Johannes Salim, CFA

Equity Bottom-Up

Matahari Department Store / Equity Bottom-Up

<ul><li><a href="https://www.smartkarma.com/entities/5230" target="_blank" data-smartkarma-citation="entities:5230:1">PT Matahari Department Store (LPPF IJ)</a>'s share prices have under-performed rival <a href="https://www.smartkarma.com/entities/12266" target="_blank" data-smartkarma-citation="entities:12266:1">Ramayana Lestari Sentosa Pt (RALS IJ)</a>'s by a whopping 71 ppt since Nov 2017.</li><li>We reiterate our view that LPPF's sales issue is unlikely to be structural given 4Q17/1Q18 SSSG recovery.</li><li>Our penetration analysis suggests that Indo's e-commerce (3.1% penetration in 2017) is likely to follow the U.S., not China, in terms of growth trajectory.</li><li>LPPF (12.2x/11.3x 2018/19 PE) trades at a deep 38-43% valuation discount to Indo retail average/RALS.</li></ul>

PT Matahari Department Store (LPPF IJ)'s share prices have under-performed rival Ramayana Lestari Sentosa Pt (RALS IJ)'s by a whopping 71 ppt since Nov 2017.We reiterate our view that LPPF's sales issue is unlikely to be structural given 4Q17/1Q18 SSSG recovery.Our penetration analysis suggests that Indo's e-commerce (3.1% penetration in 2017) is likely to follow the U.S., not China, in terms of growth trajectory.LPPF (12.2x/11.3x 2018/19 PE) trades at a deep 38-43% valuation discount to Indo retail average/RALS.

Matahari Dept Store: One of the Best Buying Opportunities Ever? Yes, We Think So