Mitra Adi Perkasa (MAPI)

Leading the way in retailing; re-initiate with Buy

 

  • MAPI is a diversified retailer with a proven expansion and productivity execution, having delivered 35% net profit CAGR (in FY17-23F)
  • With its extensive and growing range of brands, MAPI is well positioned to tap the resilient purchasing power of the middle-up shoppers.
  • We reinitiate coverage on MAPI with a Buy rating and TP of Rp2,400 on projected strong FY23-25F net profit CAGR of 17.1%

A diversified retailer with a proven execution track record

MAPI is the biggest retailer in Indonesia with an extensive range of brands from F&B to specialty stores, tapping the country’s middle to upper segment. Through steady expansion (7% CAGR in retail area in FY17-23F) and productivity improvement, MAPI has demonstrated solid revenue and net profit growth of 13% and 35% CAGR respectively.

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A proxy on the resilient middle-upper income consumers

Indonesia’s middle/upper class with monthly consumption per capita of a minimum of Rp6mn comprises 20% of the total population (per WB’s 2016 data), but accounts for nearly half of the total national consumption. We believe the middle-upper class segment will likely maintain its spending habit amid its resilient purchasing power. This shall continue to benefit MAPI as the middle/upper class segment typically spends more on discretionary items.

 

Aggressive store and brands expansion to drive growth in FY23-25F

We forecast revenue CAGR of 17.2% in FY23-25F, supported by 7.8% CAGR in area expansion and 8.6% higher revenue/sqm. We estimate 9.3% yoy store area growth in FY24, mainly driven by new store openings under specialty stores (MAPA), new brands (e.g, Alo Yoga in FY24), and via overseas expansion (in focused market in six countries in SEA). Combined with steady margins, we forecast the revenue growth to translate into FY23-25F net profit growth of CAGR 17%.

 

Reinitiate coverage with a Buy rating and SOTP-based TP of Rp2,400

We like MAPI for its proven expansion execution that will support its top line and earnings growth. We reinitiate coverage on the stock with a SOTP-based TP of Rp2,400 (implying FY24F PE of 16.7x). Key risks are lower-than-expected store expansion/store productivity, higher logistic costs from heighted conflicts in the Red Sea/Middle East and rupiah depreciation.

 

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