Aspirasi Hidup Indonesia (ACES IJ)
Expansion plans to drive store to double in 5-7 years
- Following ACES’ strong 9M24 results, we expect the potential tax benefit from a lower rate to offset the Rp30bn investment loss in ODI.
- ACES aims to double its number of stores within 5-7 years, with plans to expand into an additional 100 cities.
- We maintain our Buy rating on ACES with an unchanged TP of Rp1,100 (implying 20x FY25 PE) with FY24-26F EPS CAGR of 16%.
Solid 3Q24/9M24 rev. growth driven by a net 6 new stores and 9.8% SSSG
ACES reported strong 3Q24/9M24 rev. growth of 12.6%/13.4% yoy, supported by the addition of a net 6 new stores and 9.8% SSSG in 9M24. ACES booked higher freight costs due to the inventory buildup ahead of upcoming festive events (CNY and Ramadhan) as well as rebranding activities. Nonetheless, higher margins and strong rev. growth enabled ACES to post 3Q24/9M24 NP growth of 13.9%/18.2% yoy, representing 68.5%/67.0% of BRIDS/Cons. FY24 estimates, i.e in-line. ACES reported higher inventory days to 252 days in 9M24, which the company expects to increase to around 300 days by the end of 2024 due to the inventory stock up.
Tax benefits will offset Rp30bn investment loss in ODI
Following the cancellation of Treasury shares in Jun24 EGMS, the company is confident in securing tax benefits by the end of FY24, through reduction in tax rate to 19% for FY24. In Jun24, ACES injected Rp30bn into Omni Digital Internusa (ODI – Ruparupa) to maintain its 30% stake (the remaining stake held by Kawan Lama group). Since FY16, ODI has managed ACES’s digital transactions, including sales via the Ruparupa App and other e-commerce platforms. As of the end of Sept24, ODI had a cumulative loss of Rp130bn. Therefore, under IAS 28, mgmt. estimate that ACES will recognize Rp30bn loss in its associate investment by FY24.
Projected FY24/25F net profit growth of 8.7%/13.2% yoy
Following the release of 9M24 results, we project a slightly higher sales/sqm growth to 8% (9M24: 9% yoy). We expect the combination of modest revenue growth, lower opex (with lower rental offsetting higher freight costs), and lower tax rate partially offset the additional Rp30bn loss, bringing our FY24 net profit growth to 8.7% yoy (down slightly from 9.8% yoy prev.). For FY25, we project revenue and net profit growth of 11.8% and 13.2% yoy, respectively.
Maintain Buy with an unchanged TP of Rp1,100
ACES aims to double its number of stores within 5 to 7 years, with plans to enter additional 100 cities (primarily in Indonesia’ second- and third-tier cities). It also aims to focus on smaller store formats (1,500 to 2,000sqm) designed for higher productivity. We maintain our Buy rating on ACES with an unchanged TP of Rp1,100 (implying 20x FY25 PE) with FY24-26F EPS CAGR of 16%.
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