Ahead of the Christmas and New Year Holidays, Take a Peek at the Following Retail Issuers Stock Recommendations

Reporter: Aerospace Wisdom | Editor: Wahyu T. Rahmawati

KONTAN.CO.ID – JAKARTA. Retail sector issuers are projected to have better prospects in the remainder of this year and next year. The recovery of purchasing power and the rate of visits to outlets, as well as rising prices crude palm oil (CPO) will be a factor that boosts the performance of this sector.

Mirae Asset Sekuritas analyst Christine Natasya in her research on November 5 wrote, retail sector issuers who are in coverageit has recorded strengthening share prices since late July.

According to him, this is inseparable from the decline in Covid-19 cases, the increase in community mobility, as well as PPKM policies that follow the development of the situation in each region. “With Covid-19 cases continuing to fall and PPKM being more relaxed, demand continues to increase,” Christine wrote in the research.

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Meanwhile, Panin Sekuritas analyst Rendy Wijaya in his research on November 17 added, throughout the month of November, the average level of community mobility was at the level of +1.6% or an increase of 0.7% from the position in October 2021. This indicates the level of mobility. currently recorded to be above the level before the Covid-19 pandemic.

Meanwhile, for retail and recreational areas, the mobility level throughout November was at +6.0%, whereas in October it was +4.3%. This figure was recorded to have increased significantly from the July level which was recorded at -20.0% below the pre-pandemic level.

“Increased mobility in retail and recreational areas is one indication that people are slowly increasing their shopping activities. This can also be seen in the improvement in the IKK and also the Real Sales Index (IPR) for several products,” wrote Rendy in the research.

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Meanwhile, the IKK was recorded at an optimistic level in October 2021. The category of spending above Rp 5 million per month showed the IKK figure in October reached 122.4, up from 101.2 from September. As for the lower middle class with an expenditure level of IDR 1-2 million, the October IKK value was at the level of 108.6, up from September’s 91.2.

In line with this, Rendy estimates that the recovery of purchasing power and consumption activity by middle to upper class consumers will be faster. As a result, retail companies targeting the upper-middle class consumers have the potential to record better performance recovery compared to lower-middle class issuers, especially in the fourth quarter of 2021.

Likewise, Christine also believes that the performance of retail issuers will improve in the fourth quarter of 2021 in line with the improvement in people’s purchasing power and the recovery in the rate of visits to outlets. However, he sees no surprises from the performance of retail issuers considering that everything has been expected.

In addition, Christine highlighted the potential for stock price movements of retail issuers to improve when there is an increase in CPO prices. This is inseparable from the growth in top line retail issuer.

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“We expect that the effect of the increase in CPO prices this year will be seen in 2022. In addition, the expansion of opening new outlets, restoration of store visits, and the return of people’s purchasing power will support the performance of retail issuers next year,” added Christine.

Furthermore, although Christine believes the online store will still exist when the pandemic ends, expansion offline store remains one of the keys to driving revenue growth. He saw that the outlet expansion carried out by Mitra Adiperkasa (MAPI) so far it looks consistent and continues to increase its brand portfolio.

Meanwhile, Matahari Department Store (LPPF) will open 10 new outlets next year after closing many unprofitable outlets in the last 5 years. According to him, MAPI and LPPF are retail issuers who will benefit the most from the relaxation of PPKM and the re-emergence of fashion demand.

“We also raised the rating for the retail sector from neutral to overweight Along with the recovery in purchasing power and the intention to spend money, it also continues to improve after the loosening of community activities,” concluded Christine.

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The following are stock recommendations for retail issuers from analysts:

1. PT Mitra Adiperkasa Tbk (MAPI)

MAPI is a retail issuer with the most consistent expansion. After expanding by entering the skincare retail business through Laneige, Sulwhasoo, and Innisfree, MAPI will also enter the home furniture retail business through Index Living Mall. MAPI is also listed as a retail issuer with the strongest online sales, after the contribution of online sales reached 11.6% in the first half of 2021 (Vs 10.3% in 2020).

NH Korindo Sekuritas analyst Putu Chantika recommends buying MAPI shares with a target price of Rp 1,100 per share.

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2. PT Matahari Department Store Tbk (LPPF)

After making improvements by closing unprofitable outlets, now LPPF has 137 outlets. LPPF plans to reopen 2 new outlets this December. Meanwhile, for next year, LPPF is targeted to add 10 new outlets. Not only that, LPPF also plans to add new brands every quarter by providing more space for the selected brands.

Mirae Asset Sekuritas analyst Christine Natasya recommends trading buy LPPF shares with a target price of Rp 3,850 per share.

Also Read: Expansion, Matahari Department Store (LPPF) Opens Two New Outlets in Cianjur and Batam

3. PT Ramayana Lestari Sentosa Tbk (RALS)

In 2022, RALS prioritizes maximizing the online sales segment by optimizing through e-commerce such as Tokopedia and Shopee. RALS will also focus more on the profitability of existing stores and there are no plans to expand outlets next year. Management will also restructure the unproductive space in each outlet.

Ciptadana Sekuritas analyst Robert Sebastian recommends buying RALS shares with a target price of Rp 890 per share.

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4. PT Erajaya Swasembada Tbk (ERAA)

ERAA will benefit from launch smartphone flagship like the iPhone 13 series because it has a higher profit margin than smartphones mid-to-low segment. Various business diversification measures such as buying shares in Sushi Tei Indonesia, opening a Paris Baguette outlet, and plans to open a JD Sports outlet will be a positive catalyst for the long term.

Panin Sekuritas analyst Rendy Wijaya recommends buying ERAA shares with a target price of Rp 860 per share.

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