March 24, 2011

TRIM Notes
MAPI Conviction Buy

Good 2010 Execution

MAP scintillating performance recorded in 2010 with 46% YoY growth in operating
profit, followed by growth in net profit which grew 23% YoY. Excluding Harvey Nicholes
and other assets writeoffs of Rp57bn, Net profit should have been Rp258bn,
translating to 58% YoY growth.

Divisional Sales & Operating Profit Contribution

De p artme n t S to re s S p e c ialty S to re s Fo o d & B e ve rag e O th e r
Department Stores Specialty Stores Food & Beverage Other
100% 4 .0 % 4 .0 % 100.0% 4.0% 2.0%
2.0% 6.0%
90% 1 0 .0% 1 1 .0 % 90.0%

80% 80.0%

70% 70.0%

60% 60.0%
5 9 .0% 5 8 .0 % 79.0% 79.0%
50% 50.0%

40% 40.0%

30% 30.0%

20% 20.0%
Equity Research

2 7 .0% 2 7 .0 % 10.0%
10% 15.0% 13.0%
0.0%
0%
20 0 9 2010 2009 2010

Source: Company, TRIM Research

Department Store Overhaul

MAPI's department stores has historically been a smaller contriutor to sales (27% of
sales) while contributing 57% of total floor space operated by MAPI. The good news
is that the worst should be over for Dept Store business unit. MAPI had renovated
their department stores in 2010 to implement a new zoning and product mix strategy,
leading to a higher per sqm productivity sales. Past experiments have shown 20%
INDONESIA

improved productivity. This potentially adds Rp300bn of topline for MAPI.

F&B Drives Margin Expansion

Management is targeting 20% sales growth driven by 35% increase or 300 new stores.
MAPI plans to open 200 specialty stores in 2011, 150 of which are shoes (KIDS
Station, Payless, etc) and another 80 F&B stores (Starbucks, Burger King, Domino
Pizza). The F&B expansion will drive F&B floor space area for total MAPI portfolio
from 7% in 2010 to 10% in 2011, driving margins up as F&B contributes 60%-65%
GPM, higher than MAPI portfolio average of 50%. Increased in economics of scale
for the F&B business will drive fix cost per unit down. Our channel checks confirm
that MAPI's F&B unit is still running loss at the net level. This turnaround in profitability
will contribute to significant bottom line contribution for MAPI.

F& B Stores/floor space as % to Total

F & B f loor sp ac e to Total
12.0%

10.0%

8.0%

6.0%

4.0%

2.0%

0.0%
Paul Raymond Widjaja 2006 2007 2008 2009 2010 2011
Analyst
(paul.widjaja@trimegah.com) Source: Company, TRIM Research
 TRIM Daily Notes

Preying on Credit Card Partnerships

MAPI is famous for its bargaining position with retail space owners, able to squeeze
another 50bps of savings on a per sqm rental for its portfolio of floor space from
2009 to 2010. MAPI is next monetizing its barganing power with bank credit card
divisions, as MAPI come to find out 70% of credit card users who shops in MAPI
leaves behind outstanding credit which gives banks profit. MAPI is monetizing its
bargaining power with banks, and is successful in reducing marekting expense from
>1.5% to sales to 1.0% to sales in 2010. However, company continue to guide 1.5%
to sales marketing expense going forward to, of which 0.5% will be used for a more
targetting brand awareness campaigns in the hope to sustain 20% topline growth.

Spectacular Capital Management

Apart from sales and margins mix, the company has improved its capital management
as well. MAPI has engaged consultants and implemented a more streamlined inventory
strategy, leading to a significant decline in inventory days, from 200days in 2009 to
168days in 2010. This has freed up 170bn in cash for 2010, and potentially another
Rp40bn for working cap expansion every year going forward. This is driving faster
deleveraging for MAPI, turning it into a net cash company in the next 2 years (by
2012). Net gearing continue to improve towards 0.2x in a few years. Interest
expense for 2010 is Rp123bn, making up >3% of sales and >50% of net profit

Valuation & Recommendation

We adjusted our SSG, GPM margins and capital management assumptions in our
model, rasing our TP for MAPI from Rp2850/shr to Rp3278/shr, representing 23%
upside. The TP also reflects 16.3x 2011 PE, in the back of 66% EPSg vs, retailer
average 15.8x 2011 PE in the back of 27% EPSg. Currently, MAPI is our conviction
BUY for the retail & consumer space.

2 PT Trimegah Securities Tbk - March 24, 2011

 TRIM Daily Notes
Equity Research
INDONESIA

PT Trimegah Securities Tbk

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Jakarta 12190, INDONESIA
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3 PT Trimegah Securities Tbk - March 24, 2011