AMRT - Leading with continuous growth

KBVS Update
Friday, 29 September 2023

AMRT - Leading with continuous growth
(Initiate BUY; TP: IDR3,500)

AMRT’s continuous topline growth is proven with market share expansion and higher contribution from its loyal members. We expect AMRT’ revenue to grow by 13% yoy & 14% yoy, in ‘23F-‘24F on shopping’s trend shift, better consumer spending (a possibility on extra money for consumers as election’ campaign starts in Nov ’23) and higher revenue contribution from its loyal members.

Thanks to AMRT’s massive store numbers with good product mix, we expect its gross profit to grow by 14.7% yoy in 2H23F and 14.9%/15.9% yoy in ‘23F/‘24F. While, gross margin could expand to 20.8%, and 21%/21.4%, in 2H23F and in ‘23F/‘24F.

Thus, we expect net profit to grow by 20.5% yoy & 24.2% yoy in ‘23F-‘24F, with net margin expansion to 3.1% & 3.4% in ‘23F-‘24F on better cost management with continuous effort to lower employee counts per store and higher other income.

Moreover, AMRT is in net cash position since 2021 and its '23F-24F PE is still below than its regional peers average '23F-'24F PE and AMRT' 27.8% and 30.1% in '23F-'24F ROE is way above than peers (domestic, regional and global).

We initiate our coverage on Sumber Alfaria Trijaya (AMRT) with a BUY and TP of IDR3,500 (34x ‘24F P/E) as AMRT is leading in MT minimarket, we also think AMRT’ premium valuation is justified on a) its business growth and margin expansion, b) ‘23F-‘24F PE is still lower than regional peers’ average PE in ‘23F-‘24F, c) in a net cash position since 2021, and ‘23F-‘24F ROE is way above peers’ average ROE in ‘23F-‘24F.

Regards,
Andre Suntono – KBVS Research Team