKURITAS ASIA or any other member of the Ciptadana Capital, including any
other member of the Ciptadana Group of Companies from whom this document may be received, as to the accuracy or completeness of the
information contained herein. All opinions and estimates in this report constitute our judgment as of this date and there can be no
assurance that future results or events will be consistent with any such opinions, forecasts or estimates. The information in this document
is subject to change without notice; its accuracy is not guaranteed; and it may be incomplete or condensed.

Please see analyst certification and other important disclosures at the back of this report 7