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Dec 16,2016 11:53:51

ACES targets 10 new store openings in 2017

Aces Hardware ($ACES) will debut its 12th store this year at Mall Q Big, Tangerang later this week, surpassing initial target of opening 10 new stores in 2016. Its latest store has a selling space of 3,217m2 and will take the total number of stores to 128. According to Helen Tanzil, the corporate secretary, ACES, being conservative, will aim for another 10 new openings in 2017. (Kontan)

Dec 02,2016 13:09:13

ACES aims 7% growth in 2017

Hartanto Djasman, the director of PT Aces Hardware Tbk ($ACES), is optimistic about its performance next year on the back of improved purchasing power especially from the middle income segment. That said, ACES expects top and bottom line to grow +7%, while net margin should remain at the 10-11% level. According to Helen Tanzil, the company’s corporate secretary, ACES has set aside capex of IDR250bn for 10 new stores in 2017 and looks forward to opening branches in Balikpapan, Pekanbaru and Bandung. (kontan)

Nov 15,2016 22:47:39

ACES recorded IDR438bn revenue in October

Ace Hardware ($ACES) booked IDR438bn of revenue in October, up +7.9% y-y and resulting in SSSG of +3.7% y-y. Sales were mainly generated by the largely anticipated ACES’ 20th anniversary boom sales. Despite its strong performance in October, ACES’ year-to-date SSSG actually came in at 1.1%, less than the 2-3% as projected by management. (kontan). Bahana comment: 10M16 revenue is equal to IDR3.93tn, making up 81.7% of our full-year estimate and 78.2% of consensus.

Nov 14,2016 12:37:57

The 14th stimulus - e-commerce roadmap
The government announced its 14th economic stimulus package focusing on e-commerce roadmap in Indonesia, with main emphasis on the of Small Medium Enterprises (SMEs) and e-commerce start-ups through tax inventive. Acknowledging Indonesia potential to be the biggest digital economy in Southeast Asia with 93.4m internet users and 71m smartphone users by 2020, the stimulus policy on E-commerce is timely and continue to signify government’sprolific approach to encourage robust economic activity. The roadmap for e-commerce will be prepared in 2016-2019 with targets of 1,000 technopreneurs with USD10bn valuation which brings up the e-commerce business to USD130bn in 2020.
The e-commerce business is still in early stage of development in Indonesia, with large retail companies have been embarking into this segment, with $ACES, $MAPI and $LPPF owns and operate their e-commerce platform. However, the financial benefit of this stimulus is unlikely to be immediate, and would rather be gradual. We believe with more potential development in the e-commerce segment, it could support the ad-spend growth. In the 1H16, the e-commerce has made into the top 10 largest ad-spend in Indonesia, above the like of instant noodle. As such, the media company with strong market share domination such as $MNCN and $SCMA could also benefited in the longer run. Also, growing e-commerce business could be seen as one of potential tax source for government in the future.
The government stated the road maps in 8 aspects including: i) financing, ii) taxation, iii) consumer protection, iv) education, v) logistics, vi) infrastructure, vii) cyber security, and viii) monitoring. (Helmy Kristanto)

Jun 07,2016 12:26:34

•PERTUMBUHAN EKONOMI : Pemerintah memberi sinyal penurunan asumsi laju produk domestik bruto dari usulan RAPBNP 2016 sebesar 5,3% menjadi 5,1%-5,2%. (BISNIS INDONESIA)

•REGULASI IMPOR PONSEL & KOMPUTER : Per 1 Juli, Importir Produsen Wajib Investasi
Mulai 1 Juli 2016, impor telepon seluler, komputer genggam (handheld), dan komputer tablet khususnya untuk perangkat yang berada dalam jaringan 4G LTE oleh importir produsen wajib menyertakan bukti investasi di dalam negeri. (BISNIS INDONESIA)

•INDUSTRI PAKAN TERNAK : Jagung Ditekan, Impor Gandum Melonjak, Pengetatan impor jagung berimbas pada meningkatnya impor gandum untuk pakan ternak. Penurunan impor jagung juga telah menyebabkan penyerapan komoditas itu dari petani lokal naik cukup signifikan. (BISNIS INDONESIA) Comment : good for BISI

•TAMBAHAN MODAL BUMN : PMN Cair, Rencana penerbitan saham baru oleh BUMN kembali mencuat setelah pemerintah mengusulkan Penyertaan Modal Negara (PMN) dalam Rancangan APBN Perubahan 2016 kepada DPR. (BISNIS INDONESIA)

•WTON : Perusahaan beton pracetak PT Wijaya Karya Beton Tbk. sudah mengantongi proyek infrastruktur HSR Jakarta-Bandung dan menggenggam total nilai kontrak baru hingga Rp1,3 triliun. (BISNIS INDONESIA)

•RI MASUK LIMA BESAR DUNIA - Ledakan Besar di Ritel : Lompatan peringkat Indonesia, dari 12 menjadi 5, dalam Global Retail Development Index (GRDI) 2016 kian mengonfirmasi terjadinya booming sektor ritel di Tanah Air. (BISNIS INDONESIA) Comment : Good For ACES, RANC

•STOK CPO MENURUN : Ramadan Kerek Harga CPO, Persediaan minyak kelapa sawit di Malaysia, sebagai produsen kedua terbesar di dunia, diprediksi menyusut ke level terendah dalam dua tahun terakhir. Harga pun berpeluang mencapai level 2.900 ringgit per ton pada bulan ini. (BISNIS INDONESIA) Good For LSIP, AALI

•TLKM : PT Telekomunikasi Indonesia Tbk mengaku sudah meraih pendapatan sekitar Rp 15 triliun dari segmen High End Market yang dikelola Enterprise Customer Facing Unit (CFU). (INDO TELKO)

•BBRI- BMRI : Bank BRI (Persero) Tbk dan Bank Mandiri (Persero) Tbk berkomitmen membiayai permodalan bagi distributor minyak pelumas buatan PT Pertamina Lubricants. (KOMPAS)

•BMRI : Bank Mandiri’s e-money solution provider PT Digital Artha Media (DAM) will sign partnership agreements with 13 e-commerce companies while Indonesian Agency for Creative Economy (BEKRAF) has joined hands with several venture capital firms to fund the 16 sub-sectors in the creative industry. (DEAL STREET ASIA)

•Harga Nickel Dan Timah
Tin 3M : 16945  +350  +2.11%
Nickel 3M : 8665  +165  +1.94%



Apr 04,2016 13:21:38
ACE Hardware ($ACES), Huge Inventory Iceberg Ahead

We think ACE Hardware is overvalued as we notice some real, visible cracks in this large, very popular ship. Since 2011, its inventory growth has exceeded sales growth each year, and we are uncomfortable with the increasing inventory days in its home improvement and toy divisions. We also note that since Jan 2016, the company has had different discount sales themes monthly, which could lead to a further reduction in its gross margin this year. Taking into account such factors, we reiterate SELL with a DCF-based TP of IDR640 (28% downside).

¨ Investors buy inventory growth story. Despite ACE Hardware’s (ACE) leading market share in the home improvement sector in Indonesia, we note that investors are actually buying an inventory growth story, as its inventory growth has exceeded sales growth every year since 2011.

¨ Inventory piles up in the home improvement (HI) division. We think that its HI division’s growing inventory days is the first visible crack in ACE. It recorded 209 inventory days in FY15 vs 96 days in FY12. This is corroborated by the company giving discounts of up to 50% to clear its cleaning aids items in Jan 2016, while it is giving discounts of 70% on lighting items. Furthermore, the annual sales growth of HI items has fallen to just 0.4% in FY15 (vs 26%/18% in FY13/FY14).

¨ Lifestyle division’s inventory is also very high, at 189 days. With the exception of FY14, the inventory growth of its lifestyle division has always exceeded its gross sales growth since FY11. Annual sales growth of lifestyle items was flattish at 9.1% in FY15 (vs 11.5%/13.0% in FY13/FY14)

¨ Should divest Toys Kingdom, its toy division. The sales of its toy division only contributed 4.5% of total gross sales in 2015, and its YoY sales growth slipped to only 3% YoY in FY15 (vs 45%/30% in FY13/FY14).

¨ Closing unprofitable stores. ACE closed one of its unprofitable stores, located in Binjai (North Sumatera) in February. We believe management should close more unprofitable stores and be very selective in opening new outlets, and not just open new stores to dominate the market at the expense of its excessively high overall inventory days – which surged to c.200 days in FY15 from 57 days in FY11.

¨ Still a SELL. ACE is overvalued and we keep our SELL call on the stock, with a TP of IDR640 (28% downside). Our TP is based on a DCF valuation, assuming a 12.2% WACC and 3% terminal growth rate, which implies fair 18x/16x 2016F/2017F P/Es, considering its large inventory issue. A key risk to our call is the USD/IDR weakening below 12,000, as it imports c.80% of its goods.
Quotes delayed, except where indicated otherwise.
1,300.00 45.00 (3.59%)
Ace Hardware Indonesia Tbk.
Last Update 02:54:10