Research & Stock Picks

Emiten Report

18 July 2023

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FY23F: A Comeback Year

With its ‘Boom Sale’ promotion (June 7 – August 1, 2023), we expect to see positive MoM growth in ACES' sales in Jun-23, accompanied by double-digit SSSG (> 13%), with regions outside Java booking the highest SSSG among ACES’ sales areas (supported by the company’s strategy to focus its expansion efforts on those regions). Apart from physical sales, we believe that online sales might become another driver for ACES' future performance, with an estimated contribution of up to 20% within the next 3-5 years (1Q23: 10%). Given all of these positive catalysts, we believe FY23F will be a solid year for ACES, with projected FY23F revenue and net profit of IDR 7.6 trillion (+12.4% YoY) and IDR 710.8 billion (+7.0% YoY) respectively, marking the first positive growth in its full-year bottom line since 2020. We reiterate our BUY call for ACES with a TP of IDR 840 (18.2x FY24F PE0, -1SD below its 5-year PE average).

1H23F preview: Here comes the Boom. We believe the ‘Boom Sale’ promotion (June 7 – August 1, 2023) should help crank up ACES’ sales numbers, boosting its SSSG to double-digit levels (projection: > 13%). Regarding its sales area, we project that regions outside Java will book the highest SSSG, supported by the company’s strategy to focus its expansion on those regions. The possibility for massive sales growth in Jun-23 boosted our optimism that ACES would be able to book 1H23F revenue of IDR 3.6 trillion, in line with our estimate (47.1% of SSI’s FY23F projection, 49.0% of consensus). Regarding its full-year performance, we expect ACES to post revenue of IDR 7.6 trillion in FY23F (+12.4% YoY, driven by positive growth from all of its businesses) with a net profit of IDR 710.8 billion (+7.0% YoY), marking the first positive growth in its full-year bottom line since 2020.

Physical and online. This year, ACES chose to focus its expansion efforts on regions outside Java; throughout 1H23, ACES opened eight new stores across Indonesia, and only one of them was located in Java (Batoh Aceh, Denpasar Bali, Gianyar Bali, Panakkuang Makassar, Tarakan Kalimantan, Singkawang Kalimantan, Bontang Kalimantan, and Purwakarta), and by the end of the year, ACES is expected to open 15 new stores. Aside from physical expansion, another factor that might help support ACES' future performance is online sales;according our on-the-ground checks, ACES' online sales through Ruparupa.com have gone up considerably, supported by promos exclusive to the platform. With these kinds of promotions and other initiatives, we are confident that the contribution of online sales to ACES’ overall sales will reach 20% within the next 3-5 years. (1Q23: 10-11%).

BUY, TP IDR 840.  In light of several positive catalysts outlined above, as well as its status as a net cash company, we reiterate our BUY call for ACES with a TP of IDR 840 (18.2x FY24F PE0, -1SD below its 5-year PE average).

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