Mitra Adiperkasa (MAPI IJ)

Share price underperformance has priced in pessimistic growth expectation; Maintain Buy rating

• 3Q24 performance was driven by Active in both margins and revenue, while Fashion and F&B faced margin pressures.
• We trimmed our FY24/ 25F net profit est. by 2.3%/5.8%, leading to FY25F EPS growth est of 16.8%, driven by Active and Fashion expansion.
• We expect MAPI to sustain revenue and net profit growth and thus see 9.5% YTD share price correction to be unwarranted. Maintain Buy.

3Q24: Mix segment performance with margin pressure in Fashion and F&B

In 9M24, MAPI had opened 313 new stores, (72% from Active segment), bringing the total overall store count to 2,553. This supported 9M24 revenue growth of 16.1% yoy, primarily driven by Active (+30% yoy), followed by Fashion at +19% yoy. In 3Q24, the EBIT margin of the Fashion segment was negatively impacted by end-of-season sales starting in Jul24. Additionally, the F&B segment showed a slow recovery in revenue, resulting in continued negative margins for both 3Q24 and 9M24. While the Active segment performed well, its improvement was offset by lower margins in Fashion and F&B, which put pressure on MAPI’s 9M24 and 3Q24 EBIT margins to 8.6% and 8%, respectively. This translated into 9M24 net profit of Rp1.3tr, down 11% yoy. The 9M24 NP accounted for 66%/70% of our previous FY24F (i.e below) and consensus estimate, i.e in line.

Solid FY25F net profit growth of 16.8% yoy

Following the 9M24 results, we trimmed our FY24/25F net profit est. by 2.3% and 5.8%, respectively. For FY25, we expect the Active segment (45-46% of MAPI’s FY24/25F rev.) to drive store expansion. Consequently, we project Active revenue to grow by 19.5% yoy in FY25, followed by Fashion at 13.6% yoy and a recovery in F&B at +5.6% yoy. The slower recovery in F&B is expected to weigh on margins, leading us to estimate lower FY25F EBIT margin of 9.1%. However, we expect revenue growth of 15% yoy to support FY25F net profit growth of 16.8% yoy.

Underperformer with attractive valuation; Maintain Buy

We believe the seasonally strong 4Q24, driven by more holidays and the launch of new collections particularly in the Fashion segment should support MAPI’s performance. Additionally, its overseas stores in the Philippines, Vietnam and Thailand have already reported positive EBIT. With the advantage of exclusive brands partnerships (over 150 brands), MAPI benefits from a strong product pipeline, promotional opportunities and cost efficiencies related to freight forwarding. We expect these factors to sustain revenue and net profit growth and thus see 9.5% YTD share price correction to be unwarranted. We maintain our Buy rating on MAPI with an unchanged TP of Rp2,000, based on +1.5SD avg. 2-year PE of 14.7x.

… Read More 20241121 MAPI