Universitas Indonesia-Fortuna Capital-Final Submission

CFA Institute Research Challenge
hosted by
CFA Society Indonesia

Fortuna Capital
The CFA Institute Research Challenge is a global competition that tests the equity research and valuation,
investment report writing, and presentation skills of university students. The following report was prepared in
compliance with the Official Rules of the CFA Institute Research Challenge, is submitted by a team of
university students as part of this annual educational initiative and should not be considered a professional
report.
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.
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Disclaimer
The information set forth herein has been obtained or derived from sources generally available to the public and believed by the
author(s) to be reliable, but the author(s) does not make any representation or warranty, express or implied, as to its accuracy or
completeness. The information is not intended to be used as the basis of any investment decisions by any person or entity. This
information does not constitute investment advice, nor is it an offer or a solicitation of an offer to buy or sell any security. This report
should not be considered to be a recommendation by any individual affiliated with CFA Society Indonesia, CFA Institute, or the CFA
Institute Research Challenge with regard to this company’s stock.
Fig. 1 – Market Overview Indonesia’s Top-Notch Retail Proxy in the Making
Source: Company Data, Refinitiv, Fortuna Capital
We iterate our BUY recommendation for AMRT at the target price of IDR 3,200/sh (28% upside potential)
AMRT.IJ on the closing price of IDR2,500 on 9 Dec'22, implying 37.2x forward P/E (+1.5SD its 5Y Forward P/E trend),
Market Data utilizing intrinsic valuation: DCF with perpetuity approach in conducting our primary valuation on FY23
52-week range 1,020 - 3,090 forecasted earnings. We derived our BUY call confidently based on our three main catalysts.
Volume 14,800,400
YTD 103.25%
The Duopoly Players will Continue to Exploit Extensive Minimarket Runway
Market cap (IDR bn) 103,800 AMRT’s c.20k stores is set to comfortably seize bright minimarket 6.1% CAGR outlook in FY22-27F citing
Free float (bn) 17.964 the duopoly with Indomaret’s 20.5k stores as both sums 97.5% of minimarket sales. The extreme
Outstanding (bn) 41.52 competition landscape is forecasted to stay stringent as aggressive expansion outlook with no incumbents.
LTM P/E 45.5 We project AMRT market share to reach 14.9% in FY27F to grocery sales (vs FY21’s 13.5%), owing:
LTM EV/EBITDA 9.5
• Minimarket to dominate traditional trade is projected to lose market share by 3.6% to Modern Trade
as the rising middle-class seeks product quality. Also, minimarket to overtake hypermarket share by
Fig. 2 – Historical Price & Scenario Analysis TP
Source: Company Data, Team Analysis 0.5% as customer value closer proximity to residential areas and just-in-time shopping.
Bull Case
TP: 3,600
• Still long minimarket runway: we believe Indonesia minimarket is underpenetrated, with a 14.1%
4,000
ratio (14 stores per 1,000 residents). Onward, we expect the ratio to reach close to developed market
3,500 TP: 3,200
29% ratio, summing to c.79k outlets (vs. c.41k stores in FY22A). The expansion is justified as higher
3,000 Bear Case
TP: 2,700 consumption is projected in FY22-30F with a 5.3% CAGR due to increasing consumer class.
2,500
2,000 Solidifying Revenue with Superior Organic & Inorganic Growth Capability
1,500 Capitalizing the industry's potential & growing consumption, AMRT's revenue is set to skyrocket by 13%
1,000 CAGR FY21-27F (IDR85tn/IDR173tn in FY21/FY27F). Two factors: 1) bullish same-store sales growth/SSSG
500 (9% FY22F; 7-8% FY23F-27F) and 2) robust store expansion (FY22F at c.1.5k stores; FY23F-27F 1 - 1.2k
0
stores). AMRT is much capable of achieving solid top-line growth as:
Jan-18 Jan-19 Jan-20 Jan-21 Jan-22
• Organically: 1) solid SSSG supported by inflation (5.5% 12M22) and purchasing power growth (6.9%
Fig. 3 – On the Ground Research - Summarized wage increment FY23F) to drive both price and quantity factors upward, respectively, and 2) AMRT's
Source: Team Analysis
spacious balance sheet can readily fund outlet expansions internally (OCF/CapEx at 1.9x FY22F; to
On-the Ground Findings Summarized grow at 5.2x in FY27F), subsequent to its current efficient capital structure (D/E ~0.1x FY22F-27F)
Sample n=7 • Inorganically: franchising as a cost-cutting tool in winning the minimarket penetration race. AMRT can
AMRT Franchisees 4
benefit from 18% CapEx efficiencies (avg. FY18-21; 23-25% FY23F-27F) through franchising compared
AMRT & Indomaret Franchisees 2
when utilizing just organic growth, augmented by superb franchise operations (Fig.3)
Indomaret Franchisees 1
Franchising Yield & Return The Beginning of Net Margin Expansion
Initial Along with top-line growth, we expect AMRT to enjoy net margin expansion of 190bps (2.3%/4.2% in
Outlay 5Y IRR = 10.3%*
FY21/FY27F). Key points that prompted the widening net margin are:
vs.
7.20% (10Y Gov't Yield) • GPM expansion (20.8%/21.4% in FY21/FY27F) induced by strong bargaining and pricing power,
Implying ~33% premium complemented with OpEx to Sales contraction (18.6%/17.5% in FY21/FY27F) driven by significantly
Return
lower wage growth (19.1%/9.4%/6.9% in FY13/18/23F)
• Growing proportion of ex-Java stores (11%/33% in FY12/9M22) will guide AMRT’s EBIT margin
*within our conservative calculation (assmp. competitor's threat Y2) (3.3%/5.5% in FY21/FY27F) due to lower salary and rent expenses.
What Franchisees' are Saying • Incoming tailwinds for fee-based income (IDR0.6tn/IDR2.0tn in FY21/FY27F) with physical store as
1 "Alfamart is more selective in deciding their acting as digital transaction enabler, higher physical footprint, and wide product offerings
franchisees: specifically choosing a more known
Attractive Entry Point to Capture Upcoming Tailwind
area vs competitor (Indomaret), which more of a
risk-taker" While currently trading (35.6x) below its 5Y P/E Mean (40.0x), we deduce plenty rationales within its future
earnings as we believe that: 1) The company is currently in a comfortable stance to capture Indonesia’s
2 GDP growth in years to come; with them being in 2) one of a kind duopoly in which AMRT’s current suitable
"Competition (with Indomaret) still exists and
will ever exist in years to come. Revenue declines competitor is only Indomaret, and 3) its stable yet expansive operational segment, in which need to be
in the first two years of competitors' outlet recognized in its financial excellence further. Thus, current price presents attractive entry point to ride the
opening -- third year will normalize as demand incoming tailwind. Key downside risks to our target price are 1) Potential economic slowdown, 2) stiffer
gradually increase -- and fourth year, revenue will competition in fee-based income, 3) higher than expected wage and rent expense increment
increase above the normal level"
3 Key Financial Figures

"AMRT provides several methods of Source: Fortuna Capital Estimates
franchising: 1) land & buildings are provided by
IDR bn, unless mentioned FY20 FY21 FY22F FY23F FY24F FY25F FY26F FY27F
the franchisee, and 2) existing store (tier-2 in
terms of profitability) will be sold through Revenues 75,827 84,904 97,925 111,498 125,038 139,896 156,188 172,905
COGS (58,403) (60,414) (67,223) (77,505) (88,092) (98,615) (110,165) (122,808)
Gross Profit 17,424 24,490 30,702 33,993 36,946 41,281 46,023 50,097
Fig. 4 – Fortuna Capital
Universitas Indonesia Operating Expense (13,724) (14,870) (16,242) (18,328) (20,563) (22,978) (25,542) (27,521)
Gabriella Caryn Nanda gabriella.caryn@ui.ac.id Fee-Based Income 489 583 782 969 1,187 1,437 1,707 2,006
Gerald Oktavianus Hugo gerald.oktavianus@ui.ac.id EBIT 3,700 9,620 14,460 15,665 16,383 18,303 20,481 22,576
Jessica Annabel Tio Prisca jessica.annabel@ui.ac.id EBITDA 4,472 4,577 5,968 7,241 8,453 9,514 10,652 11,782
Kevi Cyril Ahmad kevi.cyril@ui.ac.id EPS (in IDR full) 26 47 73 90 105 122 146 176
Reinard Tanukusuma reinard91@ui.ac.id P/E (x) 29.9 25.9 35.6 28.9 24.6 21.2 17.8 14.7
Fortuna Capital for CFA Research Challenge 2022 | 1

Fig. 5 – AMRT Shareholder Structure
Source: Company Data
Business Description
PT Sumber Alfaria Trijaya, Tbk (AMRT) is Indonesia's leading modern trade minimarket founded in 1989,
currently running in duopoly landscape of Indonesia’s mini-market retail industry with PT Indomarco
Prismatama (Indomaret). Its business encompasses offering of physical products, virtual products, and
financial services through food, non-food, and fee-based income. Per 9M22, AMRT has opened 1,205 new
stores, adding up to 20,015 stores. The store distribution is majorly located in Java (non-Greater Jakarta)
(40.2%), non-Java (33.0%), and Greater Jakarta (26.8%). To support its retail business-model, AMRT also
disperses its 44 warehousing across Indonesia.
Business models & verticals – AMRT has three verticals, food (including cigarette), non-food (i.e cloth,
household furniture, etc), and service income (68.5%, 31.5%, 0% to its 9M22 top-line, respectively). Aside
minimarket sales as its main revenue stream, AMRT also earned from franchisee’s store royalty (22.8% of
AMRT’s store is franchise) as well as fee-based income from customer online transaction through its digital
partners in AMRT’s physical store. These online transactions consist of virtual product and financial services,
where e-money transactions, top ups, utilities, and instalment payment make up the most of traffic and
contribute 0.7% to AMRT’s profit as fee-based cost is only servers and negligible.
Business strategy - As the 2nd largest MT player with 35.0% market share (Fig. 6), AMRT battles Indomaret
Fig. 6 – Modern Trade Market Share in duopoly market. AMRT perceived new store openings as a major revenue driver as it is a point-of-sales of
Source: Company Data, Euromonitor, Team Analysis
its retail’s ecosystem as management guides c.1,000-1,200 new store openings annually. The firm
differentiates and positions the minimarket into 1) Alfamart, 2) Alfa Midi, 3) Lawson, and 4) Dan+Dan with
each type targeting a different customer segment. The combined 20k outlets are leveraged not only for
Indomaret
24% AMRT physical, but also digital/online products in remote communities. Through collaboration with third parties,
1% 36% MPPA customers via AMRT stores can receive, deposit, and transfer money, deposit savings for Hajj, pay insurance,
2% Superindo
2%
etc. Hence, product diversification could support AMRT’s store opening.
HERO
3%
35%
RANC Digital initiatives – COVID-19 have AMRT consider the launch of in-house digital initiatives. AMRT has two
Other
main digital innovations that target both customers, through Alfagift, and business, through Alfamikro.
AMRT, however, set aside Alfamikro initiatives as it runs on an irrational competition with Mitra Bukalapak
and Mitra Tokopedia that are likely to burn cash in exchange for market share. Alfagift is an e-groceries
Fig. 7 – Old-Age Dependency Ratio platform that offers membership plans and enables quick commerce. Customers can accumulate points
Source: United Nations and receive bonuses in return through this membership. Moreover, the digital platform provides incentives,
for instance free-delivery with no minimum purchase, discount and voucher, and various payment methods,
such as Cash on Delivery, bank transaction, E-wallet, credit/debit online, etc. Per January 2022, Alfagift has
been downloaded by 11.8 million users.
Industry and Competitive Analysis
AMRT Rides the Wave of Macro Optimism
Promising consumption growth trajectory - The economy of Indonesia holds great promise. By 2030,
Indonesia has the potential to be the seventh-largest economy. Indonesia's consumption is expected to
grow between FY23F-30F with a CAGR of 5.3% due to 3 factors (McKinsey, 2021): increasing number of
consuming classes, urban population, and skilled worker. (1) Over the next 15 years, the global consuming
Fig. 8 – Monthly Retail Industry Wage
Source: CEIC, EMIS Insight, Minister Decree, Team Analysis class will rise by 1.8 billion individuals, with more than 75% of them predicted to live in Asia. Indonesia has
3 10.0%
8.9% 8.2% 8.7% 8.0%
one of the fastest-growing consumer markets in the world because of its young, expanding, and rapidly
2.8 5.3% 7.0% urbanising population. The 55 million urban and 15 million rural Indonesians that make up this consumer
6.0%
4.8% 4.5% 4.5% 4.3%
2.6
4.3% 4.0% class are the most lucrative market segment. (2) As a projected 32 million individuals migrate from rural to
2.4 2.0% 2.4 2.0%
urban regions, the percentage of Indonesians living in urban areas might increase to 71% in 2030 from 56%
2.4
1.2% 0.0%
2.3 2.3 2.3
2.2 2.2 -2.0%
in 2022. Urban regions are expected to contribute an estimated 86 percent of Indonesia's GDP by 2030 due
2.2
-4.2% -4.3% -4.0% to the development of new cities. (3) Contrary to the many nations in Asia that are ageing, Indonesia's
2
-6.0% demographic trends will continue to be favourable through 2025 and contribute an average of 2.4 percent
-8.0% to overall economic growth until 2030.
1.8 -10.0%
FY17 FY18 FY19 FY20 FY21 FY22 FY23F A triumph of lower-than-expected 2023 wage minimum growth. AMRT runs a labour-intensive business w/
Average Monthly Wage % Change yoy Govt. UMR Growth an approx. 5-6 employee per stores (wages expense is 10% of revenue, 53% of OpEx, FY21A). Hence, the
regional wage minimum is the main matrix for its wage expense. Fortunately, 2023’s UMR growth is a low
Fig. 9 – MT D/E and Interest Coverage 6.7%, far below the prior pre-electron level of 19.1%/9.4% in FY13/FY18, thanks to a new calculation formula
Source: Company Data, Refinitiv, Team Analysis
of UMR regulated in Regulation of the Minister of Manpower (Permenaker) No. 18/2022. A new variable is
introduced to the formula, namely q, index that describes the contribution of labour to economic growth
20.40x
with a value within a certain range, namely 0.10 to 0.30 (Figure 8). Moving forward, we forecast current
regulation to benefit AMRT as UMR growth will be capped at 10%.
AMRT is poised to win the uncaptured Ex-Java market. Modern Trade players are pursuing expansion in
7.67x Covenant: 4.0x D/E Ratio outside Java citing higher growth at 6.4%/5.4% in Sulawesi/Sumatra to Java’s 1.8% in FY21. With more
3.68x 4.45x lucrative Ex-Java’s avg. 5Y 4.9% EBIT margin and 6.9% SSSG (vs Greater Jakarta 3.2%/1.4% EBIT
0.90x 1.97x
0.99x
Margin/SSSG), AMRT’s Ex-Java’s expansion strategy is reasonable and expected to exploit the market
0.20x
AMRT RANC MPPA HERO Fortuna Capital for CFA Research Challenge 2022 | 2
EBITDA Interest Coverage D/E Ratio
Fig. 10 – Mid-term Consumer Confidence Outlook further, citing 1) underpenetrated minimarket ratio of 9% (vs Java’s 17%), 2) Forecasted higher economic
Source: Deloitte, Team Analysis growth than Java, 3) large-format stores’ inability to expand, and 4) fee-based income. 5Y 4.9% EBIT margin
and 6.9% SSSG (vs Greater Jakarta 3.2%/1.4% EBIT Margin/SSSG), AMRT’s Ex-Java’s expansion strategy is
>15mn 41% 43% 16% reasonable and expected to exploit the market further, citing 1) underpenetrated minimarket ratio of 9%
10 - 15 9% 35% 31% 20% 5%
(vs Java’s 17%), 2) forecasted higher economic growth than Java, 3) large-format stores’ inability to expand,
and 4) fee-based income. AMRT has the most sizable balance sheet compared to large-store players,
5 - 10' 7% 28% 36% 25% 5% allowing for more aggressive expansion (with EBITDA to Interest Expense 20.3x, D/E Ratio of 0.2x).
Supermarket players have reached close to its debt capacity, considering riskiest bank covenants for retail
1 - 5' 5% 34% 36% 23% 3%
industry are 4.0x D/E Ratio (Figure 9), making it difficult to raise debt as their OCF is inadequate to finance
< 1mn 16% 24% 30% 28% 2% any expansion. Compelling themselves to expand would hurt their already negative bottom-line more (NPM,
AMRT: 2.7%, avg. supermarkets: -10,1%, 3Q22). On the other side, ex-Java’s 48% underbanked population
0% 20% 40% 60% 80% 100%
Very Positive Moderately Positive Neutral
fits AMRT’s fee-based income target by offering extensive digital services (see Appendix 16), fulfilling the
Moderately Negative Very Negative unmet demand. Hence, we believe AMRT is able to capture the ex-Java market faster than supermarkets.
Minimarket is Set to Dominate Trade Channel
Fig. 11 – Product Preferences (Pre vs Post Covid)
Source: Deloitte, Team Analysis Traditional trade will not level with pre-pandemic sales. Traditional trade contributes 68.9% to total grocery
Mobile Phone 17% sales. With key consumers’ coming from middle-lower segment, which has been adversely affected of
17%
22%
pandemic (7/10 in the class has decreasing income), traditional trade sales significantly eroded with a CAGR
Clothing 22% of -7.6% in FY16-21 (-17.5% in FY20-21). Preference of traditional trade has decrease from 35% to 32%
Cleaning 28%
31% (Deloitte). Perceived to be more affordable trade is inadequate to regain lower segment attention as 1)
15%
Cosmetics 20% consumers increased hygienity, 2) inconsistent product quality, and 3) unrecovered consumer confidence,
Hygiene 14%
16%
especially lower class. Moreover, traditional trade domination in non-Tier 1 cities is forecasted to drop with
Food (Canned) 21% these emerging cities will generate higher consumption growth that translates into higher middle-class
19%
Food (Packaged & Fresh) 59% population seeking modern trade (Euromonitor). We believe the trade sales to not level with pre-pandemic
69%
32%
sales in the outlook, interpreting 5.1% CAGR in FY22-27F, due to slow recovery in lower segment coupled
Overall 33% with lack of innovation owing to fewer owner’s resources compared to minimarket players.
Post-Pandemic Pre-Pandemic
Minimarket comes out as the winner of Modern Trade. Hypermarkets have lost popularity since 2012,
Fig. 12 – Trade Channel Growth Last 5Y indicated by less frequent annual visit (12x in FY12 vs. 10.2x in FY19), exacerbated during pandemic. With a
Source: Company Data, Refinitiv, Team Analysis typical location in a shopping center, these large-format stores faced difficulties amidst social restriction
30% regulations prohibiting traffic to shopping centers, resulting in a Giant exit. The loosening of PPKM and PSBB
25% 25%
was unable to attract consumers that won’t risk of viral transmission through social contact (3Q22’s total
20%
16% sales is 41% below pre-pandemic). Supermarkets, on the other hand, experience a finer performance than
15%
9% hypermarkets thanks to some players located stand-alone near residential rather than in shopping centers
10% 7%
5%
(-7.7%/-29.3% sales super/hypermarket, FY20-21). Nevertheless, we believe the diminishing trend of large-
0% format stores (Figure. 12) to stay put owing to 1) Consumers prefer smaller basket size, 2) Converted
-5% -2% weekly/monthly shopping habits into just-in-time shopping, and 3) Consumers value closer proximity to
-10% residential areas. We forecast large format store sales to rise low with 4.1% CAGR during FY22-27F.
FY18 FY19 FY20 FY21 1H22
Indonesia Modern Trade Traditional Trade The duopoly: a blessing in disguise. Indonesia's minimarket trade channel is considered a duopoly as both
MT Super/Hyper MT Minimarket sums 97.5% of share. Most heated rivalry occurred in the 2010s when AMRT and Indomaret expanded stores
massively coupled with extreme price wars, reaching lowest NPM level (AMRT: 0.5%, Indomaret: 0.7% in
Fig. 13 – AMRT vs Indomaret Profitability and SSSG FY17A). Subsequently, identical patterns are found on both players expansion, SSSG, and profitability during
Source: Company Data, Team Analysis
FY17-21 (Figure 13). On the other hand, we notice a blessing in disguise from the undisciplined competition
3.5% 7.0%
6.0% 5.3% 8.2%
5.0%
10.0%
that maintains a high bargaining power over supplier and customer (AMRT GPM 19.4%/20.8% in FY16/21)
5.0%
3.0%
2.4%
2.5% 5.0% 5.7% 0.6%
-2.4% 0.0%
and barrier to entry. The duopoly accounts for 25.2% of total Indonesia grocery thanks to c.40k stores
-2.4%
2.5% -2.9%
2.2%
combined in 3Q22 and thus, impacting FMCG companies to be powerless in demanding a more favourable
2.0% 2.3% -10.0% trade deal by trading off product awareness and troubling incumbents’ in finding already-taken strategic
1.6%
1.5%
1.5%
1.2% 1.6% 1.2% -20.0%
store locations. Moving forward, we assess that these players are going to have similar performance and
1.0%
1.1% 1.4%
reap the market even more as stiffer competition will stay due to the still uncaptured markets.
1.0% 1.0% 0.7% 1.0% -30.0%
0.5%
0.4%
Low-Hanging Fruit: E-Groceries Easy to Win Market?
0.0% -40.0%
FY15 FY16 FY17 FY18 FY19 FYFY FY21 Digitalization emerges to disrupt the retail industry. Pandemic has boosted Indonesia digital activities
NPM - Indomaret NPM - AMRT
SSSG - Indomaret SSSG - AMRT including online shopping in retail sector. While contributing only 0.7% to grocery market, Indonesia e-
groceries has grown significantly with a CAGR of 64% during FY17-21 to USD2.6bn and is forecasted to
Fig. 14 – E-Groceries Competition Mapping double to USD5.5bn in FY27F (Statista) due to proliferation of digital enablement and stickiness of
Source: Kearney, Team Analysis
customers’ online behaviour (60% customer states to continue using e-grocery after pandemic, Redseer
Survey). Priorly, customers shop via e-commerce to purchase secondary needs, but now they also use it to
fulfil their primary need (EMIS Insight). Some notable e-groceries incumbents are start-ups (i.e., Astro,
Segari, Sayurbox, etc) or retail player intensification (i.e., Alfagit and KlikIndomaret) (Fig. 14), that holds the
business model to deliver ordered online items to customers’ door. Then, Alfagift has an overall superior
performance to Indomaret’s KlikIndomaret (Alfa’s10Mn vs Klik’s 5Mn users) majorly driven by higher
incentives and finer User Interface. We forecast Alfagift (contributing 2.5% of total sales, FY21) to compete
fairly in the market comprehensive ecosystem AMRT has to offer. Alfagift is predicted to leverage AMRT’s
brick and mortar model referring international evidence (see Appendix 18).

Fig. 15 – ESG Snapshot
Environmental, Social, & Governance (ESG) Analysis
Environmental
9.50
Overall, AMRT maintained good performance on ESG issues with a total rating of 8.25/10.0 (AA Rating). This
accomplishment is in line with AMRT’s 6 sustainable material topics, which are SGD 3, 4, 5, 8, 10, and 16. To
assess the ESG score, we use MSCI ESG Framework, combined with the ASEAN Governance Scorecard to
evaluate the Governance issues. Key issues assessed are [Environmental] 1) Carbon Emission, 2) Product
Carbon Footprint; [Social] 3) Labor Management, 4) Product Safety & Quality, 5) Privacy & Data Security, 6)
Community Relations; [Governance] 7) Corporate Governance. The key issues are determined based on the
MSCI ESG Industry Materiality Map. Further details about ESG Analysis, see Appendix 10.
[E] Environment [9.50/10.00]
8.73 7.75 Green energy initiative to fight global warming - AMRT is the only consumer product retailer to take initiative
Governance Social to reduce global warming and emission by implementing Solar Power Plant. In 2021, AMRT has equipped
their 11 office branches and warehouses with a Solar Power Plant. This notable action resulted in the
Fig. 16 – AMRT SDG Targets (Material Topics) reduction of 81.19 tCO2e carbon emission and 187.04 tons of coal. Furthermore, AMRT plans to add solar
Source: Company Data
panel installation in 9 other branches by 2023, which will decrease energy efficiency cost by 20%.
Alfagift, preserving the environment by digitalization - Alfagift has enabled the consumer to shift from
printed receipt to digital receipt. Alfagift has contributed to 55,076,259 transactions in 2021 and decreased
the number of cashier rolls receipt from 3,484,446 rolls in 2020 to 3,178,997 rolls in 2021 (a drop of 8.77%).
[S] Social [7.75/10.00]
Solid privacy & data security - AMRT has acquired the ISO 27001:2013 Information Security Management
System certification. This confirms the company's present capacity to manage and control information
security risks as well as to ensure and protect the confidentiality, integrity, and availability of information.
The strong privacy and data security leads to no data breach thus far.
Inclusive workplace for women and disabilities - AMRT has a gender-inclusive workplace, where women
Fig. 17 – ASEAN Governance Scorecard make up 37% of total employees in 2021. Moreover, employees are eligible to request maternity leave,
which are 90 calendar days for women who will give birth and 2 days for the husband. The company also
A Rights of Shareholders (10% ) 19/20 provides miscarriage leave for both female and male employees. In addition, Alfamart has been actively
A1 Basic Shareholder Rights 1/1 empowering people with disabilities since 2016. By 2021, there are 777 total employees with disabilities or
A2
Participation in decisions concerning fundamental
3/3 0.6% of total employees.
corporate changes
A3 Participation in general share sholder meetings 14/15 Expired & damaged product, and pest control issues - Even though Alfamart claimed that damaged or
A4 Efficient and transparant markets for corporate control 1/1 expired merchandise will be pulled and separated from the display area, there were several cases of expired
A5 Facilitation of ownership rights by all shareholders 0/1
food and damaged packaging in Alfamart branches found by Baturaja Health Official. Moreover, during an
B Equitable Treatment of Shareholders (10% ) 13/15 inspection, Lampung Food Safety Team found many products had been bitten by rats in an Alfamart
B1 Shares and voting rights 2/2 warehouse. Alfamart’s pest control performance is behind the competitor’s performance (Indomaret) who
B2 Notice of AGM 5/5 use third-party to manage their product quality in Lampung’s warehouse. Meanwhile, Alfamart's pest
B3 Prohibition of insider trading and abusive self-dealing 2/2 control is self-managed by giving rat poison that is commonly sold in the market. AMRT could address this
Related party transactions by directors and key
B4
executives
3/4 issue by standardising pest control regulation in all their warehouses. AMRT should use third-party pest
B5 Protection of minority shareholders from abusive actions 1/2 control companies to manage rats and ensure the safety of stored products.
C Role of Stakeholders (15% ) 12/13 [G] Governance [8.73/10.00]
Disclosure of policy and practices respecting the rights
C1 7/7
of stakeholders Family business with balanced board composition - The election of Anggara Hans Prawira as President
C2 Effective redress to stakeholders for violation their rights 1/1 Director in 2014 replacing Feny Djoko Susanto, has eliminated the perception of AMRT which is known as a
C3 Mechanisms for employee participation 2/3 family company. To date, Anggara Hans Perwira has recorded excellent performance in managing the
C4 Stakeholders' freedom to communicate concerns 2/2
company and received several awards, such as the Best CEO of the Year 2020 in the People of the Year 2020
D Disclosure and Transparancy (25% ) 29/32 award night and Best CEO award 2019 by SWA. Furthermore, AMRT appointed the board of directors with
D1 Transparant ownership structure 5/5 10+ years of experience and diverse educational background
D2 Quality of annual report 8/8
D3 Disclosure of related party transactions (RPT) 1/2
Franchise business fraud allegation - In 2021, Director of Finance and Director of Franchise were suspected
D4 Disclosure of trading by Directors and Commisioners 1/1 of committing fraud against CV Andalus Makmur Indonesia. The franchisee sued AMRT due to inconsistent
D5 External auditor and auditor report 1/2 and opaque financial reports for the franchisee. Although this allegation was denied by AMRT, the news had
D6 Medium of communications 4/4 an indirect impact on the goodwill of management. AMRT should give clearer information to their
D7 Timely filing/release of annual/financial reports 3/3 franchisees to avoid misunderstanding by presenting consistent and transparent financial reports.
D8 Company website 5/6
D9 Investor relations 1/1
Consumer’s donation controversy - In the annual report 2015, AMRT included consumer donations as a form
of CSR. This was not in accordance with UU No. 40/2007 and PP No. 47/2012, where donation reports should
E Responsibility of the Board (40% ) 53/65
be separated from corporate social responsibility reports. The way AMRT combined donation and CSR
E1 Board duties and responsibilities 6/6
reports caused misunderstanding that the CSR is financed by consumer donation. Therefore, The Central
E2 Board structure 20/24
Information Commission of the Republic of Indonesia warned AMRT to disclose clear information about
E3 Board Processes 17/22
E4 People on the Board 4/6
donations received from the public. Although AMRT has confirmed that the company does not use
E5 Board Performance 6/7 consumer donations to finance the company's CSR activities, donation and CSR reports have not been
separated since then.
Weighted Overall Score 8.73

Fig. 18 – Trade Channel Contribution
Source: Euromonitor, DBS Bank, Team Analysis Investment Summary
Catalyst #1 - Strategically Positioned to Utilize the Duopoly Landscape
AMRT’s c.20k stores is set to comfortably seize bright minimarket 6.1% CAGR outlook in FY22-27F citing the
duopoly with Indomaret’s 20.5k stores as both sums 97.5% of minimarket sales. With no evidence of
disrupted duopoly, we believe the extreme competition landscape is forecasted to stay stringent due to
aggressive expansion outlook with no incumbents able to enter. We project AMRT market share to elevate
1.4% during FY22-27F, reaching 14.9% to grocery sales (vs FY21’s 13.5%), owing 1) minimarket to dominate
trade channel and 2) still long minimarket runway
Minimarket to dominate the trade channel. Traditional trade is 68.9% contributor to the grocery market. We
Fig. 19 – Countries Minimarket Ratio project the market size to dwindle by 3.0% CAGR in FY22-26F owing to 1) Raising middle-class population
Source: Research Market, Team Analysis seeking higher product and service quality, 2) lack of owner’s innovation, and 3) Unrecovered lower consumer
confidence. In addition, hypermarkets experienced a declining trend with a CAGR of 2.1% in FY16-21A. We
forecast the large-format store to not level with pre-pandemic sales as 1) Customers value closer proximity
higher, 2) Return to smaller basket size, and 3) Just-in-time grocery shopping. Summing up, customers have
minimarket as a top-of-mind trade channel thanks to offering vital elements others do not provide, projecting
the trade’s sales to expand 2.2% in forecast period.
Still long minimarket runway. In FY22A, Indonesia reached a minimarket ratio of 14.1% (Java: 17%, Ex-Java:
9%). We believe Indonesia minimarket to expand at a cap of c.79k outlets, somewhat similar to developed
market 29% ratio (Figure 19) compared to current 41,040 stores. We justify Indonesia to catch up with
developed market by forecasted higher household consumption in FY22-30F with a 5.3% CAGR, thanks to
increasing 1) consumers class, 2) urban population, and 3) skilled worker. The deficit of c.38k outlets are
Fig. 20 – AMRT’s # of Store and Additions
expected to be exploited most by Indomaret and AMRT equally citing ever-lasting duopoly.
30,000 1,800
Catalyst #2 – Expansion-Driven Growth Propels Revenue Higher & Higher
1,500 25,910 1,600 We set a bullish 13% CAGR FY21-27F revenue growth driven by robust store expansion (FY22F at c.1.5k stores;
25,000 1,405
1,272 1,400 FY23F-27F 1 - 1.2k stores) accompanied with strong SSSG (9% FY22F; c.7% FY23F-27F). Our takeaways include:
20,310
20,000 17,538 18,810 1,200
16,133 1,000 Organic growth #1: Price & purchasing power are subjected to rise – so does SSSG. We see that AMRT's SSSG
15,000 1,000
800 will be constant c.7.0% FY23F-27F, except for FY22F - c.9.0%, pushed by the low-base consumption in 2021,
839
10,000 600 driving the growth even higher. Two main factors: 1) As AMRT sells staples goods, its average selling price is
400 closely related with Indonesia's inflation rate at 5.5% Dec '22. At the same time, 2) the quantity sold is also
5,000
200 projected to increase following the wage increment of 6.9% FY23 -- driving up the purchasing power. Both of
0 0 these factors, increased SSSG, fuelling the engine to unleash the utmost top-line growth potential.
FY19 FY20 FY21 FY22F FY27F
Number of Stores
Organic growth #2: Spacious balance sheet has solved it all. AMRT indeed has learned from the past, as
Store Additions (RHS)
previously, it was heavily leveraged on debt. This condition was caused by 1) a higher number of store
Fig. 21 – SSSG, Inflation, Wage Growth Outlook additions in previous years (1.2k-1.9k annually FY12-15), despite 2) lower margins due to tight competition
with Indomaret (NPM 0.4%-1% FY15-18), causing 3) insufficient cash flow, leading to 4) the company heavily
9% Inflation Rate Wage Increment leveraged on debt (finance cost 125% of net income FY15-18) in keeping the store expansion ongoing. AMRT
SSSG Purchasing Power Parity started deleveraging its debt FY19 ahead, shown with net debt/EBITDA declining significantly at 48% CAGR
8%
7.00% FY18-21, mainly due to 1) sufficient number of stores to compete (c.16k vs Indomaret c.17k FY19), and 2) a
7% 7.00% stable increase in revenue/store (IDR3.9bn/IDR4.6bn FY11/19) within tripled owned store number in only 9
6.90% years (c.5k/16k FY11/19). AMRT currently has a negative net debt (-IDR1.42tn) in FY21 and can fund its
6% 5.50%
independent expansion due to ample cash, shown by its OCF/CapEx at 1.9x FY22F, to grow at 5.2x in FY27F.
5% 5.00%
Inorganic growth #1: A savvy way to win minimarket penetration race. Based on our case study, AMRT can
4% save up its total CapEx c.18% (avg. FY18-21) through franchising/inorganic growth, compared to utilizing its
3% 2.54% 3.04% own cash through organic growth only -- to further forecasted at the range of 23-25% CapEx efficiency FY22F-
2.75% 27F. AMRT's franchising royalty income contributes around 2.1% (avg. FY18-21; constant at c.2% FY27F) to
2% its net income, but franchising has been an excellent way of expanding without relying too much on its cash.
FY23F FY24F FY25F FY26F FY27F
Inorganic growth #2: A truly attractive investment opportunity. AMRT's franchisees are able to yield 5Y
internal rate of return (IRR) at 10.3% (conservative measures) -- opening up an opportunity for investments
Fig. 22 – Franchising CapEx Efficiency
Source: Company Data, Team Analysis with a higher return. Franchising can be either in the form of 1) new outlets (land & buildings provided by
Total CapEx franchisees) or 2) take-over -- tier-2 outlets in terms of profitability will be sold in the form of franchising.
Savings through Franchising
6,000 CapEx Efficiency
5,050 29% Catalyst #3 – Paving the Upcoming Net Margin Expansion
5,000
3,909 3,966
4,000
3,827
27%
Through our calculation, we recognize that AMRT’s net margin could expand by 200bps in 6 years (2.3%/4.3%
3,000
in FY21/FY27F). With 4.3% margin, AMRT net profit should touch c.IDR7.39tn. Though seemingly big, we
25% believe that starting now, AMRT has paved its way in realizing margin expansion through these measures:
2,000
23.6%
Gross margin expands while operating expense contracts. GPM expansion (20.8%/21.4% in FY21/FY27F) is
1,000 23%
realizable as AMRT, in our view, has huge bargaining power to supplier. With 20,015 (9M22) outlets (vs.
0
21%
Indomaret at 20,511), AMRT has established its position as supplier’s main distribution channel, giving AMRT
-1,000 (738.61) (937.07)
the ability to push its cost to the limit. Along with that, AMRT also set strong footing as consumers’ main trade
(1,007.78) (1,282.17)
-2,000
FY20
19.3%
FY21 FY22F FY27F
19%
Fig. 23 – AMRT’s Store Blend Trend
channel due to its near residential presence, realizing its strong pricing power. With this intact, we believe
42.0% 41.1% 40.7% 40.5% 40.3% 40.2% AMRT’s gross profit could reach c. IDR37tn in FY27F (vs. IDR20tn in FY22F), an optimistic yet realizable figure.
40.0%
Considering OpEx, where salary expense is the main OpEx contributor (c.53%), we see that next year’s wage
38.0%
36.0%
increment is relatively lower compared to historical trend (19.1%/22.2%/9.4%/6.9% in FY13/14/18/23F). Even
34.0% 33.0%
with high wage growth, AMRT was able to hold its OPM at 2.8%/2.7% in FY13/14. In addition, we noticed that
32.3% employees/store had gradually decreased since FY15, thus, we believe this trend should continue to pursue
32.0% 31.1%
29.5% 29.8% margin expansion. All combined, we believe, could reduce OpEx/Sales to 17.5% in FY27F (vs. 18.6% FY21)
30.0%
28.0% 29.4% 29.4% 27.4% 26.8% Ex-Java store blend threefold, will gradually continue. Ex-Java store proportion escalated from 11% in FY12
28.4%
26.0% to 33% in 9M22, clearly implying that AMRT pursues ex-Java expansion as its main strategy. Since FY15, ex-
FY18 FY19 FY20 FY21 9M22 Java average revenue/store increases by 6.9% on average YoY (Jabodetabek: 1.4%; Java: 1.9%). OPM also
Jabodetabek Java (Ex-Jabodetabek) Ex-Java
continue to expand (1.47%/6.28% in FY15/FY21). We presume that this condition was triggered by lower rent
and wages expense in ex-Java, guiding AMRT’s NPM from 1.0% in FY15 to 2.3% in FY21. Advancing onward,
Fig. 24 – EBIT Margin Geographically we perceive that AMRT will continue to pursue this strategy. With the incoming efficiency effort, we opine
that this scheme will be the main driver for AMRT’s OPM expansion (1.7%/3.3%/5.5% in FY17/FY21/FY27).
7.0% 6.4% 6.3% Fee-based income should take off in upcoming years. We aim fee-based income to reach IDR2.0tn by 2027
6.0% 5.8%
6.3% 6.3% as AMRT is in favourable landscape in expanding its fee-based transactions. Firstly, Indonesia is APAC’s third
5.0% biggest unbanked and underbanked population (Appendix. 12), thus, Indonesia opens an appealing
4.2%
4.0%
3.2%
opportunity for AMRT physical store as digital transaction enabler. Secondly, as fee-based transactions are
3.0% 2.8% heavily tied with physical store footprint, the fully lifted PPKM soften the burdens of mobility, increasing in-
2.0% 1.5% store traffic. Lastly, with the wide product offering (Appendix. 15), we believe AMRT could serve larger
1.0%
customer base in fee-based transactions compared to its similar competitor.
FY15
Jabodetabek
FY18 FY19 FY20
Java (Ex-Jabodetabek)
FY21 9M22
Ex-Java Financial Analysis
Key Forecast Drivers
Source: Fortuna Capital Estimates
Fig. 25 – AMRT Store Addition vs Rev. Growth
Source: Company Data, Team Analysis Key Forecast Drivers FY19 FY20 FY21 FY22F FY23F FY24F FY25F FY26F FY27F
2,000 1,918 Number of Stores 16,133 17,538 18,810 20,310 21,510 22,710 23,910 24,910 25,910
1,800 36.0% Same Store Sales Growth (SSSG, in %) 5.8% -2.9% 5.0% 9.0% 7.0% 7.0% 7.0% 7.0% 7.0%
1,587
1,600 1,456 1,487 Food Segment, Gross Profit Margin 19.1% 18.7% 19.1% 19.6% 19.7% 19.8% 19.9% 20.0% 20.0%
31.0%
1,400 28.4% 1,283 Non-Food, Gross Profit Margin 21.6% 23.6% 24.4% 23.6% 23.7% 23.8% 23.9% 24.0% 24.0%
31.1%
1,200 26.0% Employees/Store 7.8 7.4 7.4 6.9 6.5 6.4 6.3 6.2 6.1
1,000 19.7% 21.0% Salaries Growth/Year 6.9% 9.0% 0.2% 9.0% 6.9% 6.0% 5.5% 5.0% 5.0%
800 16.2% Fee-Based Income Growth 22.9% -17.0% 10.4% 20.0% 17.0% 16.0% 15.0% 14.0% 13.0%
16.0%
600 Franchise Ratio 23.2% 22.8% 22.8% 22.8% 22.8% 22.8% 22.8% 22.8% 22.7%
266 11.0% CapEx/Store 3.2 2.8 3.4 3.7 3.8 3.9 4.1 4.2 4.3
400 9.5% 8.7%
200 6.0%
FY12 FY13 FY14 FY16 FY17 FY18
1) Revenue: Incoming Double-Digit Percentage Growth
Store Additions Revenue Growth, YoY (RHS) Outlet expansion trends resurrect, might be higher in upcoming years. Historically, AMRT was able to record
constant double-digit percentage growth of revenue since FY09, in c.19.7 - 47.4%, up until FY18 (8.7%), when
Fig. 26 – Average Revenue/Store and SSSG AMRT recorded its lowest annual store expansion (266/1,460 in FY18/5Y mean). We believe the stubby FY18
store addition was caused by AMRT’s highly leveraged operation, decreasing the ability to expand
8.0
6.80 11.0 aggressively, and punishing the stock price. Progressing forward, we opine that AMRT will open 1,000 - 1,200
7.0 9.0
9.0 stores annually, except for FY22F, where AMRT is on track to open c.1,500 stores. Since AMRT’s cash flow
6.0
4.64 4.67 5.01 7.0 from the operation is adequate to finance yearly CapEx requirements (refer to point 4. Cap. Structure and
5.0 4.50 7.0
4.0 5.0 CF), we believe that this situation of sustainable growth will snowball into the forthcoming future, yielding a
5.8
3.0
5.0 3.0 double-digit percentage revenue growth. However, adjusting to AMRT’s current size, the percentage would
2.0 1.0 be lower compared to its historical trend (c.19.7 - 47.4%/11.6% - 15.3% in FY09 - FY16/FY22F - FY27F).
\
1.0 -2.9 -1.0 Strong outlook for same-store sales growth (SSSG). We contend that AMRT’s SSSG should be constant in
0.0 -3.0 c.7.0%, until FY27F except for FY22F, where it could reach c.9.0%, mainly pushed by the low-base effect of
FY19 FY20 FY21 FY22F FY27F 2021’s consumption. Our assumptions are based on SSSG calculation obtained by blending one store’s
Avg. Rev/Store (in IDRbn, LHS) SSSG (RHS, in %)
average selling price and quantity sold. Both factors, in our view, are positively affected in the upcoming years
for a couple of reasons. Firstly, price is heavily tied to Indonesia’s inflation where the recently announced
Fig. 27 – AMRT’s Revenue Mix (in IDRbn) figure is 5.5% (Dec’22). As staples goods provider, we believe that AMRT’s overall store price should increase
by the similar amount, or even higher. Secondly, we posit 2023’s minimum wage growth (~6.9%) as the motor
200,000 Food 90%
Non-Food
for SSSG’s quantity side as it enhances the overall purchasing power, yielding in higher quantity
180,000 173
Service 80% purchased/person. With many incoming outlets addition, AMRT will better establish its position as consumer
160,000 % Food to Rev (RHS)
% Non-Food to Rev (RHS)
goods producers’ main distribution channel and marketplace; thus, we believe AMRT could best exercise its
61,035 70%
140,000 pricing power and capture the incoming growing consumption.
120,000 66.3% 67.1% 68.1% 64.6% 60%
100,000 98 2) Expenses: Efficient yet Effective
17 50%
80,000 34 Operational expenses should grow at a slower pace. In our view, AMRT’s OPM could expand by 220bps
31,140
60,000 27,882 40% (3.3%/5.5% in FY21/FY27F), mainly prompted by upcoming years minimum wage increase, where 2023’s
25,524 35.3%
40,000 increase is the lowest compared to previous pre-election years and 2014 (19.1%/22.2%/9.4%/6.9% in
33.7% 32.8% 31.8% 30% FY13/14/18/23F). Historically, OpEx accounted for 18.7% - 19.4% of revenue; only in 9M22 it decreases to
20,000
50,269 57,005 66,687 111,697
0 20% 18.3%. With 20.5 – 21.5% GPM, the pre-fee-based income margin is roughly 2.3% - 3.3%. AMRT’s operational
FY20 FY21 FY22F FY27F
Fig. 28 – AMRT’s S&W Expense (in IDRbn)
Source: Company Data, Team Analysis expense is mainly composed (>50%) of salaries and wages expense (9.9% of revenue in 9M22). In addition to
35,000 Salaries and Wages Expenses 59.0% the relatively low wage growth, we see that AMRT constantly decreases their headcounts/store (8.6/7.4 in
OpEx
30,000 S&W Expense/Opex (RHS) 30,422 FY16/FY21), thus, we based our employees/store assumption on this trend where we assign a 0.5/0.4
52.8% 54.0%
52.8% employee/store decrease in FY22F and FY23F as we believe that AMRT will pursue operating efficiency efforts
25,000 53.3%
51.2% 45.8%
in attempt to expand its margin. Along with the possibly slowing wage growth, we noticed that AMRT
49.0%
20,000 49.4%
17,441 constantly allocate c.15% CapEx (~IDR580 in FY21) to its warehousing system. This is the underlying reason
15,832
15,000 13,641 14,649 13,933 of our assumption that AMRT will sooner or later complete its distributions center (DC) to accommodate store
12,572 44.0%
9,205
expansion, particularly in second-tier cities. Hence, forestalling the potential addition of transportation and
10,000 7,807 8,365
6,216 6,987
39.0%
distribution costs as AMRT could distribute its items efficiently without overcapacity in any DC due to the
5,000 recent c.30% increase in fuel price, which is similar to 2014’s fuel price increase that added 30bps to expenses.
0 34.0% This assumption's impact is that overall OpEx to sales will decrease to 18.6%/17.5% in FY23F/FY27F.
FY18 FY19 FY20 FY21 FY22F FY27F
3) Profitability: Where It All Adds Up
Fig. 29 – AMRT’s Employee/Store Trend We foresee AMRT’s net margin to increase by 190 bps in 6 years (2.3%/4.2% in FY21/FY27F), translating into
IDR7.3tn net profit in FY27F. We are convinced by this scheme as we scrutinize several key points:
8.0 9.6% 10.3% 10.5%
Constantly increasing gross profit margin (GPM) accompanies top-line double-digit growth. We believe
7.5 9.9% 10.0% AMRT’s GPM will increase by 60 bps (20.8%/21.4% in FY21/FY27F). In our selected Indonesian peers’ GPM,
7.0 9.4% 9.5% excluding Alfamart (34.9%/35.5% in FY12/9M22), we see that AMRT is the only retailer to constantly elevate
its top-line margin (15.4%/20.9% in FY12/9M22), please refer to Appendix.8.This growing margin, we believe,
6.5 8.9% 9.0% is attributable to the AMRT’s 20,015 outlets that act as the primary consumer goods distributor, therefore,
6.0 8.5% having a stronger bargaining power towards suppliers and pricing power to the end consumer. Another point
7.8 7.4 7.4 6.9 6.5 to note is that AMRT’s GPM is relatively lower than Indonesian retailers, thus, giving headroom to expand
5.5 8.0% further. With the more expansionary stance for AMRT in the foreseeable future, we believe that AMRT could
FY19 FY20 FY21 FY22F FY23F exercise higher bargaining and pricing power to suppliers and consumers and gradually improve their GPM.
Employees/Store S&W Expense to Revenue (RHS)
Ex-Java expansion strategy ensures the story of margin expansion. AMRT’s ex-Java expansion strategy is
Fig. 30 – AMRT’s GPM, OPM, NPM favourable as we spot that ex-Java’s EBIT margin persistently improves in the last 6 years (1.47%/6.28% in
Source: Company Data, Team Analysis FY15/FY21). Along with the increasing blend of ex-Java stores (25.4%/33.0% in FY15/FY21), Jabodetabek blend
8.0%
OPM NPM GPM (RHS)
22.0% decreases from 39.6% to 27.4% in the same period. We presume that this is the main cause that AMRT’s net
7.0% 21.4% 21.5%
margin expands (1.0%/2.3% in FY15/FY21). Going forward, we believe that the ex-Java store proportion will
6.0%
gradually increases as ex-Java expansion presents AMRT with the opportunity to have lower wage (Appendix.
20.8% 20.9% 5.5% 21.0% 13) and rent expenses, thus, resulting in a higher operating margin (1.7%/3.3%/5.5% in FY17/FY21/FY27F).
5.0%
20.3% 4.3% 20.5% AMRT’s strategy to constantly focus on ex-Java expansion, in our point of view, is meticulously suitable to
4.0% 3.3% capture the potential higher consumption growth (triggered by higher minimum wage increment) in ex-Java.
19.9% 4.2%
20.0%
3.0% 2.5% 2.2% The presence of physical stores would act as fee-based income touchpoint. We presume fee-based income
3.1%
2.0% 2.3% 19.5%
to touch IDR2.0tn by FY27F, constituting 1.2% of revenue and c.27.0% of net income, triggered by three
1.0% 1.6% 1.4% 19.0% catalysts. 1) Fundamentally, fee-based transactions are digital transaction, thus, the presence of AMRT’s
FY19 FY20 FY21 FY22F FY27F physical store should act as digital transaction enabler. This circumstance aligns with Indonesia’s demography
of the unbanked and underbanked population (Appendix. 12), particularly those siding in ex-Java, where
Fig. 31 – AMRT’s Fee-Based Income Growth internet penetration is the main barrier. 2) as Fee-based income is driven by physical store footprint, the fully
2,500 Fee-Based Income (in Rpbn, LHS) 90%
lifted PPKM could boost physical visits to AMRT’s outlet as the main driver of fee-based transactions, and 3)
as % of Revenue (RHS)
as % of EBIT (RHS) +20.7% 80% AMRT’s store offer wide fee-based transaction product offerings (Appendix. 15), where according to our
2,000 as % of Net Income (RHS)
5Y CAGR
70%
research, is the broadest services offered compared to AMRT’s competitor.
60%
1,500 4) Capital Structure and Cash Flows: Strong Insurance for Expansion
46.1% 50%
40% Ample net cash to further justify expansive growth. AMRT deployed investment/store, shown by total CapEx
1,000 27.5%
29.0% 30% (right-of-use & fixed assets)/total independent store additions (excl. franchise store), 4Y FY18-21 average at
21.2% IDR3.6 bn/store. As we forecast 1.5k total store additions FY22F (annualized from c.1.2k additions per Q3'22
500 20%
489 583 782 2,0… 10% – to decline at 7.5% CAGR FY23F-27F conservatively) – and implied incremental independent store additions
0.6% 1.2%
0 0% at ~1.1k (assuming 23% franchise rate), we reach at total estimated CapEx for store at IDR4.3tn – to further
FY20 FY21 FY22F FY27F add IDR758bn for warehousing purposes (constant at 15% of total CapEx), reaching total CapEx of IDR5.1tn
FY22F (vs IDR3.9tn FY21 – 29% YoY growth; IDR3.9tn - 4.5tn FY23F - FY27F).
Fig. 32 – AMRT Net Debt & DER vs Peers
Source: Company Data, Team Analysis The decline in franchise ratio demands independent expansion (-0.6% CAGR FY18-21; -0.9% CAGR FY23F-27F)
Net Debt D/E - but cash is still more than enough. We further benchmarked its solvency from OCF/CapEx figure at 2.0x
4,000 3,724 4.5 5 FY22F, but we estimate it will grow to reach 5.1x in FY27F (20% CAGR FY22F-27F) due to 1) stabilized
independent store addition at c.1-1.2k FY23F-27F, 2) stabilized CapEx and cost pressure (investment/store to
3,000 3.5 be constant at c.IDR3bn FY23F-27F), and 3) healthy operating margin. From its EBITDA standpoint, we see
1,954 that its EBITDA/CapEx is maintained at 3.5x-5x FY22F-26F – showing a very ‘safe’ cash condition to be
2,000 1,618
2 deployed at any time for expansion plans.
1,000 0.2 0.9 0.9
(1,420) 329 0.4 Rigidly efficient capital structure. AMRT had negative net debt (-IDR1.42tn) in FY21 due to its ample cash
0.5
0 derived from healthy operating margins and low debt, resulting in a wider delta. Historically, net debt/EBITDA
-1,000 -1 declined significantly at 48% CAGR FY18-21; it also applies to its net debt/equity ratio, which deteriorated at
43% CAGR FY18-21. With lenders, AMRT has a policy of maintaining the D/E ratio of a maximum of 2x per the
-2,000 -2.5 terms agreed with associated banks. The consolidated ratio of D/E FY21 was 0.2x, a 0.2 decrease YoY (vs 0.4x
AMRT.JK MAPI.JK RANC.JK HERO.JK ERAA.JK
Fig. 33 – EBITDA & OCF to CapEx
in 2020; c.0.3x average FY18-21) – we forecast to reach c.0.05x FY26F. Its debt-to-asset ratio was maintained
8.0 EBITDA/CapEx at the same level in FY21 at ~0.1x – and we forecast it to reach ~0.02x FY26F. This continuously diminishing
7.4
7.0 OCF/CapEx figure mainly comes from a significant decline in the number of 1) short-term bank loans (-5% CAGR FY18-
5Y CAGR
+17.7% 21), 2) long-term bank loans (-7% CAGR FY18-21), and 3) bonds payable (all repaid in 2020). Going forward,
6.0
5.1 we see that AMRT on a standalone basis will keep its net cash position, shown by constant negative net debt
5.0 5Y CAGR & deteriorating debt-to-equity/asset ratio closer to zero (0). Therefore, no urgency to onboard interest-
4.0 3.5 3.7
+20.9% bearing debt in a hawkish macroenvironment that could hamper AMRT’s net margin.
3.5
3.3
3.0 Healthy operating cash flow injecting liquidity & generating dividend regularity. Historically, AMRT paid its
2.4
2.0 dividend at a 51% dividend pay-out ratio (avg. FY18-21), and we forecast DPR to be constant at the level of
2.0
51%, 2% yield FY22F, and >1.5% FY23F-27F. As we see, on top of the debt headroom and healthy operating
1.0 cash flow, AMRT has plenty of capacity to finance their future needs. As previously mentioned in a stronger
0.0
OCF/CapEx figure in years to come, its OCF stands out as it provides liquidity. Historically, AMRT's OCF grew
FY20 FY21 FY22F FY27F at 1.6% FY18-21, and we forecast to grow at a robust 10.4% CAGR FY23F-27F, driven by 1) strong bottom line
growth with net profit to grow 25% FY21-27F, 2) efficient working capital & asset management -- to deliver
Fig. 34 – AMRT's Regular vs Franchise Stores excellence in its operations to be Indonesian proxy in years to come. These factors will continuously support
AMRT to provide a sustainable dividend for its shareholders.
25,000 Total Self-Owned Outlets
Total Franchised Outlets
Franchise Ratio 20,024
29.0% Valuation
20,000
27.0% We iterate our BUY recommendation for AMRT at the target price of IDR 3,200/sh, translating to a 28% upside
14,516 15,671
15,000 13,540 potential on the closing price of IDR2,500 on 9 Dec'22, and implying 37.2x forward P/E. We use intrinsic
25.0% valuation - discounted cash flow (DCF) with perpetuity approach in conducting our primary valuation. We also
conduct P/E multiples valuation & relative valuation with peers to further check the sanity of our target price.
10,000 22.8% 22.7% 23.0%
5,887 1) Intrinsic Valuation: DCF – Perpetuity Approach
5,000 3,998 4,294 4,294 21.0%
We use a discounted cash flow valuation (DCF) method with perpetuity approach to capture AMRT's long-
term profitability in 10 years of our forecast period. First, we employ a perpetuity approach with free cash
0 19.0% flow to the firm (FCFF). This method allows us to incorporate the company's future growth prospects – given
FY20 FY21 FY22F FY27F its continuous investment activities, and also to consider the effect of financing on our valuation. Our DCF
with perpetuity approach arrived at the target price of IDR3,200 -- translating to a 24% potential upside, with
Fig. 35 – AMRT’s Cash Flow Summary
Source: Team Analysis implied forward P/E 37.2. Our model is subject to change and sensitive to these stated factors:
10,000 3,534 Revenues. Revenue determined highly the DCF calculation, in which is driven by: 1) Total store expansion
8,000
growth, as AMRT's revenue is highly dependent on its annual store addition; 2) Same-store-sales growth
6,000
4,000 8,948 (SSSG), obtained through the blend of one store's average selling price and quantity sold. Both factors will
6,560 6,336
2,000 4,405 excel in years to come knowing the organic & inorganic expansion methods will supply competitive store
- openings, supplemented by high inflation figures & minimum wage increments to support solid SSSG.
(2,093)
(2,000) (3,831) (3,660) (3,517)
(4,000) (3,321)
Capital Expenditures. Two main purposes of AMRT’s CapEx: stores expansion & warehousing expansion --
(1,455)
(6,000)
(2,750) (3,279) (567) divided further into capital deployed for rent purposes (classified as right-of-use assets) and fixed assets for
(20)
(8,000) (602) both categories. AMRT's CapEx has had stable growth over the years -- CapEx from fixed assets to revenue
FY20 FY21 FY22F FY27F
Operating CF Investing CF Financing CF
ratio coming at c.2% (average FY18-21) and CapEx for right-of-use assets to revenue at c.5.9% (average FY20-
21) – aligning its constant growth for store expansion historically. Its CapEx from stores expansion takes up
Fig. 36 – Fortuna Capital’s Investment Rating c.85% of total CapEx, totalling to IDR3.9tn - 4.5tn of total CapEx (incl. warehousing purposes) FY23F - FY27F.
Capital Structure. AMRT had a negative net debt (-IDR1.42 tn) in FY21, driven by ample cash derived from
Sell Hold Buy healthy operating margins and low debt. We forecast AMRT will keep its net cash stance, shown by constant
-15% or less -15% - +15% 15% or more negative net debt & deteriorating debt-to-equity/asset ratio caused by its ample cash condition being able to
finance their future expansion.
Fig. 37 – Weighted Average Cost of Capital Tax. We benchmark our income tax rate to Law No. 7, 2021 (UU No 7 2021) about Harmonization of Tax
Regulations (UU HPP), corporate income tax of 22% will take effect in the 2022 tax year -- going forward. The
WACC (IDR bn) Number
increase (vs 20% before the amendment) was driven by the recovering state of Indonesia's economy
Cost of debt 13%
Tax rate 22% WACC. We calculate the cost of equity utilizing Capital Asset Pricing Model (CAPM) approach with 1) risk-free
After tax cost of debt 9.83% rate of 7.2% (10 years government benchmark yield); 2) equity risk premium (Damodaran); 3) beta of 0.37
Risk free rate 7.20% derived from 5Y correlation of AMRT and JCI & 5Y monthly beta from Refinitiv - arriving at the cost of equity
Beta 0.37 at 9.46%. The cost of debt was estimated using company data of weighted average historical interest-bearing
Equity risk premium 6.12%
debt of 9.82% FY18-21, in which tax shield is applied at 22% tax rate. We arrived at 9.46% WACC.
Cost of equity 9.46% Terminal Growth. We then adjust our terminal growth rate at a conservative 3.5%, incorporating several
Interest bearing debt 1,600 reasons of: 1) Indonesian central bank projections of a strong 4.6-5.3% GDP growth in 2023; 2) Strong
Cash and cash equivalents 2,706 projections toward minimarket business upcoming profitability; 3) AMRT's operations in the retail sector that
Net debt -1,105 offers consumer goods -- creating a solid position toward any instability & degrowth of other sectors.
Share price (IDR full) 2,500
Shares outstanding (bn) 41.52 2) Market-Based Valuation: Price to Earnings (P/E) Multiples
Market value of equity 103,800 We further compared our target price of Rp3,200/share to other valuation method. We chose P/E method as
WACC 9.46% we believe that P/E multiple incorporates market sentiment towards AMRT’s current and future earnings. We

use FY23F earnings of IDR3.7tn and assigned P/E multiples of 32.5x (-0.5SD 5Y P/E trend.) and 40.0x (5Y Hist.
Fig. 38 – DCF – Perpetuity (Summarized)
Source: Team Analysis Mean). Through this method, we obtained price range of IDR2,900 – IDR3,600/share (16% - 44% ups.), thus,
DCF - Perpetuity Approach (IDR bn) Number ensuring that our DCF valuation falls within a sensible range. Moreover, our target price of IDR3,200/share
Long-Term Growth Rate 3.50% implies a 46.0x historical P/E valuation (c.+0.5SD of 5Y P/E trend) and a 37.2x forward P/E valuation (c. +1,5SD
Unlevered FCF in terminal period + 1 8,396
Terminal value 140,861
of 5Y Forward P/E trend). We are of the view that AMRT’s margin expansion story will eventually kick-off.
PV terminal value 62,363 Hence, the seemingly
3) Relative Valuation:huge P/E willPricing
Multiples gradually tone
with down hereafter.
Peers
PV stage 1 cash flow 65,542
Enteprise value 127,905 We also conducted relative valuation through peer multiples pricing to check whether our target price is in a
Total enterprise value 127,905 sensible range. We did not find any compatible peer domestically. Thus, we compile comparable overseas
Net debt -1,105 retailer peers, based on several criteria: 1) Operate as a minimarket or supermarket (like AMRT or MIDI); 2)
Total equity value 106,466 focuses majorly on food and beverages (excluding retailers with discretionary products and department
Weighted avg shares outstanding (bn) 41.52
Equity value per share (full) 3,200
stores); 3) at least IDR65tn in revenues; 4) at least IDR20tn in assets, and 5) operates in countries with similar
Current price (full) 2,500 demographic with Indonesia. We attain the following companies based on our peer group analysis: 1) Yonghui
Upside/(downside) 28.00% Superstores Co. Ltd (601933.SS), 2) Avenue Supermarts Ltd (AVEU.NS), 3) Lawson Inc. (2651.T), 4) BGF Retail
Co. Ltd (282330.KS), 5) GS Retail Co. Ltd (007070.KS), 6) President Chain Store Corp. (2912.TW), 7) CP ALL
(CPALL.BK), 8) Taiwan Family Mart Co. Ltd (5903.TWO), 9) United Super Markets Holdings Inc. (3222.T), and
Fig. 39 – AMRT’s P/E Band
Source: Team Analysis 10) Vingroup JSC (VIC.HM). We extend the number of peers to minimize the outlier multiples due to
70 68.7 unnormalized operations prompted by COVID-19 presence.
60 Fig. 43 - Peers Trading Comparable
54.3
50 Source: Refinitiv consensus, Fortuna Capital estimates
Relative valuation
40 39.9
Company Ticker Market Cap P/E (x) P/E/G EV/EBITDA EV/Sales EV/Gross profit
35.6 (USD bn) FY23F FY23F FY23F FY23F FY23F
30
25.4 PT Sumber Alfaria Trijaya AMRT.IJ 6,667 27.9 1.2 12.4 0.9 4.5
20 Yonghui Superstores Co Ltd 601933.SS 4,601 39.7 (0.2) 14.6 0.6 2.8
Avenue Supermarts Ltd AVEU.NS 30,621 75.6 2.8 55.1 5.0 32.6
10 11.0
Lawson Inc 2651.T 3,842 24.0 4.0 4.7 0.6 1.3
BGF Retail Co Ltd 282330.KS 2,762 17.1 1.2 5.8 0.4 2.5
0
Dec-18 Dec-19 Dec-20 Dec-21 Dec-22 GS Retail Co Ltd 007070.KS 2,322 14.4 0.3 8.0 0.6 2.5
President Chain Store Corp 2912.TW 9,063 24.6 1.5 11.9 1.2 3.5
STD-2 STD-1 Mean STD+1 STD+2 P/E
CP All PCL CPALL.BK 17,012 30.0 0.8 17.5 1.5 6.7
Taiwan FamilyMart Co Ltd 5903.TWO 1,470 18.5 0.5 7.4 0.8 2.2
United Super Markets Holdings Inc 3222.T 8,893 19.2 0.4 9.5 2.1 8.2
Vingroup JSC VIC.HM 1,103 73.9 1.4 10.2 0.3 1.1
Fig. 40 – AMRT’s Forward P/E Band Average Ex AMRT 33.7 1.4 14.5 1.3 6.3
Source: Team Analysis AMRT Disc/Premium to peers -17.2% -15.0% -14.3% -28.5% -29.1%
41.5 We used several multiples namely P/E, Price-to-Earnings-to-Growth (PEG), EV to EBITDA, EV to Sales, and EV
40
to Gross Profit. We chose this measure as we perceive that it could best picture retailers’ ability in generating
34.1
sales, manage their margin, and capture potential earnings growth. Through these comparable, we found
30 29.5
26.7 that our target price of IDR3,200/share lies within the valuation football field on all 5 metrics. Hence, ensuring
and establishing our previous valuation through DCF and P/E. Furthermore, we find that AMRT FY23F
20 19.2 multiples are traded well below our peers’ mean. Although we believe that every peer faced different
11.8
challenges and demographics, these comparable insured us that our valuation is reasonable and there is
10 headroom for AMRT’s margin expansion to be rewarded with a more premium valuation.
Dec-18 Dec-19 Dec-20 Dec-21 Dec-22
STD-2 STD-1 Mean STD+1 STD+2 Forward P/E
4) Sensitivity & Scenario Analysis
Fig. 41 – Valuation Football Field Sensitivity analysis. We are trying to strain and test the robustness of our valuation model to see the impact
of changes on key inputs, such as LT growth, WACC for our DCF valuation. Our model is more sensitive towards
TP: IDR3,200/sh
EV/Gross
WACC, with +-1% resulting in increase / decrease of 12.5% in TP, while a 1% increase / decrease in LTG will
profit
1,700 4,200
result in increase / decrease of 9.3% in target price. WACC in the spectrum of +-1.5% & LTG of +- 1.5%, we
EV/Sales
see 69% BUY and 31% HOLD within the range.
1,800 3,900
EV/EBITDA Scenario analysis. Furthermore, we proceed to conduct a scenario analysis that is realistic in terms of
2,500 3,500
possibilities of downside risks that might change the investment recommendation. Key assumptions that we
PEG use as the subject of scenario analysis are: 1) # of Store Additions, 2) SSSG, 3) Food Segment GPM, 4) Non-
2,500 3,600
Food Segment GPM, 5) Employees/Store, 6) Salaries Growth/Year, and 7) Fee-Based Income Growth. We are
P/E
2,200 3,400 seeing three possible scenarios. 1) Best Case (Bull Scenario): we foresee that the competitive landscape with
1,500 2,000 2,500 3,000 3,500 4,000 4,500 Indomaret will be tighter, resulting in a larger number of store additions annually (c.7% higher each year),
accompanied by both higher purchasing & pricing power to derived on a higher SSSG (5%). Food and non-
Fig. 42 – Scenario Analysis – Impact to Net Income food GPM, alongside fee-based income, will increase due to higher bargaining power to suppliers and an
increase in dependency on fee-based activities. Within the labour side, a more efficient employee/store
9,000 8,725
Base Case deployed alongside a more conservative salary growth/year. This scenario will lead to the target price of IDR
8,000 Worst Case 3,600/sh, implying 44% upside (16% higher). Base Case: as mentioned 2on the report. 3) Worst Case (Bear
Best Case 7,299
7,000 Scenario): a conditional restriction would limit AMRT's capability to target store expansion numbers.
Bargaining power to suppliers will also deteriorate causing a lower food & non-food GPM (0.5% decrease).
6,000
5,920 This scenario will lead to the target price of IDR 2,700/sh, implying 8% upside potential (20% lower).
5,000
4,000
3,000
2,000 Fortuna Capital for CFA Research Challenge 2022 | 9

FY22F FY23F FY24F FY25F FY26F FY27F
Fig. 44 – Risk Matrix
Investment Risks
Macroeconomic Risks
MR1: Economic Slowdown Looms. It is expected that Indonesia will experience a broad-based economic
slowdown because1) High inflation and high expected inflation due to global energy instability, 2) Lower
fiscal support for the economy as the government plan to reduce expenditure, 3) Slowing Indonesia’s
external prospects because of the strong monetary tightening occurring worldwide. The implication is that
the underlying demand for Indonesian goods and services will probably weaken in 2023.
Impact to valuation: Our model analyses a 4% decrease in forecasted SSSG will have us downgrade our
recommendation to SELL (TP:21,700; Downside: 37%).
Mitigant: The economic slowdown will not significantly dampen AMRT’s sales since consumers are still
required to purchase groceries. Furthermore, the consumer staples industry is categorized as an inflation
insulated industry. (Fig. 21).
MR2: Risk of raw material cost due to commodity hikes. AMRT is prone to direct supply chain costs such as
fuel prices and raw material. The rising fuel prices due to Russia-Ukraine instability and government subsidy
Fig. 45 – AMRT vs FMCG GPM Change subtraction may hurts AMRT’s margin as suppliers need to adjust further price to cope with the increment.
Impact on valuation: Our sensitivity analysis shows that a 1% decrease of Food and Non-Food GPM will drop
AMRT’s TP to 2.800 (Upside: +12.0%).
Mitigant: AMRT runs in a duopoly w/Indomaret, implying that the firm has high bargaining power to supplier
causing upstream producer inability to transfer surge cost to retailers (Fig. 45)
MR3: Minimum Wage and Rental Price Hike. Workers have demanded a rise in minimum wage for 13% in
2023. Although it has not been finalized yet, the government has already declared that there will be an
increase tFY23F. Furthermore, the rental price is projected to surge by 2-5% in 2023 (Knight Frank, 2022).
According to Savills Indonesia's research, warehouse rent prices will rise by 4-6% annually. The increase in
rental prices will have a significant impact on AMRT's finances as wage and rental expense is major cost
contributor.
Fig. 46 – Gap Chart in Store Opening Impact on valuation: An increase of 1% expected wage to our current assumption will impact our TP to only
IDR3,000 (Upside:+20%).
Mitigants: AMRT planned to reduce the number of employees per store from six to five, so each employee
will be expected to be more productive. In addition, AMRT can negotiate a long-term lease with the landlord
that includes specifically stated protective rent rise provisions to minimize the effect of rental price surge.
Industry Risks
IR1: Fee-base increasing competition. Fee-based income is an essential profit contributor for AMRT as it
directly went from top to bottom-line due to negligible cost. However, this segment is likely to be more
competitive as online players target these services (i.e Tokopedia, Gojek, Bukalapak).
Impact on valuation: Our model states a 1% decrease in Fee-based income per store growth will lower our
Fig. 47 – Risk Sensitivity Analysis
Source: Team Analysis AMRT’s TP to 3.100 (Upside: +24%).
Net Profit Mitigant: Ex-Java expansion is AMRT to wins fee-based market outside of Java as the region is still
Store IDR Bn Price underpenetrated wiith fnancial services that even pre-mentioned competitor cannot reach and customer
Addition (2027F) (IDR) Delta Upside also can transfer, receive, and deposit cash via AMRT’s cashier, a feat digital startup unable to conduct.
1,500 7,243 3,200 0 28.00%
1,200 7,249 3,100 -100 IR2: Government regulation prohibits further store opening. Several regions in Indonesia have limited the
24.00%
1,000 7,250 3,000 -200 modern minimarket store opening. Take Sukaharjo as an example, which has a moratorium on the
20.00%
establishment of minimarkets. According to this moratorium, the Regency Government will not issue
Net Profit permits for building new minimarkets until 2030. The minimarket moratorium policy refers to Regional
IDR Bn Price Regulation No. 7/2017 concerning the Arrangement and Development of Traditional Markets. The reason
SSSG (2027F) (IDR) Delta Upside behind this regulation is to protect small businesses and traditional markets.
9.0% 7,243 3,200 0 28.00% Impact on Valuation: If projected store opening decreased by 20%, our target price is shrunk to IDR2.900
7.0% 5,203 2,400 -800 -4.00% (Upside: +24%).
5.0% 3,348 1,700 -1,500 -32.00% Mitigant: AMRT could maximize their store opening in the region that does not impose the restriction of
Salaries Net Profit minimarket store establishment.
Expense IDR Bn Price
Growth (2027F) (IDR) Delta Upside
Business Risks
9.0% 7,243 3,200 0 BR1: Lower-than-expected new store opening. Management guidance states AMRT will open 1.200-1.300
28.00%
10.0% 6,620 3,000 -200 annually for the next 5 years. This number is critical as stores are key success factors in the retail industry.
20.00%
11.0% 5,967 2,700 -500 8.00%
AMRT potentially is unable to achieve the target because of several factors, such as regulatory and funding.
Fee-Based Net Profit Impact on valuation: If projected store opening decreased by 20%, our target price is shrunk to IDR2.900
Income IDR Bn Price (Upside: +24%).
Growth (2027F) (IDR) Delta Upside Mitigant: 1.200 – 1.300 figure is equal to AMRT level of expansion during 2013 – 2015 period. We believe
20.0% 7,243 3,200 0 28.00% lower number of openings will not occurred as AMRT has set a strong foot and excellent track record in
18.0% 7,089 3,100 -100 24.00% achieveing yearly target (Fig 46)
15.0% 6,947 2,400 -800 -4.00%

Appendix List
Financials and Valuation Industry and Business ESG and Risks
1. Income Statement 12. Indonesia's Unbanked and Underbanked Population 19. ESG Analysis
2. Balance Sheet 13. Jabodetabek, Java (ex-Jabodetabek), ex-Java Minimum Wages Comparison 20. AMRT's Board of Director Overview
3. Cash Flow Statement 14. On the Ground Analysis Key Findings 21. AMRT's Board of Comissioner Overview
4. Key Forecasts Drivers 15. AMRT's Fee-Based Income Network (Product Offerings) 22. Additional Risks
5. Key Forecast Assumptions 16. Price Comparison between Alfamart, Indomaret, and Supermarkets
6. Key Ratios 17. Developed Market vs. Emerging Market Minimarket Calculation
7. AMRT's GPM trend vs Indonesian Peers 18. International Evidence of O2O Collaboration
8. AMRT's Free Cash Flow
9. Capital Expenditures Forecast
10. AMRT's Price to Earning Valuation
11. Trading and Multiples Valuation Comparables
Appendix 1. Income Statement

Source: Fortuna Capital
Income statement (IDR bn) FY19 FY20 FY21 FY22F FY23F FY24F FY25F FY26F FY27F
Revenues 72,945 75,827 84,904 97,925 111,498 125,038 139,896 156,188 172,905
Food 49,329 50,269 57,005 66,687 74,815 82,650 91,772 101,679 111,697
Non-Food 23,579 25,524 27,882 31,140 36,571 42,263 47,984 54,354 61,035
Services 37 34 17 98 111 125 140 156 173
COGS (58,403) (60,414) (67,223) (77,505) (88,092) (98,615) (110,165) (122,808) (135,917)
Gross Profit (Contribution Margin) 14,542 15,412 17,681 20,420 23,406 26,423 29,731 33,381 36,988
Operational Expenses (12,751) (13,724) (14,870) (16,242) (18,328) (20,563) (22,978) (25,542) (27,521)
Selling and Distribution Expenses (12,249) (13,138) (14,288) (15,627) (17,497) (19,690) (22,008) (24,506) (26,350)
General and Administrative Expenses (1,392) (1,511) (1,543) (1,813) (2,288) (2,632) (3,075) (3,521) (4,072)
Other Income 1,132 988 1,027 1,268 1,583 1,901 2,264 2,661 3,097
Other Expenses (241) (63) (65) (69) (126) (141) (158) (177) (196)
Operating Profit/(Loss) (EBIT) 1,791 1,689 2,811 4,178 5,078 5,861 6,753 7,838 9,467
Non-Operating Income (Expenses) (337) (299) (342) (230) (217) (150) (105) 70 78
Earnings Before Final Tax and Corporate Income Tax (EBT) 1,455 1,389 2,469 3,948 4,861 5,711 6,648 7,909 9,545
Tax Benefit (Expense) (315) (300) (480) (869) (1,069) (1,256) (1,463) (1,740) (2,100)
Earning After Tax 1,140 1,089 1,989 3,079 3,791 4,454 5,186 6,169 7,445
Attributable to Owners 1,113 1,062 1,951 3,019 3,717 4,367 5,084 6,048 7,299
EPS (in IDR) 27 26 47 73 90 105 122 146 176
Appendix 2. Balance Sheet

Balance sheet (IDR bn) FY19 FY20 FY21 FY22F FY23F FY24F FY25F FY26F FY27F
Current Assets
Cash & cash equivalents 3,909 3,878 3,270 2,706 4,170 6,203 8,677 12,252 15,786
Trade receivables 1,737 1,897 2,027 2,453 2,988 3,420 3,902 4,443 5,013
Inventories 7,577 7,640 8,755 9,131 11,165 12,553 14,084 15,767 17,525
Prepaid expenses 1,422 29 - - - - - - -
Other current assets 137 114 157 157 157 157 157 157 157
Total Current Assets 14,783 13,559 14,212 14,447 18,480 22,333 26,820 32,619 38,481
Non-Current Assets
Deferred tax assets 243 161 263 304 346 388 434 485 537
Estimated claims for tax refund - - - - - - - - -
Deferred charges - net 360 415 435 502 572 641 717 801 887
Investment in associates 183 321 352 352 352 352 352 352 352
Prepaid rent - net of current
portion 2,831 - - - - - - - -
PPE - net of accumulated
depreciation 5,453 6,091 6,463 7,214 7,482 7,708 7,890 7,710 8,065
Right of use assets - 5,293 5,592 6,788 7,288 7,688 8,029 8,073 8,291
Other non-current assets 140 131 176 176 176 176 176 176 176
Total Non-Current Assets 9,209 12,412 13,282 15,337 16,216 16,954 17,600 17,598 18,308
Total Assets 23,992 25,971 27,494 29,783 34,696 39,286 44,420 50,217 56,789
Current Liabilities
Bank loans (ST & LT current
portion) 1,203 1,325 1,244 1,244 1,244 1,244 1,244 1,244 1,244
Trade payables 7,892 8,861 9,754 9,768 11,968 13,343 14,846 16,482 18,167
Taxes payable/other payables,
short term employee benefits 211 310 681 785 894 1,002 1,121 1,252 1,386
Other liabilities 81 81 - - - - - - -
Advances and accrued
expenses 538 544 557 659 758 858 969 1,093 1,223
Others payable 1,590 2,516 3,192 3,681 4,183 4,683 5,232 5,832 6,455
Current portion of 1,652 1,689 948 948 948 948 948 948 948
Other current liabilities - - - - - - - - -
Total Current Liabilities 13,168 15,326 16,376 17,003 20,029 22,212 24,577 27,067 29,614
Non-Current Liabilities
Deferred tax liabilities - - - - - - - - -
Estimated employment benefit
liabilities 1,279 1,006 1,081 1,081 1,081 1,081 1,081 1,081 1,081
LT loan - net current portion 1,761 1,110 1,047 752 547 584 613 603 581
Other non-current liabilities 901 891 0 0 0 0 0 0 0
Total Non-Current Liabilities 3,940 3,008 2,128 1,833 1,627 1,664 1,693 1,684 1,662
Total Liabilities 17,108 18,334 18,504 18,836 21,656 23,876 26,270 28,751 31,276
2|Fortuna Capital - Appendix
Shareholder's Equity
Share capital 415 415 415 415 415 415 415 415 415
Additional PIC 2,480 2,480 2,480 2,480 2,480 2,480 2,480 2,480 2,480
Treasury stocks - - - - - - - - -
Unrealized gain (loss) on AFS
marketable securities, OCI (378) 92 (104) (104) (104) (104) (104) (104) (104)
Retained earnings 4,180 4,435 6,000 8,018 10,184 12,642 15,484 18,920 23,113
Total Shareholder's Equity 6,697 7,422 8,791 10,809 12,975 15,433 18,274 21,711 25,904
Non-Controlling interest 187 214 199 139 64 (23) (125) (246) (392)
Total Liabilities + Equity 23,992 25,971 27,494 29,783 34,696 39,286 44,420 50,217 56,789
Appendix 3. Cash Flow Statement

Cash flow (IDR bn) FY19 FY20 FY21 FY22F FY23F FY24F FY25F FY26F FY27F
Net profit 1,113 1,062 1,951 3,019 3,717 4,367 5,084 6,048 7,299
Depreciation 1,217 1,253 1,341 1,462 1,561 1,664 1,770 1,862 1,383
Rent amortization 1,652 6,478 6,243 - - - - - -
Change in working capital 686 3,192 614 (93) 341 265 268 267 244
Cashflow from operation 5,409 6,560 6,336 4,405 5,637 6,314 7,142 8,198 8,948
Capex, fixed assets (1,173) (1,891) (1,713) (2,213) (1,829) (1,890) (1,953) (1,681) (1,737)
Other investing items (1,516) (1,940) (1,947) (1,304) (611) (512) (463) (178) (356)
Cashflow from investing (2,689) (3,831) (3,660) (3,517) (2,440) (2,402) (2,417) (1,860) (2,093)
Proceed (repayment) from ST loans 1,113 302 (825) (99) 98 81 64 (21) (47)
Proceed (repayment) from LT loans (1,489) (651) (68) (295) (206) 37 29 (10) (22)
Dividends paid (116) (806) (386) (1,002) (1,550) (1,909) (2,243) (2,611) (3,106)
Other financing items (401) (1,594) (1,999) (59) (74) (87) (102) (121) (146)
Cashflow from financing (892) (2,750) (3,279) (1,455) (1,733) (1,878) (2,251) (2,763) (3,321)
Net cashflow 1,839 (32) (605) (567) 1,464 2,034 2,474 3,575 3,534
Beginning cash 2,070 3,909 3,878 3,273 2,706 4,170 6,203 8,677 12,252
Ending cash 3,909 3,878 3,273 2,706 4,170 6,203 8,677 12,252 15,786
Appendix 4. Key Forecasts Drivers

Income Statement Drivers FY19 FY20 FY21 FY22F FY23F FY24F FY25F FY26F FY27F
Revenue
Store Additions 839 1,405 1,272 1,500 1,200 1,200 1,200 1,000 1,000
Old Stores Same Store Sales Growth (SSSG, in %) 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
New Stores Same Store Sales Growth (SSSG, in %) 5.8% -2.9% 5.0% 9.0% 7.0% 7.0% 7.0% 7.0% 7.0%
Gross Profit Margin, Food 19.1% 18.7% 19.1% 19.6% 19.7% 19.8% 19.9% 20.0% 20.0%
Gross Profit Margin, Non-Food 21.6% 23.6% 24.4% 23.6% 23.7% 23.8% 23.9% 24.0% 24.0%
Revenue Mix
Food 67.6% 66.3% 67.1% 68.1% 67.1% 66.1% 65.6% 65.1% 64.6%
Non-Food 32.3% 33.7% 32.8% 31.8% 32.8% 33.8% 34.3% 34.8% 35.3%
Services 0.1% 0.0% 0.0% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1%
Costs
Franchise Ratio 23.2% 22.8% 22.8% 23.0% 22.8% 22.5% 22.3% 22.0% 21.8%
CapEx/Store 3.7 3.3 4.0 4.4 4.5 4.6 4.8 4.9 5.1
Employees/Store 7.8 7.4 7.4 6.9 6.5 6.4 6.3 6.2 6.1
Annual Salary Growth 6.9% 9.0% 0.2% 9.0% 6.9% 6.0% 5.5% 5.0% 5.0%
S&D Expenses to Sales 16.8% 17.3% 16.8% 16.0% 15.7% 15.7% 15.7% 15.7% 15.2%
G&A Expenses to Sales 1.9% 2.0% 1.8% 1.9% 2.1% 2.1% 2.2% 2.3% 2.4%
Tax Rate 21.7% 21.6% 19.4% 22.0% 22.0% 22.0% 22.0% 22.0% 22.0%
Other
Fee-Based Income/Store Growth 22.9% -17.0% 10.4% 20.0% 17.0% 16.0% 15.0% 14.0% 13.0%
Finance Cost to Sales 0.5% 0.5% 0.4% 0.3% 0.2% 0.2% 0.1% 0.0% 0.0%
Appendix 5. Key Forecast Assumptions

Revenue Rationale
Store Additions From our calculation and company data, we believe that AMRT could reach 1.5k additional stores in FY22F while maintaining 1.0-1.2k stores going forward with healthy cash flow
Same Store Sales Growth (SSSG, in %) We approximate SSSG by combining price aspect (reflected in Indonesia's inflation, as AMRT sells staples good) and the upcoming minimum wage increase, we believe it should increase similar to the combined amount
Gross Profit Margin, Food Food GPM to gradually increase as AMRT establishes its position as the main distribution channel of suppliers and marketplace for consumers, exercising higher bargaining and purchasing power
Gross Profit Margin, Non-Food Non-Food GPM to gradually increase as AMRT establishes its position as the main distribution channel of suppliers and marketplace for consumers, exercising higher bargaining and purchasing power
Revenue Mix We see an increasing trend of Non-Food blend in revenue mix, thus, we gradually adjust the revenue mix for non-food segment by c.1% every year
Costs
Franchise Ratio AMRT's franchise-owned store saw declining proportion to all stores. However, our on-the-ground research suggested that AMRT has excellent franchise operation, thus we adjust the decline in franchise ratio to be slower
CapEx/Store We seek CapEx/Store by analyzing historical investing cash flow, resulting in IDR4.2bn/store. The number based our assumptions for future CapEx, adjusted with yoy growth rate of 3%
Employees/Store We noticed AMRT gradually decrease its headcounts/store since FY15. In attempt to pursue margin expansion, we believe this trend should continue, thus, we assign a proportional decrease for FY22F/FY23F assumption
Annual Salary Growth With the recently announced minimum wage growth, we calculate AMRT's provincial presence to find the adjusted-average of c.6.9%
S&D Expenses to Sales Several accounts beside salaries and wages expenses, depreciation, and rent amortization are forecasted using % of sales
G&A Expenses to Sales Several accounts beside salaries and wages expenses, depreciation, and rent amortization are forecasted using % of sales
Tax Rate With the recently announced HPP, corporate income tax will be adjusted to 22% starting FY22
Other
Fee-Based Income/Store Growth We breakdown AMRT's fee-based income/store historically to see the annual growth. With our industry analysis, we believe the yoy growth should be double-digit percentage, slowly decreasing with higher customer base
Finance Cost to Sales Though independently AMRT is free of debt, we take into account the consolidated subsidiaries finance cost, and believe the number should deteriorate in upcoming years
Appendix 6. Key Ratios

Key Ratios FY19 FY20 FY21 FY22F FY23F FY24F FY25F FY26F FY27F
Highlight
EV/EBITDA (x) 7.7 6.9 8.2 14.2 12.0 10.4 9.1 7.9 7.0
P/E (x) 32.8 31.3 25.9 34.4 27.9 23.8 20.4 17.2 14.2
P/BV (x) 5.3 4.3 5.6 9.5 8.0 6.7 5.7 4.8 4.1
Per Share
Adjusted EPS (Rp) 27 26 47 73 90 105 122 146 176
Adjusted BVPS (Rp) 166 184 217 264 314 371 437 517 614
Adjusted DPS (Rp) 3 19 9 24 37 46 54 63 75
Growth
Revenue 9.2% 4.0% 12.0% 15.3% 13.9% 12.1% 11.9% 11.6% 10.7%
Operating Profit 27.6% -5.7% 66.5% 48.6% 21.5% 15.4% 15.2% 16.1% 20.8%
EBITDA 11.0% 2.4% 30.4% 21.3% 16.7% 12.6% 12.0% 10.6% 8.9%
Net Income 71.2% -4.6% 83.8% 54.7% 23.1% 17.5% 16.4% 19.0% 20.7%
Fee-Based Income 27.4% -11.1% 19.2% 34.1% 23.9% 22.5% 21.1% 18.8% 17.5%
Profitability
Gross Profit Margin 19.9% 20.3% 20.8% 20.9% 21.0% 21.1% 21.3% 21.4% 21.4%
EBIT margin 2.5% 2.2% 3.3% 4.3% 4.6% 4.7% 4.8% 5.0% 5.5%
EBITDA margin 6.1% 6.0% 7.0% 7.4% 7.6% 7.6% 7.6% 7.5% 7.4%
Profit margin 1.6% 1.4% 2.3% 3.1% 3.3% 3.5% 3.6% 3.9% 4.2%
ROA 4.6% 4.1% 7.1% 10.1% 10.7% 11.1% 11.4% 12.0% 12.9%
ROE 16.6% 14.3% 22.2% 27.9% 28.6% 28.3% 27.8% 27.9% 28.2%
Liquidity
Current (x) 1.1 0.9 0.9 0.8 0.9 1.0 1.1 1.2 1.3
Quick (x) 0.5 0.4 0.3 0.3 0.4 0.4 0.5 0.6 0.7
Cash (x) 0.3 0.3 0.2 0.2 0.2 0.3 0.4 0.5 0.5
Efficiency
Asset turnover (x) 3.0 2.9 3.1 3.3 3.2 3.2 3.1 3.1 3.0
Receivable turnover (x) 49.1 43.3 48.2 45.6 42.3 41.3 40.4 39.5 38.7
Inventory turnover (x) 9.6 9.9 9.7 10.7 10.0 10.0 9.9 9.9 9.9
Fixed Assets turnover (x) 13.4 12.4 13.1 13.6 14.9 16.2 17.7 20.3 21.4
Payable turnover (x) 9.2 8.6 8.7 10.0 9.3 9.4 9.4 9.5 9.5
Solvency
Interest cover (x) 4.5 4.4 8.7 15.2 19.0 28.4 40.2 n/a n/a
Debt to asset ratio (x) 0.1 0.1 0.1 0.1 0.0 0.0 0.0 0.0 0.0
Debt to equity ratio (x) 0.3 0.3 0.2 0.1 0.1 0.1 0.1 0.1 0.1
Days
Cash Collection Cycle 6.5 3.2 1.5 5.0 5.3 5.9 6.5 7.1 7.7
Receivables days 8.6 7.8 7.5 8.0 8.6 8.8 9.0 9.2 9.4
Inventories days 46.2 46.1 44.5 43.0 46.3 46.5 46.7 46.9 47.1
Payables days 48.4 50.7 50.5 46.0 49.6 49.4 49.2 49.0 48.8
Appendix 7. AMRT’s GPM trend vs Indonesian Peers

Source: Fortuna Capital, Refinitiv
25.0% Indonesian Peers’
AMRT’s GPM 41.0%
20.8% 20.9% 39.8%
19.1% 19.4% 19.5%
19.8% 19.9% 20.3% 40.0% GPM
20.0% 18.1% 18.4% 39.0%
16.1%
38.0% 37.3%
15.0% 36.8% 36.6%
37.0% 36.2%
36.0% 35.4% 35.5% 35.5%
34.9%
10.0% 35.0% 34.6%
34.3%
34.0%
5.0% 33.0%
32.0%
0.0% 31.0%
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 9M22 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 9M22
Appendix 8. AMRT’s Free Cash Flow

Free Cash Flow to Firm (FCFF) FY19 FY20 FY21 FY22F FY23F FY24F FY25F FY26F FY27F
Operating profit or EBIT 1,791 1,689 2,811 4,178 5,078 5,861 6,753 7,838 9,467
Tax (-) (315) (300) (480) (869) (1,069) (1,256) (1,463) (1,740) (2,100)
Operating profit after tax or EBIAT 1,476 1,388 2,331 3,309 4,009 4,604 5,290 6,098 7,367
D&A expense (-) 2,681 2,895 3,157 3,063 3,374 3,654 3,899 3,944 3,362
Change in WC 686 3,192 614 (93) 341 265 268 267 244
Capital expenditure (1,173) (1,891) (1,713) (2,213) (1,829) (1,890) (1,953) (1,681) (1,737)
Unlevered FCF 3,670 5,584 4,389 4,066 5,895 6,633 7,504 8,628 9,236
Period -2 -1 0 1 2 3 4 5 6
Reporting date Dec-19 Dec-20 Dec-21 Dec-22 Dec-23 Dec-24 Dec-25 Dec-26 Dec-27
Valuation date Dec-22 Dec-22 Dec-22 Dec-22 Dec-22 Dec-22 Dec-22 Dec-22 Dec-22
Discount factor 299% 199% 99% 1% 101% 201% 301% 401% 501%
PV of unlevered FCF 2,726 4,582 3,978 4,060 5,329 5,429 5,560 5,788 5,609
Appendix 9. Capital Expenditures Forecast

Source: Company Data, Fortuna Capital
CapEx Efficiency Calculations FY19 FY20 FY21 FY22F FY23F FY24F FY25F FY26F FY27F
Total CapEx for Store (w/o franchising) 2,501 3,827 3,909 5,050 4,175 4,314 4,458 3,838 3,966
Investment/Store 3.15 2.84 3.40 3.72 3.83 3.94 4.06 4.18 4.31
Total Additional Franchise Stores 165 260 296 345 273 270 267 220 218
Total CapEx for Store (through franchising) 2,126 3,253 3,323 4,292 3,549 3,667 3,789 3,263 3,371
Efficiency 520 739 1,008 1,282 1,045 1,065 1,084 920 937
Efficiency (%) 21% 19% 26% 25% 25% 25% 24% 24% 24%
Appendix 10. AMRT’s Price to Earning Valuation

P/E Multiple Valuation P/E Multiple Valuation
2023F Earnings (IDR bn) 3,717 2023F Earnings (IDR bn) 3,717
Multiple Target (x) 32.5 Multiple Target (x) 39.9
Valuation (IDR bn) 120,806 Valuation (IDR bn) 148,312

Outstanding Share 42 Outstanding Share 42
Target Price (in IDR/share) 2,900 Target Price (in IDR/share) 3,600
Upside 16.0% Upside 44.0%
Implied Forward P/E 33.7 Implied Forward P/E 41.8
Appendix 11. Trading and Multiples Valuation Comparable

Source: Fortuna Capital, Refinitiv
Price Cash Net Debt Outs Mkt. Cap EV
Company
(IDR full) (IDR bn) (IDR bn) (bn) (IDR bn) (IDR bn)
Sumber Alfaria Trijaya (AMRT IJ) 2.500 2.618 (1.017) 41,52 103.811 104.829
Yonghui - 601933.SS 7.894 21.190 70.178 9,08 71.641 130.689
Avenue - AVEU.NS 736.094 195 704 0,65 476.823 539.499
Lawson - 2651.T 597.792 - 407 0,10 59.825 69.832
BGF Retail - 282330.KS 2.489.562 153 3.866 0,02 43.007 41.520
GS Retail - 007070.KS 353.843 158 33.306 0,10 36.156 84.006
President Chain Store - 2912.TW 135.743 10.192 23.220 1,04 141.122 180.137
CP ALL - CPALL.BK 29.491 43.081 171.111 8,98 264.915 592.763
Taiwan Family Mart Co. Ltd - 5903.TWO 102.567 4.060 14.171 0,22 22.895 38.651
United Super Markets Holdings Inc - 3222.T 36.311 7.048 71.706 3,81 138.486 262.745
Vingroup JSC - VIC.HM 133.797 - 1.092 0,13 17.171 23.301
FY22 FY23 FY24
Company Sales EPS EGR EBITDA Gross Profit Sales EPS EGR EBITDA Gross Profit Sales EPS EGR EBITDA Gross Profit
(IDR bn) (IDR) (%) (IDR bn) (IDR bn) (IDR bn) (IDR) (%) (IDR bn) (IDR bn) (IDR bn) (IDR) (%) (IDR bn) (IDR bn)
Sumber Alfaria Trijaya (AMRT IJ) 97.925 71 50,1% 7.241 20.420 111.498 89 25,9% 8.510 23.406 125.038 104 18,2% 9.579 26.423
Yonghui - 601933.SS 211.572 (78) -85,3% 6.143 43.176 222.574 199 -248,5% 8.947 46.446 234.332 307 64,1% 9.980 49.309
Avenue - AVEU.NS 85.853 7.608 48,6% 7.654 13.172 108.059 9.733 27,4% 9.794 16.566 128.438 11.884 22,1% 11.767 19.711
Lawson - 2651.T 105.753 23.549 3,8% 14.634 53.522 108.471 24.867 6,0% 14.964 54.833 110.436 25.815 4,9% 15.210 55.751
BGF Retail - 282330.KS 86.288 127.376 17,2% 6.850 15.542 92.734 145.880 14,7% 7.104 16.790 98.725 163.127 11,9% 7.385 17.968
GS Retail - 007070.KS 133.107 16.121 -80,8% 9.676 32.296 140.643 24.520 52,3% 10.526 34.214 148.005 28.676 19,0% 11.140 36.376
President Chain Store - 2912.TW 143.270 4.780 -0,4% 14.386 48.598 151.002 5.524 16,9% 15.125 51.904 158.290 6.023 9,3% 15.804 54.699
CP ALL - CPALL.BK 364.109 706 26,1% 29.817 79.870 395.848 982 38,5% 33.928 88.343 424.225 1.194 21,0% 37.710 95.675
Taiwan Family Mart Co. Ltd - 5903.TWO 45.600 4.365 3,5% 4.983 15.920 49.695 5.530 34,6% 5.190 17.852 53.482 5.317 13,9% 5.262 19.343
United Super Markets Holdings Inc - 3222.T 100.694 1.255 -77,6% 16.753 15.792 124.918 1.891 51,4% 27.586 32.110 108.537 1.409 5,7% 17.028 36.282
Vingroup JSC - VIC.HM 73.966 1.221 107,4% 2.075 20.540 73.628 1.810 52,6% 2.281 20.509 74.018 1.848 -24,2% 2.313 20.684
Implied Multiple FY22 FY23 FY24

Quartile 3 41,8 2,0 18,8 1,5 6,5 37,3 1,5 16,0 1,3 5,1 25,8 2,5 14,4 1,3 4,7
Quartile 2 (Median) 28,4 1,2 11,9 0,8 2,8 24,3 1,2 11,9 0,6 2,8 23,9 1,3 11,4 0,6 2,7
Quartile 1 23,5 0,8 8,0 0,6 2,5 18,7 0,7 6,9 0,6 2,5 20,1 1,0 6,6 0,6 2,3
Mean 44,0 2,6 17,8 1,5 8,2 33,7 1,7 16,8 1,4 7,4 30,3 1,9 14,8 1,3 6,5
Price FY22 FY23 FY24
Quartile 3 2.900 7.100 3.300 3.600 3.200 3.400 3.400 3.300 3.600 2.900 2.700 4.800 3.300 3.800 3.000
Quartile 2 (Median) 2.000 4.200 2.100 1.800 1.400 2.200 2.700 2.500 1.800 1.700 2.500 2.600 2.700 1.900 1.700
Quartile 1 1.700 2.800 1.400 1.500 1.200 1.700 1.600 1.400 1.600 1.400 2.100 2.000 1.500 1.700 1.500
Mean 3.100 9.400 3.100 3.600 4.100 3.000 4.000 3.500 3.900 4.200 3.200 3.600 3.400 3.900 4.100
Appendix 12. Indonesia’s Unbanked and Underbanked Population

Source: Fortuna Capital, Bain, Temasek, Asian Banker
Proportion of Unbanked, Underbanked, and Banked in SEA # of Unbanked, Underbanked, Banked in

Unbanked Underbanked Banked
Indonesia (2021)
100%
90% 23% 22% 21%
26%
37%
80%
70% 60%
45%
13% 10% 92.31
60% 24% 26%
181
50%
40%
30%
40%
45%
65% 69% 47.06
50% 51%
20% 38%
10% 15% 18%
2%
0%
SEA Singapore Malaysia Thailand Indonesia Philippines Vietnam Unbanked Underbanked Adult Population
Appendix 13. Jabodetabek, Java (ex-Jabodetabek), ex-Java Minimum Wages Comparison

Source: Fortuna Capital, Central Bureau of Statistics
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Jabodetabek Rp 1,117,050 Rp 1,406,667 Rp 1,588,667 Rp 1,766,667 Rp 2,378,000 Rp 2,235,851 Rp 2,430,594 Rp 2,625,779 Rp 2,849,233 Rp 2,899,178 Rp 2,994,848 Rp 3,183,249
DKI Jakarta Rp 1,529,150 Rp 2,200,000 Rp 2,441,000 Rp 2,700,000 Rp 3,100,000 Rp 3,355,750 Rp 3,648,036 Rp 3,940,973 Rp 4,276,350 Rp 4,416,186 Rp 4,641,854 Rp 4,901,798
Banten Rp 1,042,000 Rp 1,170,000 Rp 1,325,000 Rp 1,600,000 Rp 1,784,000 Rp 1,931,180 Rp 2,099,385 Rp 2,267,990 Rp 2,460,997 Rp 2,470,997 Rp 2,501,203 Rp 2,661,280
Jawa Barat Rp 780,000 Rp 850,000 Rp 1,000,000 Rp 1,000,000 Rp 2,250,000 Rp 1,420,624 Rp 1,544,361 Rp 1,668,373 Rp 1,810,351 Rp 1,810,351 Rp 1,841,487 Rp 1,986,670 10Y AVG. growth
Growth Rate 25.9% 12.9% 11.2% 34.6% -6.0% 8.7% 8.0% 8.5% 1.8% 3.3% 6.3% 10.5%
Java (Ex-Jabodetabek) Rp 882,527 Rp 989,061 Rp 1,133,517 Rp 1,183,279 Rp 1,269,008 Rp 1,534,270 Rp 1,676,879 Rp 1,818,660 Rp 1,973,881 Rp 2,010,107 Rp 2,040,692 Rp 2,198,211
Jawa Tengah Rp 765,000 Rp 830,000 Rp 910,000 Rp 910,000 Rp 910,000 Rp 1,367,000 Rp 1,486,065 Rp 1,605,396 Rp 1,742,015 Rp 1,798,979 Rp 1,812,488 Rp 1,958,169
DI Yogyakarta Rp 892,660 Rp 947,114 Rp 988,500 Rp 988,500 Rp 988,500 Rp 1,337,645 Rp 1,454,154 Rp 1,570,923 Rp 1,704,608 Rp 1,765,000 Rp 1,840,916 Rp 1,981,782
Jawa Timur Rp 745,000 Rp 866,250 Rp 1,000,000 Rp 1,000,000 Rp 1,000,000 Rp 1,388,000 Rp 1,508,895 Rp 1,630,059 Rp 1,768,777 Rp 1,868,777 Rp 1,891,567 Rp 2,040,244
Bali Rp 967,500 Rp 1,181,000 Rp 1,542,600 Rp 1,621,172 Rp 1,807,600 Rp 1,956,727 Rp 2,127,157 Rp 2,297,969 Rp 2,494,000 Rp 2,494,000 Rp 2,516,971 Rp 2,713,672
Nusa Tenggara Barat Rp 1,000,000 Rp 1,100,000 Rp 1,210,000 Rp 1,330,000 Rp 1,482,950 Rp 1,631,245 Rp 1,825,000 Rp 2,012,610 Rp 2,183,883 Rp 2,183,883 Rp 2,207,212 Rp 2,371,407
Nusa Tenggara Timur Rp 925,000 Rp 1,010,000 Rp 1,150,000 Rp 1,250,000 Rp 1,425,000 Rp 1,525,000 Rp 1,660,000 Rp 1,795,000 Rp 1,950,000 Rp 1,950,000 Rp 1,975,000 Rp 2,123,994 10Y AVG. growth
YoY Growth Rate 16.3% 15.4% 0.0% 0.0% 38.8% 8.7% 8.0% 8.5% 5.7% 1.2% 7.9% 10.0%
Ex-Java Rp 1,142,367 Rp 1,353,206 Rp 1,591,903 Rp 1,801,906 Rp 2,009,735 Rp 2,186,373 Rp 2,377,746 Rp 2,574,605 Rp 2,807,397 Rp 2,810,737 Rp 2,840,662 Rp 3,049,818
Aceh Rp 1,400,000 Rp 1,550,000 Rp 1,750,000 Rp 1,900,000 Rp 2,118,500 Rp 2,500,000 Rp 2,700,000 Rp 2,916,810 Rp 3,165,031 Rp 3,165,031 Rp 3,166,460 Rp 3,413,666
Sumatera Utara Rp 1,200,000 Rp 1,375,000 Rp 1,505,850 Rp 1,625,000 Rp 1,811,875 Rp 1,961,354 Rp 2,132,189 Rp 2,303,403 Rp 2,499,423 Rp 2,499,423 Rp 2,522,609 Rp 2,710,493
Sumatera Barat Rp 1,150,000 Rp 1,350,000 Rp 1,490,000 Rp 1,615,000 Rp 1,800,725 Rp 1,949,284 Rp 2,119,067 Rp 2,289,220 Rp 2,484,041 Rp 2,484,041 Rp 2,512,539 Rp 2,742,476
Riau Rp 1,238,000 Rp 1,400,000 Rp 1,700,000 Rp 1,878,000 Rp 2,095,000 Rp 2,266,722 Rp 2,464,154 Rp 2,662,026 Rp 2,888,564 Rp 2,888,564 Rp 2,938,564 Rp 3,191,662
Kep. Riau Rp 1,015,000 Rp 1,365,087 Rp 1,665,000 Rp 1,954,000 Rp 2,178,710 Rp 2,358,454 Rp 2,563,875 Rp 2,769,754 Rp 3,005,460 Rp 3,005,460 Rp 3,050,172 Rp 3,279,194
Jambi Rp 1,142,500 Rp 1,300,000 Rp 1,502,300 Rp 1,710,000 Rp 1,906,650 Rp 2,063,000 Rp 2,243,719 Rp 2,423,889 Rp 2,630,162 Rp 2,630,162 Rp 2,698,940 Rp 2,943,000
Sumatera Selatan Rp 1,195,220 Rp 1,630,000 Rp 1,825,000 Rp 1,974,346 Rp 2,206,000 Rp 2,388,000 Rp 2,595,995 Rp 2,804,453 Rp 3,043,111 Rp 3,043,111 Rp 3,144,446 Rp 3,404,177
Bengkulu Rp 930,000 Rp 1,200,000 Rp 1,350,000 Rp 1,500,000 Rp 1,605,000 Rp 1,737,412 Rp 1,888,741 Rp 2,040,407 Rp 2,213,604 Rp 2,215,000 Rp 2,238,094 Rp 2,418,280
Kep. Bangka Belitung Rp 1,110,000 Rp 1,265,000 Rp 1,640,000 Rp 2,100,000 Rp 2,341,500 Rp 2,534,673 Rp 2,755,444 Rp 2,976,706 Rp 3,230,024 Rp 3,230,023 Rp 3,264,884 Rp 3,498,479
Lampung Rp 975,000 Rp 1,150,000 Rp 1,399,037 Rp 1,581,000 Rp 1,763,000 Rp 1,908,447 Rp 2,074,673 Rp 2,241,270 Rp 2,432,002 Rp 2,432,001 Rp 2,440,486 Rp 2,633,284
Kalimantan Barat Rp 900,000 Rp 1,060,000 Rp 1,380,000 Rp 1,560,000 Rp 1,739,400 Rp 1,882,900 Rp 2,046,900 Rp 2,211,500 Rp 2,399,699 Rp 2,399,699 Rp 2,434,329 Rp 2,608,602
Kalimantan Tengah Rp 1,327,459 Rp 1,553,127 Rp 1,723,970 Rp 1,896,367 Rp 2,057,558 Rp 2,227,307 Rp 2,421,305 Rp 2,663,435 Rp 2,903,145 Rp 2,903,145 Rp 2,922,516 Rp 3,181,013
Kalimantan Selatan Rp 1,225,000 Rp 1,337,500 Rp 1,620,000 Rp 1,870,000 Rp 2,085,050 Rp 2,258,000 Rp 2,454,671 Rp 2,651,782 Rp 2,877,449 Rp 2,877,449 Rp 2,906,473 Rp 3,149,977
Sulawesi Selatan Rp 1,200,000 Rp 1,440,000 Rp 1,800,000 Rp 2,000,000 Rp 2,250,000 Rp 2,435,625 Rp 2,647,767 Rp 2,860,382 Rp 3,103,800 Rp 3,165,876 Rp 3,165,876 Rp 3,385,145
Sulawesi Tenggara Rp 1,032,300 Rp 1,125,207 Rp 1,400,000 Rp 1,652,000 Rp 1,850,000 Rp 2,002,625 Rp 2,177,052 Rp 2,351,870 Rp 2,552,015 Rp 2,552,015 Rp 2,576,017 Rp 2,758,948
Sulawesi Barat Rp 1,127,000 Rp 1,165,000 Rp 1,400,000 Rp 1,655,500 Rp 1,864,000 Rp 2,017,780 Rp 2,193,530 Rp 2,381,000 Rp 2,678,863 Rp 2,678,863 Rp 2,678,863 Rp 2,871,794
Gorontalo Rp 837,500 Rp 1,175,000 Rp 1,325,000 Rp 1,600,000 Rp 1,875,000 Rp 2,030,000 Rp 2,206,813 Rp 2,384,020 Rp 2,788,826 Rp 2,788,826 Rp 2,800,580 Rp 2,989,350
Sulawesi Utara Rp 1,250,000 Rp 1,550,000 Rp 1,900,000 Rp 2,150,000 Rp 2,400,000 Rp 2,598,000 Rp 2,824,286 Rp 3,051,076 Rp 3,310,723 Rp 3,310,723 Rp 3,310,723 Rp 3,485,000
Papua Barat Rp 1,450,000 Rp 1,720,000 Rp 1,870,000 Rp 2,015,000 Rp 2,237,000 Rp 2,421,500 Rp 2,667,000 Rp 2,934,500 Rp 3,134,600 Rp 3,134,600 Rp 3,200,000 Rp 3,282,000 10Y AVG. growth
YoY Growth Rate 3.4% 20.2% 18.3% 12.6% 8.3% 8.7% 8.5% 12.5% 0.0% 0.0% 6.9% 9.0%
Indonesia Rp 1,088,903 Rp 1,296,908 Rp 1,584,391 Rp 1,790,342 Rp 1,997,819 Rp 2,074,685 Rp 2,268,874 Rp 2,455,662 Rp 2,672,371 Rp 2,685,037 Rp 2,725,489 Rp 2,923,307 10Y AVG. growth
YoY Growth Rate 10.1% 19.1% 22.2% 13.0% 11.6% 3.8% 9.4% 8.2% 8.8% 0.5% 1.5% 7.3% 9.6%
Appendix 14. On The Ground Analysis Key Findings

AMRT vs Indomaret Franchising Competition with Indomaret Wage Increase Issues
"AMRT & Indomaret franchising method is similar in many "Competition (with Indomaret) still exists and will ever exist "Wage increase issue wouldn't be a problem as an
in years to come. Revenue declines in the first two years of
metrics. The only difference is AMRT is more selective in competitors' outlet opening -- third year will normalize as
aggregate increase in wage will also increase
selecting its franchise operations, looking at the proximity of demand gradually increase -- and fourth year, revenue will purchasing ability from customers -- that lead to
the area to related residential or public spaces." increase above the normal level" higher demand & revenue."
AMRT’s Franchising Methods Key Inputs for AMRT & Indomaret Franchising
"AMRT provides methods of franchising: 1) land & There are several key impressions of AMRT's franchising operations:
buildings are provided by the franchisee, and 2) existing 1) Administration stuff such as financial statement reporting -- is already sufficient in terms of providing adequate
& transparent information over the operational period,
store (tier-2 in terms of profitability) will be sold through 2) Inputs & suggestions from franchisees should be assessed in a faster & immediate manner to provide any
franchising" support for franchisees' operations.
Location of franchised branches - Alfamart Documentations
Citra Raya - Tangerang - Banten Province

Serang - Banten Province
Ciputat - Tangerang - Banten Province
Pamulang - Tangerang - Banten Province
Rangkasbitung - Lebak - Banten Province
Parug - Bogor Regency - West Java Province
Location of franchised branches - Indomaret
Kembangan - West Jakarta - Jakarta Province

Duren Sawit - East Jakarta - Jakarta Province
Pulo Gadung - East Jakarta - Jakarta Province
5Y CF – Projections 5Y IRR
Initial Without competition 15.24%
Outlay
Implication
Year Cash Flow (in IDR mn)
0 - 1,200 Assumptions:
Return 1 360 - No competitor within the same area
2 360
- Franchised are based on method 1: land & building from franchisee
3 360
4 360
5 360
5Y CF – Projections 5Y IRR
With competition (enter at Y2) 10.25% Implication
Initial
Outlay
When competitor opens outlet within the same area (assumed Y2)
- Earnings will come at half the normal amount (c.IDR15mn/month)
- The following year (Y3) will increase but not at the normal amount
Return - At Y4 (next 2 years), earnings will be back at normal level (increase in demand)
- At Y5 (next 3 years), the demand will keep increasing as new outlet established
- Earnings will increase at c.15% in Y5
Appendix 15. AMRT's Fee-Based Income Network (Product Offerings)

Source: Fortuna Capital, Company Data
Appendix 16. Price Comparisons between Alfamart, Indomaret, and Supermarkets

Alfamart Indomaret Alfamidi Superindo Ranch Market
Food
Price (in IDR) Price (in IDR) Price (in IDR) Price (in IDR) Price (in IDR)
Product Brand Jelambar Latumeten Jelambar Daan Mogot Jelambar Perdana Daan Mogot Cengkareng
Beras Sania 5Kg 62,500 62,500 64,000 64,000 64,000 64,000 64,000 64,500
Indomie Goreng 85gr 3,100 3,100 3,100 3,100 3,100 3,100 3,000 3,200
Telor Negeri, per kg 22,900 22,900 21,000 21,000 32,500 32,500 29,900 29,900
Susu Indomilk UHT 950ml 19,400 19,400 19,200 19,280 18,500 18,500 22,380 21,390
Minyak Bimoli 1L 19,500 19,500 21,700 21,700 21,900 21,900 22,900 22,300
Gula Gulaku Gula Tebu Premium 1kg 13,500 13,500 13,500 13,500 13,500 13,500 13,500 13,500
Teh Sari Wangi The Asli 50 Sachet 13,700 13,700 13,500 13,500 13,500 13,500 13,700 13,800
Aqua Galon (Refill) 19,900 19,900 21,000 21,000 20,100 20,000 20,200 22,000
Air Mineral
Dengan Galon 52,900 52,900 54,000 54,000 53,400 53,000 55,200 56,200
Rokok Sampoerna Mild Merah 23,200 23,200 22,300 22,300 22,900 22,900 23,500 23,390
Kopi Kapal Api Kopi Susu 31gr x 10 sachet 14,900 15,200 15,000 15,000 15,500 15,500 15,890 16,000
Non-Food
Product Brand
In House Brand, 200 sheets 14,900 14,900 12,500 13,000 15,200 14,900 11,890 n/a
Tisu
Paseo Facial Tissue, 250 sheets 19,900 19,900 19,700 19,700 19,600 19,800 20,290 20,100
Shampo Sunsilk 340ml 51,900 51,900 52,500 52,500 53,600 53,900 52,390 54,100
Sabun Lifebuoy Bar Soap 110 gr 7,500 7,500 7,900 7,900 8,400 8,500 7,790 7,900
Sikat Gigi Oral-B Fresh Clean Black 3 pcs 21,000 21,000 22,500 22,500 22,900 22,900 21,590 21,400
Pasta Gigi Pepsodent Complete 8 190gr 22,900 22,900 24,000 24,000 23,300 23,580 25,090 25,200
Detergen Rinso Rose Fresh 750ml 23,700 23,700 23,700 23,700 22,800 22,800 23,890 24,160
Karbol Wipol Karbol Cemara 750ml 33,600 33,600 33,900 33,900 33,400 33,600 36,790 35,700
Pembalut Charm Safe Night 420mm, 8 Pads 24,600 24,600 22,500 22,500 24,600 24,600 23,090 23,300
Deodoran Rexona Deo Roll Powder Dry 20,500 20,500 21,500 21,500 19,900 19,900 22,190 22,450
Kapur Barus Bagus Kapur Ajaib 3.5gr x 12pcs 21,500 21,500 19,900 19,900 22,200 22,200 21,190 22,250
Appendix 17. Developed Market vs. Emerging Market Minimarket Calculation

Source: Market Research, Fortuna Capital
Country Population C-Stores C-store Ratio Market Size FY16-21 CAGR GDP per Capita Description
Japan 125,000,000 56,000 45% $87Bn 1.60% $40.000 C-Store Ratio = C- Store / Population x (1.000)
US 331,000,000 148,026 45% $811Bn 2.60% $69.000 10% C-store ratio implies 10 c-store per 1.000 residents
UK 67,000,000 49,000 73% $258Bn 2.60% $47.000 Developed Market Minimarket Ratio Median = 29%
Australia 27,000,000 6,900 26% $107Bn 5% $47.000 We expect Indonesia current 14% Minimarket Ratio will
German 83,000,000 35,000 42% $251Bn 2.40% $50.800 match Developed Market's 29%. Thus, the mature
France 67,800,000 7,140 11% $249Bn 3.00% $43000 Indonesia will have approx:
Netherland 17,530,000 5,000 29% $70Bn 4% $58000 Population x Minimarket Ratio = # Stores
Canada 38,250,000 10,180 27% $143Bn 5.10% $52051 276,000,000 x 29% = 78,777 stores (vs. c.40.5k stores)
Italy 49,000,000 28,865 59% $223Bn 2.00% $35.511 Potential MM addition:
Thailand 70,000,000 17,500 25% $90Bn 3.80% $7233 78,777 - 40,500 = 38,277 stores (94.5% addition)
Indonesa 276,000,000 40,500 15% $226Bn 7.70% $5000
Appendix 18. International Evidence of O2O Collaboration

Source: EMIS Insight, Fortuna Capital
Date Country Companies involved Description Reasoning & Outcome
Allowing customers to receive
goods purchased via online
platform in 7-Eleven stores in the Increase foot traffic which increase Growing SSSG FY17; followed by strong
2017 Philippines Lazada with 7-Eleven
city center area; and will take top-line year in FY18 due to election year
several days for a more outskirt
area
Goods will be delivered from
Additional foot traffic which could Convenience stores in partnership with
2018 Japan JD with FamilyMart & 7-Eleven central convenience stores
increase top-line JD earned tripled sales volume
locations across cities
Conducted trial partnership which
select Kohl's stores that would Amazon have a wide network of
Kohl acquired 2mn new customers by
2019 US Amazon with Kohl accept return from Amazon offline retail stores, which is accessible
2020
customers. Service was to customers
established in 2019
Appendix 19. ESG Analysis

Source: Fortuna Capital, MSCI, Company Data
The methodology for analysing ESG is the MSCI (Morgan Stanley Capital International) ESG scoring framework. Fortuna Capital identify AMRT
as a company within the Food & Retailing Sub-Industry and determine the weightage of each key issue (KI) using MSCI ESG Industry Materiality
Map. As MSCI recommends adjusting the KI to fit the company’s business model, we perform some adjustments in order to suit AMRT’s
dynamics. The modification was made by eliminating “Raw Material Sourcing”, adding “Carbon Emission” and “Community Relations” KI. Then,
we adjust the weightage of each KI. Furthermore, to increase the reliability of the governance aspect calculation, the analysis used the latest
ASEAN Governance Scorecard v.2.0 (Fig. 17 in the report) and apply the score to the Governance component of MSCI KI Performance Scoring
1) Scoring Methodology
ESG rating was determined by assessing the risk and opportunity exposure, as well as management performance. The risk and opportunity
exposure are evaluated on a scale of 0 to 10, with 0 denoting no exposure and 10 denoting extremely high exposure. The management score
also ranges from 0 to 10, with 0 representing no evidence of management efforts and 10 representing very strong management. In order to
obtain the same total Key Issue Score, the Risk Exposure Score and Risk Management Score are combined in a way that a higher amount of
exposure requires a higher level of demonstrated management competence. Assessment of opportunities works similarly to that risk, but a
different model is used to combine opportunity exposure and management. Key Issue ratings are also presented on a 0 to 10 scale, with 0 is
very poor and 10 is very good. The model for Risk and Opportunity, as well as score classification, depicted below.
Risk Exposure vs Management Score Opportunity Exposure vs Management Score Score Classification
Source: MSCI Source: MSCI Source: MSCI
Letter Rating Final ESG Score

AAA 8.571 - 10.0
AA 7.143 - 8.571
A 5..714 - 7.143
BBB 4.286 - 5.714
BB 2.857 - 4.286
B 1.429 - 2.857
CCC 0.0 - 1.429
2) Key Issues Performance Score

Exposure Score Management KI Performance Industry Weighted KI
ESG Pillar Theme Key Issue
Risk Opportunity Score Score Weightage Performance Score
Carbon Emission 7 9 9.00 6.90% 0.621
Environmental Climate Change
Product Carbon Footprint 3 6 10.00 7.90% 0.79
Human Capital Labor Management 4 7 10.00 14.50% 1.45
Product Safety & Quality 8 3 2.00 14.70% 0.294
Social Product Liability
Privacy & Data Security 5 8 10.00 14.70% 1.47
Stakeholder Opposition Community Relations 9 10 9.00 8.30% 0.747
Governance Corporate Governance 6 6.00 33% 1.98
ESG Performance Score 7.352
3) Key Issues Evidence

Evidence
ESG Pillar Key Issue
Risk/Opportunities Management
With almost 15% of the global GDP, retail is the largest
AMRT has target to reduce carbon emission by implementing
economic sector and employer in the private sector. This
Solar Power Plant. Thus far, AMRT has build Solar Power Plant
sector is contributing to 25% of global Greenhouse gas (GHG)
at 11 office branches and warehouses. The target is to equip
emissions (World Business Council for Sustainable
Carbon Emission their 20 branches with Solar Power Plant by 2023. Moreover,
Development, 2022). Moreover, in the case of AMRT, bricks
AMRT uses more energy-efficient LED lamp in their office and
and mortar retail is responsible for 17% more of GHG emission
warehouse. Furthermore, AMRT is reducing the electricity
compared to ecommerce (Generation Investment
consumption by using "sky light" in their warehouses.
Management, 2020).
Packaging emission takes account for 4% of traditional retail
Environmental
average emission (MIT, 2021). Every year, Indonesia produces
over 7.8 million tons of plastic waste, which 62.8% of the waste
Notable actions:
is mismanaged (World Bank, 2021). In Jakarta alone, retail
1) Non-Free Plastic Bag (KPTG) program
industry contributed to 5.2 tons out of 978 tons of total plastic
Product Carbon Footprint 2) Partnership with a third party for reuse the cardboard
waste in circulation. In addition, cardboard are among the
3) Optimizing digital reciept through Alfagift
biggest sources of carbon footprint in the environment.
Receipt from the purchases also considered as not beneficial
since 90% of them are lost, damaged, or thrown away by
consumers.
Retail industry is a labor-intensive industry. The most critical AMRT equips their employees with various training and
issues in retail industry is employee theft, which become one education programs, including in-house training, public
of the main causes of inventory shrinkage in the retail sector training, and career development. The everage training hour
(Global Retail Theft Barometer, 2015). Moreover, retail received by the employee is 66.24 hours per year. Moreover,
Labor Management industry is one of the industry that has the highest turnover turnover of AMRT's employee is 2.3%. In the pandemic period,
rate. Compared to industry averages, retail turnover rates are there was no layoffs and numeration deduction in order to
is mismanaged (World Bank, 2021). In Jakarta alone, retail
1) Non-Free Plastic Bag (KPTG) program
industry contributed to 5.2 tons out of 978 tons of total plastic
Product Carbon Footprint 2) Partnership with a third party for reuse the cardboard
waste in circulation. In addition, cardboard are among the
3) Optimizing digital reciept through Alfagift
biggest sources of carbon footprint in the environment.
Receipt from the purchases also considered as not beneficial 9|Fortuna Capital - Appendix
since 90% of them are lost, damaged, or thrown away by
consumers.
Retail industry is a labor-intensive industry. The most critical AMRT equips their employees with various training and
issues in retail industry is employee theft, which become one education programs, including in-house training, public
of the main causes of inventory shrinkage in the retail sector training, and career development. The everage training hour
(Global Retail Theft Barometer, 2015). Moreover, retail received by the employee is 66.24 hours per year. Moreover,
Labor Management industry is one of the industry that has the highest turnover turnover of AMRT's employee is 2.3%. In the pandemic period,
rate. Compared to industry averages, retail turnover rates are there was no layoffs and numeration deduction in order to
approximately 5% higher in Asia (KPMG, 2018). This high maintain employee's welfare. Furthermore, AMRT is actively
turnover rate is very costly. A retail employee's average hiring disabilities people and creating gender-inclusive
turnover cost is between $6,000 and $7,000 (Mindfield, 2015). workspace with 37% of total employees are women.
As a leader in retail industry, AMRT has 19,567 stores, 44
warehouses, 10 Depos, and 11 Store Hubs scattered AMRT claimed that the company has fulfilled healthy and
throughout Indonesia. AMRT stocks up massive amount of safety requierments, such as Halal certification and
product in their warehouses. Thus, the company should aware PIRT/BPOM. Moreover, AMRT also perform routine product
with product storing system, such as the hygiene of its quality inspections to ensure product safety and quality.
Product Safety & Quality
warehouses. One of the common issues in the warehouse is However, there was some cases that the official found expired
pest management. Failure to keep the product safety and and damaged product in a Alfamart branch. In addition, one of
quality in their warehouse will result in sanction according to warehouses is lacking for its pest control since there were
Indonesian Civil Code and Law No. 8 of 1999 on Customers many product had been bitten by rats.
Protection.
AMRT's digital platform, Alfagift, stores substantial amount of Notable actions:
Social consumer data. There are 9.9 million members registered on 1) Obtaining the ISO 27001:2013 Information Security
Alfagift, which 60.4% of them actively purchase through Management System certification
Privacy & Data Security Alfamart stores. According to Ministry of Communication and 2) Development and transition of data centers to cloud-based
Information (MOCI) Regulation No. 20 of 2016, failure to applications
secure personal data in digital system will lead to sanction. In 3) Collaborates with third parties to identify traffic access
addition, AMRT could also lose trust from public. network logs and other anti-fraud collaboration
AMRT's target to open up to 1000 new stores in 2022 could be
the opportuniity to empower the local community by hiring
employees and support MSMEs. Through Alfamart Assisted
Outlet (OBA), small entrepreneurs are able to supply their
merchandise at discounted price that can be sold at a
reasonable profit. OBA members also get assisted by Alfamart
Opportunity to empower many local communities in non-tier 1
since Alfamart will act as "traditional stall consultant".
Community Relations cities as AMRT has a target to expand their branches
Moreover, by allowing local businesses to sell their goods on
throughout Indonesia
Alfamart, the company provides possibilities for SMEs to grow.
Until 2021, more than a thousand local products have been
sold at Alfamart. Furthermore, Alfamart conducts a
management training program for small businesses. 3.100
warung merchants and SMEs in 32 cities across Indonesia have
received training from Alfamart in 2021.
Although AMRT is a family business, current AMRT's CEO, Anggara Hans Prawira has no family relationship to Djoko Susanto
and family. His performance as Alfamart's CEO is excellent with many awards have been received. However, there were some
Governance Corporate Governance controversies addressed to the BoD. For example, CV Andalus Makmur who reported AMRT for franchise fraud. This allegation
has been denied by AMRT, but it had indirect effect to company's goodwill. Another thing worth noticing is the consumer's
donation controversy, which was not in accordance with UU No. 40/2007 and PP No. 47/2012.
Appendix 20. AMRT’s Board of Director Overview

Name Position Number of Shares Education Professional Experience
● President Director of PT Sumber Alfaria Trijaya Tbk (2014 - present)
● Bachelor's degree in Economics in Accounting from Trisakti ● Managing Director of PT Sumber Alfaria Trijaya Tbk (2011 - 2014)
University ● Deputy Managing Director of PT Sumber Alfaria Trijaya Tbk (2008 - 2010)
Anggara Hans Prawira President Director -
● Master's degree in Management from IPMI Business School ● Finance Director of PT Sumber Alfaria Trijaya Tbk (2002 - 2008)
● Master of Business Administration from Monash University ● Finance Director of PT Alfa Mitramart Utama (2001 - 2002)
● Consultant at Prasetio Utomo & Co (1994 - 2000)
● Director of PT Sumber Wahana Sejahtera (2017 - present)
● Director of PT Sumber Trijaya Lestari (2015 - present)
● Director of International Business and Technology PT Sumber Alfaria Trijaya
Tbk (2014 - present)
● Bachelor's degree in Electrical Engineering from Satya ● Director of Alfamart Retail Asia Pte.Ltd (2013 - present)
Bambang Setyawan
Director - Wacana Christian University ● Director of Information Technology PT Sumber Alfaria Trijaya Tbk (2002 -
Djojo
● Bachelor's degree in Economics from Airlangga University 2014)
● Director of Information Technology PT Alfa Mitramart Utama (2000 - 2002)
● Management Information System Manager at PT Perusahaan Dagang dan
Industri Panamas (1992 – 2000)
● Supervisor PT HM Sampoerna Tbk (1988 – 1992)
● Finance Director of PT Sumber Alfaria Trijaya Tbk (2013 - present)
● Corporate Secretary of PT Sumber Alfaria Trijaya Tbk (2013 - present)
● Bachelor's degree in Accounting from Trisakti University,
Tomin Widian Director - ● Vice President of Finance and Accounting PT Smart Tbk (2007 - 2013)
Jakarta
● Consultant/Auditor at Ernst & Young/ Prasetio Utomo & Co. Arthur
Andersen (1991 - 2007)
10 | F o r t u n a C a p i t a l - A p p e n d i x
● Franchise Director of PT Sumber Alfaria Trijaya Tbk (2011 - present)

● Investor Relations of PT Sumber Alfaria Trijaya Tbk (2011 - present)
● Director of Business Development and Audit PT Sumber Alfaria Trijaya Tbk
● Bachelor's degree in Economic from Atmajaya Catholic
(2007 - 2010)
Uninersity
Soeng Peter Suryadi Director - ● Mortgage Advisor, The Loan Market, Perth, Australia (2005 - 2007)
● Master of Business Administration from University of
● General Manager of PT Astra International Tbk (2002 - 2005)
Western Australia
● Assistant Vice President of PT Bank Universal (1994 - 2000)
● Manager of PT Federal International Finance (1990 - 1993)
● Sales Supervisor at PT Astra International (Honda Sales Operation) (1987 -
● Director of Merchandising PT Sumber Alfaria Trijaya Tbk (2018 - present)
● Bachelor of Business Corporate Finance from San Francisco ● Property and Development Director of PT Midi Utama Indonesia Tbk (2013 -
State University present)
Harryanto Susanto Director 190.560.200 (0,46%)
● Master of Business Administration from San Francisco ● Director of PT Cipta selaras Agung (2012 - present)
State University ● Chief Operating Officer of PT Surya Mustika Nusantara (2011 - 2013)
● Director of PT Primus Pratama (2010 - 2011)
● License and Corporate Affair Director of PT Sumber Alfaria Trijaya Tbk (2014
- present)
● License, Franchise and Corporate Affair Director PT Midi Utama Indonesia
Tbk (2017 - present)
● Acting Director of Corporate Affair PT Sumber Alfaria Trijaya Tbk (2010 -
● Bachelor's degree of Law from Sekolah Tinggi Hukum 2014)
Indonesia, Jakarta ● Deputy Director of Government Relation PT Sumber Alfaria Trijaya Tbk
Solihin Director 180.000 (0,00%)
● Master's degree of Law from Tujuh Belas Agustus 1945 (2009 - 2014)
University, Jakarta ● Operation General Manager of PT Sumber Alfaria Trijaya Tbk (2001 - 2009)
● General Manager of Franchise Marketing PT Sumber Alfaria Trijaya Tbk
(2001 - 2009)
● Franchise Manager PT Indomarco Adi Prima / PT Indomarco Prismatama
● Sales Supervisor Kopi Gelatik (1986 - 1988)
● Marketing at Modern Foto Co Film (1979 - 1985)
Appendix 21. AMRT’s Board of Commissioner Overview

Name Position Number of Shares Education Professional Experience
● Bachelor of Science in Business Administration from Ohio
● President Commissioner of PT Sumber Alfaria Trijaya, Tbk (2014 - present)
State University
Feny Djoko Susanto President Commissioner 265.850.300 (0,64%) ● President Director of PT Sumber Alfaria Trijaya, Tbk (2002 - 2014)
● Master of Business Administration from Cleveland State
● President Director of PT Alfa Mitramart Utama (1999 - 2002)
University
● Commissioner of PT Sumber Alfaria Trijaya, Tbk (2014 - present)
● Chairman of Steering Committee Yayasan Bunda Mulia (2008 - present)
● Bachelor of Business Administration in Finance from San ● President Commissioner of PT Midi Utama Indonesia Tbk (2011 - present)
Budiyanto Djoko Francisco State University ● Director PT Sigmantara Alfindo (2011 - present)
Commissioner 194.700.200 (0,47%)
Susanto ● Master of Business Administration in Finance from San ● President Commissioner PT Sumber Indah Lestari (2013 - present)
Francisco State University ● President Commissioner of PT Sumber Alfaria Trijaya, Tbk (2012 - 2014)
● Commissioner of PT Sumber Alfaria Trijaya, Tbk (2010 - 2012)
● Analyst at Northstar Pacific (2007 - 2009)
● Independent Commissioner of PT Sumber Alfaria Trijaya Tbk (2008 -
present)
● Chairman of Nomination and Remuneration Committee of PT Sumber
Imam Santoso ● Bachelor's of Art from Tujuh Belas Agustus 1945 University, Alfaria Trijaya Tbk (2020 - present)
Independent Commissioner -
Hadiwidjaja Semarang ● Head of the Committee of Audit PT Sumber Alfaria Trijaya Tbk (2011 –
2014)
● Executive Rector of Bunda Mulia University (1996 - 2008)
● General Affairs Manager at PT Bentoel (1976 – 1996)
● Independent Commissioner of PT Sumber Alfaria Trijaya Tbk (2008 -
present)
● Inspector General of the Ministry of Industry (2018)
● Director of Security Police Security Intelligence State of the Republic of
● Police College Indonesia (2012)
● Bachelor's degree of Law ● Intelligent and Security Director of Police Security Area Metro Jaya (2008)
Setyo Wasisto Independent Commissioner -
● Postgraduate Certificate in Criminal Justice & Police ● Lieason Officer Set NCB Interpol Kuala lumpur, Malaysia (2006)
Management ● Police Chief of Bogor City, Bogor Regional Police West Java (2001)
● Police Chief of the Resort Indramayu, Regional Police of Cirebon, Region
Police West Java (2000)
● Head of the Police Security Intelligence division of big City Bandung district
police West Java (1999)
Appendix 22. Additional Risks Encountered

Source: Fortuna Capital, News
IR3: Faster-than-expected supplier payment: AMRT has diverse FMCG supplier that runs an oligopolistic competition. Already poor performing,
the FMCG industry is forecasted to stay competitive with few main players, resulting in a projected worsened performance (Avg. NPM
8.3%/8.9% in FY21/19). Considering a negative outlook, it is justifiable that suppliers will demand faster payable payment from AMRT to ensure
sufficient working capital. Impact on Valuation: an increase in forecasted APTO days by 2 days will reduce our TP to IDR3,100/sh (ups. +20%).
Mitigant: The duopoly with Indomaret put AMRT at major advantage and expected FMCG to face difficulties in negotiating a better deal.
BR2: Delay in Distribution Center Development. Currently, AMRT is finishing its DC construction in Madiun, Gorontalo, and Tegal. In 2023, the
minimarket plans to build 3 DCs in the Outside Java region, specifically Palangkaraya, Bengkulu, and Palopo, but the lands of this proposed
development have not been acquired. DCs can reduce distribution expense as warehousing can take places in nearby locations to its physical
stores. Impact on financials: 20-30bps increase in Opex/Sales %. Mitigant: Regular review on DC finalization progress
BR3: MIDI’s conflict of interest acquisition. MIDI’s 2013 acquisition is a fit example of a conflict-of-interest case. AMRT acquired 41.8% of MIDI
by overtaking PT Amanda Cipta Persada’s interest (ACP). However, both ACP and AMRT are owned by the same controlling entity, Djoko
Susanto’s Alfacorp. Thus, we see the investment as “funded by invisible cash” that AMRT does not require any cash as the cash outflow is gone
back to Alfacorp. Impact on Valuation: Not Relevant. Mitigant: AMRT could increase their transparency in terms of investment deals, specifically
affiliated one, to avoid public’s negative speculation.

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Universitas Indonesia-Fortuna Capital-Final Submission

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CFA Institute Research Challenge

CFA Society Indonesia

3 Key Financial Figures

Fortuna Capital for CFA Research Challenge 2022 | 1

Fortuna Capital for CFA Research Challenge 2022 | 3

[E] Environment [9.50/10.00]

Fortuna Capital for CFA Research Challenge 2022 | 4

Fortuna Capital for CFA Research Challenge 2022 | 8

2,000 Fortuna Capital for CFA Research Challenge 2022 | 9

Fortuna Capital for CFA Research Challenge 2022 | 10

Appendix 1. Income Statement

Appendix 2. Balance Sheet

Appendix 3. Cash Flow Statement

Appendix 4. Key Forecasts Drivers

Appendix 5. Key Forecast Assumptions

Appendix 6. Key Ratios

Appendix 7. AMRT’s GPM trend vs Indonesian Peers

Appendix 8. AMRT’s Free Cash Flow

Appendix 9. Capital Expenditures Forecast

Appendix 10. AMRT’s Price to Earning Valuation

Valuation (IDR bn) 120,806 Valuation (IDR bn) 148,312

Appendix 11. Trading and Multiples Valuation Comparable

Implied Multiple FY22 FY23 FY24

Appendix 12. Indonesia’s Unbanked and Underbanked Population

Proportion of Unbanked, Underbanked, and Banked in SEA # of Unbanked, Underbanked, Banked in

Appendix 13. Jabodetabek, Java (ex-Jabodetabek), ex-Java Minimum Wages Comparison

Appendix 14. On The Ground Analysis Key Findings

Location of franchised branches - Alfamart Documentations

Citra Raya - Tangerang - Banten Province

Location of franchised branches - Indomaret

Kembangan - West Jakarta - Jakarta Province

Appendix 15. AMRT's Fee-Based Income Network (Product Offerings)

Appendix 16. Price Comparisons between Alfamart, Indomaret, and Supermarkets

Appendix 17. Developed Market vs. Emerging Market Minimarket Calculation

Appendix 18. International Evidence of O2O Collaboration

Appendix 19. ESG Analysis

Letter Rating Final ESG Score

2) Key Issues Performance Score

3) Key Issues Evidence

Appendix 20. AMRT’s Board of Director Overview

● Franchise Director of PT Sumber Alfaria Trijaya Tbk (2011 - present)

Appendix 21. AMRT’s Board of Commissioner Overview

Appendix 22. Additional Risks Encountered

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