EQUITY RESEARCH

ACES - Company Updates - 12 December 2019

CIPTADANA SEKURITAS ASIA

BUY Ace Hardware Indonesia

A moment to cherish
TP: Rp1,880 (+21.7%)

Sector Retail Christmas is just around the corner

From the past five years, ACES fourth quarter sales contributed around 28% of total net
Bloomberg Ticker ACES IJ
sales, while net profit in the fourth quarter contributed around 32% to the full year
Share Price Performance
numbers. We expect ACES to book Rp2.4 tn net revenue in 4Q19, around 29% to total net
sales. On the bottom line, we deem ACES to book Rp296.4 bn net profit in 4Q19, around
Last price (Rp) 1,545 29% to total net profit in 2019. We believe ACES will meet our forecast, due to Christmas
Avg. daily T/O (Rpbn/USDmn) 36.0/2.6 theme promotions, high demand for Christmas decoration products, higher SSSG, and also
sales contribution from the new stores. In addition, ACES YTD SSSG was at 6.5% until
3m 6m 12m
October 2019. We expect SSSG to improve in November and December, due to Christmas
Absolute (%) -13.7 -14.2 3.0 seasonality.
Relative to JCI (%) -11.3 -13.1 1.5
Sales in every 4Q is still growing
52w High/Low price (Rp) 1,920/1,450
We try to examine every sale on the fourth quarter, as fourth quarter is the strongest
quarter for ACES. As we can see from the graph (Exhibit 3), the sales is still growing very
2,000 25% well, and the growth also still on an uptrend. We believe this was due to growing middle
1,800 income and also contribution from the new stores. We expect this trend to continue in
20%
1,600
15%
2020F, due to growing middle income segment.
1,400
1,200 10%
1,000 Remained solid home improvement products sales growth
800 5% Under BI retail sales Index, home improvement products is forming solid sales growth
600 0% trend (Exhibit 4). Since July 2019, the trend is going up, reaching the peak in September
400 2019 by 11% YoY, and then slowing down in October 2019 to 4% YoY. We see, that house
-5%
200
hold retail sales growth has a similar trend with ACES monthly SSSG, in September 2019
0 -10%
ACES SSSG reached 12.5%, before hit -0.2% in October (Exhibit 5). We believe home
Dec-18

Oct-19
Nov-19
Dec-19
Jan-19

Jun-19
May-19

Jul-19
Feb-19
Mar-19
Apr-19

Aug-19
Sep-19

improvement products will remain stable in 2020F, due to less competition, and less
impacted by e-commerce disruption. Therefore, in 2020F, we think that home
ACES 1yr Rel. to JCI (RHS) improvement segment is still attractive.
Outstanding shrs (mn) 17,150
Store expansion updates
Mkt. Cap (Rpbn/USDmn) 26,497/1,890
As of December 2019, ACES had opened 20 new stores in 2019, and closed 2 stores,
Estimated free float (%) 40.0 hence, ACES operates 194 stores in total. We like the company initiatives to expand in
Major shareholders outside Java, as the area yielded the highest SSSG compared to other region. We believe,
improvement in commodity price, and better infrastructure will boost the sales in outside
Kawan Lama Sejahtera 60.0% Java area.
Capital Group Companies Inc 6.0%
Rating and recommendation
Standard Life Aberdeen Plc 4.7%
We believe that ACES sales will improve in 4Q19, due to Christmas and New Year
EPS Consensus seasonality. We also like ACES, as we believe that home improvement is a resilient and
stable segment which has less business competition and less impacted by e-commerce
Ciptadana Cons. % Diff disruption. Moreover, ACES mid-up segment is more resilient toward the purchasing
2019F 59.7 62.6 -4.6 power concerned. We maintain our BUY call on ACES with unchanged 2020F DCF-based TP
of Rp1,880/sh. At the moment the stock trades at 23.7x 2020F PER.
2020F 65.2 70.7 -7.8
2021F 72.3 79.0 -8.5 Exhibit 1 : Financial Highlights
Year to 31 Dec 2017A 2018A 2019F 2020F 2021F
Revenue (Rpbn) 5,939 7,240 8,420 9,344 10,354
Operating profit (Rpbn) 869 1,072 1,171 1,316 1,458
Net profit (Rpbn) 777 964 1,024 1,118 1,239
EPS (Rp) 45.3 56.2 59.7 65.2 72.3
EPS growth (%) 10.2 24.0 6.2 9.2 10.9
Robert Sebastian EV/EBITDA (x) 27.1 22.1 19.9 17.7 15.6
+62 21 2557 4800 ext.760 PER (x) 34.1 27.5 25.9 23.7 21.4
sebastianrobert@ciptadana.com PBV (x) 7.5 6.3 5.5 4.8 4.2
Dividend yield (%) 1.1 1.5 1.5 1.6 1.8

http://www.ciptadana.com ROE (%) 22.1 22.8 21.1 20.2 19.7

Source : ACES, Ciptadana Estimates

This document is being provided for the exclusive use of BUDHY SIALLAGAN at PT MIRAE ASSET
Please see analyst certification and other important disclosures at the back of this report 2
SEKURITAS INDONESIA
 EQUITY RESEARCH
ACES - Company Updates - 12 December 2019
CIPTADANA SEKURITAS ASIA

th
Exhibit 2: 4 Quarter Revenue and Net Profit Contribution

Revenue Contribution Net Profit Contribution

40%

35%

30%

25%

20%

15%

10%

5%

0%
4Q14 4Q15 4Q16 4Q17 4Q18

Source: ACES, Ciptadana Estimates

th
Exhibit 3: ACES sales and SSSG on every 4 Quarter

SSSG Sales (RHS) Trend line

30% 2,500

25%
2,000

20%
1,500
15%
1,000
10%

500
5%

0% 0
4Q13 4Q14 4Q15 4Q16 4Q17 4Q18

Source: ACES

Exhibit 4: Home Improvement on BI retail sales index

Home Improvement Sales Index Growth % (RHS)
200.0 40
180.0
30
160.0
140.0 20
120.0 10
100.0
80.0 0

60.0 -10
40.0
-20
20.0
0.0 -30

Source: Bank Indonesia

This document is being provided for the exclusive use of BUDHY SIALLAGAN at PT MIRAE ASSET
Please see analyst certification and other important disclosures at the back of this report 3
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 EQUITY RESEARCH
ACES - Company Updates - 12 December 2019
CIPTADANA SEKURITAS ASIA

Exhibit 5: Home Improvement sales index growth & ACES SSSG

Home Improvement Growth (%) ACES SSSG (%)

14

12

10

0
Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Juli-19 Agst-19 Sep-19 Oct-19
-2

Source : ACES, Ciptadana Estimates

Exhibit 6: Forward PER band

Source : ACES, Ciptadana Estimates

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Please see analyst certification and other important disclosures at the back of this report 4
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 EQUITY RESEARCH
ACES - Company Updates - 12 December 2019
CIPTADANA SEKURITAS ASIA

Exhibit 7 - Income Statement

Year to 31 Dec (Rpbn) 2017A 2018A 2019F 2020F 2021F
Revenue 5,939 7,240 8,420 9,344 10,354
COGS -3,104 -3,797 -4,420 -4,906 -5,436
Gross profit 2,835 3,443 3,999 4,438 4,918
Oper. expenses -1,966 -2,371 -2,828 -3,123 -3,460
Oper. profit 869 1,072 1,171 1,316 1,458
EBITDA 944 1,167 1,280 1,436 1,591
Interest income 33 29 31 38 48
Interest expense -38 -47 -51 -56 -58
Other income (exp.) 96 148 136 142 147
Pre-tax profit 960 1,202 1,287 1,440 1,595
Income tax -179 -226 -251 -308 -340
Minority interest -3 -12 -12 -14 -15
Net profit 777 964 1,024 1,118 1,239

Exhibit 8 - Balance Sheet

Year to 31 Dec (Rpbn) 2017A 2018A 2019F 2020F 2021F
Cash & cash equivalent 902 799 1,069 1,219 1,662
Acct, receivables 90 37 43 47 52
Inventory 1,849 2,520 2,640 2,930 3,096
Other curr, asset 517 741 842 934 1,035
Total current asset 3,358 4,096 4,593 5,131 5,845
Fixed assets - net 359 444 546 659 785
Other non-curr.asset 711 781 890 975 942
Total asset 4,429 5,321 6,028 6,765 7,571

ST debt + curr. maturity 0 115 67 75 0

Acct, payable 169 198 233 259 287
Advances received 0 0 0 0 0
Other curr. liab 309 318 372 413 457
Long term debt 0 0 0 0 0
Other non-curr, liab, 440 455 506 487 540
Total liabilities 918 1,086 1,179 1,233 1,284
Shareholder equity 3,513 4,225 4,850 5,532 6,287
Minority interest -2 10 0 0 0
Total liab + SHE 4,429 5,321 6,028 6,765 7,571

Exhibit 9 - Per Share Data

(Rp) 2017A 2018A 2019F 2020F 2021F
EPS 45.3 56.2 59.7 65.2 72.3
BVPS 204.8 246.4 282.8 322.5 366.6
DPS 16.4 22.7 23.3 25.4 28.2
FCF per share 28.5 0.2 41.7 32.7 56.8

Source : ACES, Ciptadana Estimates

This document is being provided for the exclusive use of BUDHY SIALLAGAN at PT MIRAE ASSET
SEKURITAS INDONESIA Please see analyst certification and other important disclosures at the back of this report 5
 EQUITY RESEARCH
ACES - Company Updates - 12 December 2019
CIPTADANA SEKURITAS ASIA

Exhibit 10 - Cash Flow

Year to 31 Dec (Rpbn) 2017A 2018A 2019F 2020F 2021F
Net income 777 964 1,024 1,118 1,239
Depreciation 75 95 109 120 133
Chg in working cap. -176 -859 -195 -425 -113
Other -33 -29 -25 -32 -42
CF-Oper activities 643 172 913 781 1,218

Capital expenditure -157 -180 -210 -234 -259

Others 3 12 12 14 15
CF-Investing activities -154 -168 -198 -220 -244

Net change in debt -5 115 -48 7 -75

Net change in equity 0 0 0 0 0
Dividend payment -281 -389 -399 -436 -483
Other financing -38 138 -22 -14 -15
CF-Financing activities -291 -107 -445 -410 -532

Net cash flow 198 -104 270 151 442

Cash - begin of the year 704 902 799 1,069 1,219
Cash - end of the year 902 798 1,069 1,219 1,662

Exhibit 11 - Key Ratios

Year to 31 Dec 2017A 2018A 2019F 2020F 2021F
Growth
Revenue (%) 20.3 21.9 16.3 11.0 10.8
Operating profit (%) 19.1 23.4 9.2 12.3 10.8
Net profit (%) 10.2 24.0 6.2 9.2 10.9
Profitability Ratios
Gross margin (%) 47.7 47.6 47.5 47.5 47.5
Operating margin (%) 14.6 14.8 13.9 14.1 14.1
EBITDA margin (%) 15.9 16.1 15.2 15.4 15.4
Net margin (%) 13.1 13.3 12.2 12.0 12.0
ROA (%) 17.6 18.1 17.0 16.5 16.4
ROE (%) 22.1 22.8 21.1 20.2 19.7
Liquidity Ratios
Current ratio (x) 7.0 6.5 6.8 6.9 7.9
Quick ratio (x) 3.2 2.5 2.9 2.9 3.7
Cash conversion cycle (days) 212.6 236.2 210.4 210.1 200.0
Activity Ratio
Inventory turnover (days) 217.5 242.3 218.0 218.0 207.8
Receivable turnover (days) 3.6 3.2 1.7 1.8 1.8
Payable turnover (days) 8.5 9.2 9.3 9.6 9.6
Solvency Ratio
Interest cover (x) 24.7 24.9 25.1 25.6 27.4
Debt to equity ratio (x) 0.0 0.0 0.0 0.0 0.0
Net debt to equity (x) Net Cash Net Cash Net Cash Net Cash Net Cash

Source : ACES, Ciptadana Estimates

This document is being provided for the exclusive use of BUDHY SIALLAGAN at PT MIRAE ASSET
Please see analyst certification and other important disclosures at the back of this report 6
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 EQUITY RESEARCH
ACES - Company Updates - 12 December 2019
CIPTADANA SEKURITAS ASIA

EQUITY RESEARCH

HEAD OF RESEARCH ANALYST ANALYST

Arief Budiman
Strategy, Automotive, Heavy Equipment,
Construction, Oil & Gas and Shipping
T +62 21 2557 4800 ext 819
E budimanarief@ciptadana.com
Erni Marsella Siahaan, CFA Yasmin Soulisa
Banking Property, Plantations
T +62 21 2557 4800 ext 919 T +62 21 2557 4800 ext 799
E siahaanerni@ciptadana.com E soulisayasmin@ciptadana.com

ECONOMIST ANALYST ANALYST

Nicko Yosafat Fahressi Fahalmesta Robert Sebastian
T +62 21 2557 4800 ext 820 Cement, Toll Road, Poultry Retail, Healthcare
E yosafatnicko@ciptadana.com T +62 21 2557 4800 ext 735 T +62 21 2557 4800 ext 760
E fahalmestafahressi@ciptadana.com E sebastianrobert@ciptadana.com

ANALYST ANALYST ANALYST

Gani Thomas Radityo Muhammad Fariz
Telco, Tower, Media Coal, Metal Mining Consumer, Cigarette
T +62 21 2557 4800 ext 734 T +62 21 2557 4800 ext 795 T +62 21 2557 4800 ext 740
E gani@ciptadana.com E radityothomas@ciptadana.com E farizmuhammad@ciptadana.com

TECHNICAL ANALYST RESEARCH ASSISTANT

Trevor Gasman Sumarni
T +62 21 2557 4800 ext 934 T +62 21 2557 4800 ext 920
E gasmantrevor@ciptadana.com E sumarni@ciptadana.com

EQUITY SALES

DIRECTOR OF INSTITUTIONAL EQUITY SALES

Dadang Mulyana
Plaza ASIA Office Park unit 2
Jl. Jend. Sudirman Kav. 59
Jakarta - 12190
T +62 21 2557 4800 ext 838
F +62 21 2557 4900
E mulyanadadang@ciptadana.com

BRANCH OFFICES

JAKARTA - MANGGA DUA JAKARTA - PURI KENCANA SURABAYA

Komplek Harco Mangga Dua Perkantoran Puri Niaga III Intiland Tower Surabaya
Rukan Blok C No.10 Jl. Puri Kencana Blok M8 No.2E Ground Floor Suite 5 & 6
Jl. Mangga Dua Raya Kembangan Jl. Panglima Sudirman 101-103
Jakarta - 10730 Jakarta - 11610 Surabaya - 60271
T +62 21 600 2850 T +62 21 5830 3450 T +62 31 534 3938
F +62 21 612 1049 F +62 21 5830 3449 F +62 31 534 3886

This document is being provided for the exclusive use of BUDHY SIALLAGAN at PT MIRAE ASSET
Please see analyst certification and other important disclosures at the back of this report 7
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 EQUITY RESEARCH
ACES - Company Updates - 12 December 2019
CIPTADANA SEKURITAS ASIA

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Each contributor to this report hereby certifies that all the views expressed accurately reflect his or her personal views about the
companies, securities and all pertinent variables. It is also certified that the views and recommendations contained in this report are not
and will not be influenced by any part or all of his or her compensation.

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The information contained in this report is based on material we believe to be reliable; however, we do not represent that it is accurate,
current, complete, or error free. Assumptions, estimates and opinions contained in this report constitute our judgment as of the date of the
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Disclaimer: This document is not intended to be an offer, or a solicitation of an offer, to buy or sell relevant securities (i.e. securities
mentioned herein or of the same issuer and options, warrants or rights to or interest in any such securities). The information and opinions
contained in this document have been compiled from or arrived at in good faith from sources believed to be reliable. No representation or
warranty, expressed or implied, is made by PT CIPTADANA SEKURITAS ASIA or any other member of the Ciptadana Capital, including any
other member of the Ciptadana Group of Companies from whom this document may be received, as to the accuracy or completeness of the
information contained herein. All opinions and estimates in this report constitute our judgment as of this date and there can be no
assurance that future results or events will be consistent with any such opinions, forecasts or estimates. The information in this document
is subject to change without notice; its accuracy is not guaranteed; and it may be incomplete or condensed.

This document is being provided for the exclusive use of BUDHY SIALLAGAN at PT MIRAE ASSET
Please see analyst certification and other important disclosures at the back of this report 8
SEKURITAS INDONESIA