• Our retailers posted overall SSSG at mid-low teens and aggregate 3Q24 top-line growth of +12.2% YoY with MAPI booking the highest growth (+17.4% YoY), followed by MIDI (+14.6% YoY) and ACES (+12.6% YoY). On the bottom line, total growth for the sector was +18.2% YoY, with strong numbers from ERAA (+639.5%) and ACES (+13.7% YoY). Worth mentioning that ERAA’s booked one-off gain in promotional support jumped +195.8% YoY, boosting operating income, while ACES’ performance was mainly driven by solid ex-Java results and ‘Boom Sale’ impact. However, MAPI reported -10.0% YoY net profit, mainly on unfavorable product mix.
• In 2025F, we expect more robust growth from retailers, particularly those focusing in middle-up segments, given that the planned middle-class stimulus should help increase spending power. However, import tariffs will remain a key risk for most retailers under our coverage, as the government considers 200% import tax on Chinese products.
• At this juncture, we maintain our OW rating on retail sector with the following pecking order: ERAA>ACES>MIDI>AMRT>MAPI. We believe retailers focusing on the middle-up segments are well-positioned to benefit from robust demand, especially with the support of government stimulus. Additionally, we see ERAA’s undemanding valuation as an attractive investment opportunity. Downside risks: lower-than-expected purchasing power and stronger USD.