Aspirasi Hidup Indonesia (ACES.IJ Rp394; BUY TP Rp550) NEKA’s Store Visit Takeaways: Promising Value Proposition, Though Still in Early Execution Stage

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Aspirasi Hidup Indonesia (ACES IJ)

NEKA’s Store Visit Takeaways: Promising Value Proposition, Though Still in Early Execution Stage

NEKA’s Jatimakmur store offers ~4k SKUs, attracting students and mothers with Rp80-100k avg basket size.
NEKA has limited SKU overlaps with AZKO yet broadly mirrors MR. DIY. Management expects minimal long-term margin dilution on lean operations.
Nonetheless, NEKA’s execution remains key as it is still in an early stage. We reiterate Buy rating on ACES with unchanged TP of Rp550.

Our thoughts post NEKA store visit

We recently visited NEKA Jatimakmur Bekasi to gain insights into the store environment, product assortment, target market, and pricing strategy. The outlet is located along the main arterial road in Bekasi and near several schools, benefiting from foot traffic from students and mothers. The store carries approx. 4k SKUs, primarily curated white-label products under NEKA brand, alongside selected items from Krisbow and KRIS brand, as well as FMCG products from local manufacturers such as Mayora, Wings, and Aice ice cream. Based on our discussions with the store staff, average basket size is estimated at Rp80-100k with ~150-200 daily transactions. Some of the best-selling categories include accessories, stationary, and selected household products.

Limited SKU overlaps with AZKO & its competitive positioning

Our in-store observations suggest limited SKU overlap between NEKA and AZKO, estimated at less than 5% of total SKUs, primarily within household appliances such as emergency lights, table fans, mini blenders and juicers, hair dryers, and basic electrical supplies. In contrast, NEKA’s product categories broadly mirror a nearby MR. DIY store, with the key differentiation being the collusion of FMCG and beauty products, which are not offered in MR. DIY. While NEKA’s products are generally priced below AZKO’s, management is targeting NEKA’s gross margin of approx. 45%, only marginally lower than AZKO’s 47-48%, and supported by a leaner cost structure, management does not expect meaningful long-term dilution in operating margins. Each NEKA outlet is staffed by 7 employees across two shifts, compared with AZKO’s smaller stand-alone stores, which typically require more than double the manpower.

Maintain our estimates unchanged; Reiterate Buy with a TP of Rp550

While NEKA’s format and value preposition could benefit from the recent shift in consumer spending behavior, we believe its execution remains the key as NEKA is still in an early stage with total of 10 stores. For now, we maintain our earnings estimates for ACES unchanged. We have not incorporated NEKA into our forecasts as its contribution to overall sales remains immaterial. Reiterate our Buy call with an unchanged TP of Rp550; currently it trades at 8.2x PE FY26F. Tactical (3M) view: UW. We see limited downside in valuation as currently ACES is already below -1.5std of its 3yr mean, but near-term improvements in sales and SSSG appear unlikely.

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