FY16 Earnings Preview

In recent years RALS has been embarked on both cost‐cutting and cost‐saving initiatives in

response to its rapidly changing operating environment (economic slowdown, regulatory

changes, consumers’ preference shift, threat from new players in the retail industry).

The result from those initiatives trickles into better financial performance in FY16. We are

fairly confident that both revenue and net income are expected to meet, or even exceed our

estimation.

Revenue grew 6.9% (y/y) to IDR 4.56 trillion in 9M16 or equaled to 79% of our FY16 target.

We believe revenue would reverse its course and modesty rebound 4.28% to IDR 5.77

trillion after a 5.6% contraction in FY15.

Clothing and accessories segment remains the biggest revenue contributor (around 64%). It

grew 10.4% (y/y) in 9M16 to IDR 2.93 trillion (85% of our FY16 target of IDR 3.44 trillion). We

estimate this segment to grow 1.69% in FY16 following a fall of 1.46% in FY15.

Supermarket segment grew relatively flat 1.1% (y/y) in 9M16 to IDR 1.63 trillion or 70.2% of

our FY16 target. We forecast Supermarket segment to generate revenue of IDR 2.33 trillion

(+8.34%) last year.

If it turns out that the growth of Supermarket segment is much slower than what we

envisage, we would still consider it as a commendable improvement compared with the

11.46% plunge in FY15. Obviously, RALS will have its work cut out to build SPAR brand

awareness among public.

Gross Profit Margin is projected to be 38.5% last year, up from 36.0% in FY15. Operating

Profit Margin (OPM) jumps to 5.28% in FY16 from 4.53% in previous year. Net Profit Margin

(NPM) is likely to improve to 6.4% from 6.1% in FY15 and stays above 6% for FY17F–18F.

FY16 net income is set to exceed our estimation of IDR 370 billion (+10.12%). Up to 9M16

RALS already posted IDR 361 billion of net income (+18.75% y/y), representing 97.6% of our

target.

INDONESIA
PT Phillip Securities Indonesia
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Tel +62-21 5790 0800 Fax +62-21 5790 0809
Website: www.phillip.co.id