STOCK MARKET - JAKARTA. Merchandise from the retail sector companies still seems to be selling well in the third quarter of 2018, in line with the number of international-scale activities held domestically. Although the outlook is bright, analysts say retail sector issuers will still face many challenges.
In the third quarter of this year, a number of retail sector issuers managed to score average sales growth per outlet (SSSG). Based on research from Bahana Securities (12/10), PT Ace Hardware Tbk (ACES) recorded SSSG growth in September at 11.3%. Their cumulative SSSG growth throughout 2018 reached 13.3%.
Mega Christina, an analyst at Bahana Securities, said that SSSG ACES reaching double digits in September was very impressive. Because, this year there was a shift in the implementation of ACES Boom Sales to October. That means there is still an opportunity for ACES to hoist SSSG more significantly.
Not only ACES, PT Ramayana Lestari Sentosa Tbk (RALS) also managed to record an impressive SSSG in September, which was 11%. Although this year SSSG RALS only grew 2.4%, this is the highest monthly SSSG number since April 2017.
According to Mega, the success of RALS is inseparable from the transformation efforts made by the issuer. For example, move some of their outlets to the top floor in a mall so that they get closer to the cinema and food outlets or food court, so they get more visitors. "This policy is the development of a one stop shopping concept," Mega said, Friday (10/19).
NH Korindo Securities analyst Michael Tjahjadi also believes other retail issuers will get similar achievements, given that in the third quarter of this year there is a lot of momentum that retail companies can use to reap greater profits.
In addition to the Asian Games and Asian Para Games, retail publishers will benefit from programs such as Indonesia's Discount Shopping Day from August to early September. During the same period, the Jakarta Great Sale Festival also took place. "Moments like that will maintain the performance of retail companies after the Eid holiday in the second quarter," explained Michael, last weekend.
Impact of the rupiah
However, the trend of weakening the rupiah this year is a big challenge for retail issuers, especially ACES and MAPI. Both issuers sell many imported products.
At least around 80% of the products sold by ACES are imported products. While MAPI has a lot of clothing or fashion stores, everything is imported.
Mega said, the increase in product prices could be an option for two issuers to minimize the effect of weakening the rupiah. Most importantly, the rate of price increase is adjusted to the level of rupiah correction, so as not to burden consumers. Thus, price increases do not have a negative impact on company sales.
Vice President of the Shining Securities Indosurya Research Department William Surya Wijaya and Michael recommend buying ACES and MAPI. Both issuers have the potential to score positive performance at the end of the year.
Meanwhile, Mega is more of a RALS champion. In addition, issuers are relatively resistant to rupiah volatility because their products are made locally. The potential to increase social assistance funds from the government is also a positive catalyst for issuers targeting the lower middle class. Mega recommends buying RALS with a target price of IDR 1,770 per share. n
