• Retailers under our coverage posted consolidated 1H24 top-line growth of +12.3% YoY. MAPI posted the highest growth (+15.4% YoY), followed by ERAA (+14.6% YoY) and ACES (+13.9% YoY), with overall SSSG at mid-high single digit. On the bottom line, our retail coverage booked consolidated growth of +7.1% YoY, with MIDI and ACES delivering strong growth of +25.2% YoY and +20.9% YoY on the back of ex-Java momentum. However, MAPI reported net profit decline of -11.4% YoY, primarily due to the opening of new stores, which affected the company’s profitability.
• We expect strong performance from retailers in the second part of the year, driven by robust demand from the middle-up segment and the upcoming government aid in 2H, which is expected to boost demand from the lower-end segment. However, the potential imposition of 200% import tax on Chinese products may hurt retailers with high exposure to Chinese inventory, including ACES, RALS, and MAPI (above 50%), while AMRT and MIDI are likely to see minimal impact.
• At this juncture, we maintain our OW rating on the retail sector with pecking order of ERAA> ACES>MIDI>AMRT>MAPI. We believe retailers focusing on the middle-up segment are well-positioned to benefit from robust demand, especially given the K-shaped economic recovery; additionally, we believe ERAA’s undemanding valuation is quite attractive at the moment. Downside risks:  1) lower-than- expected purchasing power, 2) USD rebound.