Indonesia Initiating Coverage
6 July 2021 Consumer Non-cyclical | Retail - Staples Matahari Putra Prima (MPPA IJ) Buy The Rising Phoenix; Initiate BUY Target Price (Return): IDR1,750 (+50%) Price: IDR1,170 Market Cap: USD606m Avg Daily Turnover (IDR/USD) 81,591m/5.66m
Initiate coverage with a BUY and IDR1,750 TP, 50% upside. Matahari Putra Analysts Prima’s recent revamping of initiatives should help to transform its business and keep it ahead of competitors. A strong focus on digital initiatives – particularly Indonesia Research Team the collaboration with Indonesia’s largest technology group GoTo – will likely +6221 5093 9888 lead to greater monetisation from the e-groceries trend. Our SOP-based TP is [email protected] derived from 1.7x 2023F P/S (fresh products) and 11.0x 2023F EV/BITDA (non- fresh products). Possible additional investment from GoTo is a likely catalyst to its share price. Michael Setjoadi Internal business transformation on the cards. The company aims to strongly +6221 5093 9844 [email protected] focus on expanding sales of its fresh products. We are positive on this strategy given less intense competition in the segment and this strategy may work well, supported by its strong merchandising programme (ie partnership with Disney), Marco Antonius Indonesian Ulama Council’s (MUI) halal assurance system (HAS) and strong +6221 5093 9849 logistics facilities. The company will also continue its expansion with a new, [email protected] smaller efficient yet modern hypermarket format, yielding better productivity and
efficiency. This should help MPPA penetrate into residential areas, as well as Tier II and III cities. Further, the integration of data analytics across all operations Share Performance (%) will allow for more business insight to enhance its value. YTD 1m 3m 6m 12m Tapping into the enormous potential of e-groceries. E-groceries have gained Absolute 1014.3 3.5 223.2 983.3 917.4 popularity since the pandemic, with the online to offline (O2O) strategy Relative 1013.9 4.5 222.6 985.5 896.7 performing better – particularly retail businesses – resulting in greater 52-wk Price low/high (IDR) 86.0 – 1,235 collaboration between offline and online players. In recognition of this, MPPA has launched its own platform to tap in digital opportunity. Furthermore, the Matahari Putra Prima (MPPA IJ) company currently has a presence in several online marketplace and e- Price Close Relative to Jakarta Composite Index (RHS) groceries apps – giving it the widest online footprint among offline retailers. We 1,400 1,200
expect online channel contribution to be stronger given MPPA’s aim of 1,200 1,029 increasing its digital stores on top of the GoTo collaboration. 1,000 857
Financial outlook: We forecast sales to grow by 9%, 16% and 19% in 2021- 800 686
2023 on the expectations of a full economic recovery kicking in and MPPA’s 600 514 initiatives bearing fruit. This also helped EBITDA margins to gradually improve from around 4-5% in 2020 to about 9-10% in 2023F. Also, this is in line with the 400 343 improvement of its bottomline, although we expect the company only to start 200 171
booking profit in 2023. With a strong balance profile, owing to better working 0 0
Jul-20 Jul-20
Oct-20 Apr-21
capital management, the company is expected to be in net cash position in Oct-20
Jan-21 Jan-21 Jun-21 Jun-21
Feb-21 Feb-21 Mar-21 Mar-21
Nov-20 Dec-20 Dec-20
Aug-20 Aug-20 Sep-20 Sep-20 May-21 FY21F. Risks to our call include rising new COVID-19 cases, slower-than- May-21 expected vaccine rollout leading to slower economic recovery, slower-than- Source: Bloomberg expected expansion, and increasing competition.
Forecasts and Valuation Dec-19 Dec-20 Dec-21F Dec-22F Dec-23F Total turnover (IDRb) 8,655 6,748 7,351 8,494 10,085 Recurring net profit (IDRb) (580) (476) (338) (100) 186 Recurring net profit growth (%) (7.9) (17.9) (29.0) (70.3) - Recurring P/E (x) na na na na 52.00 P/B (x) 18.3 52.5 15.4 15.9 10.9 P/CF (x) na 9.30 127.11 21.17 11.96 Dividend Yield (%) na na na na na EV/EBITDA (x) 266.88 31.00 22.96 14.62 8.79 Note: Return on average equity (%) (65.8) (113.0) (63.9) (3.6) 37.3 Small cap stocks are defined as companies with a market InterestNet debt cover to equity (x) (%) 112.2 (1.64) 357.4 (0.77) net (0.49) cash net cash0.32 net cash2.21 capitalisation of less than USD1bn.
Source: Company data, RHB
See important disclosures at the end of this report 1
Matahari Putra Prima Indonesia Initiating Coverage
6 July 2021 Consumer Non-cyclical | Retail - Staples
Financial Exhibits
Asia Financial summary (IDR) Dec-19 Dec-20 Dec-21F Dec-22F Dec-23F Indonesia Recurring EPS (70.05) (57.48) (40.83) (12.13) 22.50 Consumer Non-cyclical BVPS 64.07 22.30 76.14 73.43 107.12 Matahari Putra Prima Return on average equity (%) (65.8) (113.0) (63.9) (3.6) 37.3 MPPA IJ Buy Valuation metrics Dec-19 Dec-20 Dec-21F Dec-22F Dec-23F Recurring P/E (x) na na na na 52.00
P/B (x) 18.3 52.5 15.4 15.9 10.9 Valuation basis FCF Yield (%) (3.1) 10.6 (0.0) 2.9 6.2 SOP EV/EBITDA (x) 266.88 31.00 22.96 14.62 8.79
EV/EBIT (x) na na na 129.59 21.37 Key drivers i. Collaboration with GoTo; Income statement (IDRb) Dec-19 Dec-20 Dec-21F Dec-22F Dec-23F ii. Improved performance from better online Total turnover 8,655 6,748 7,351 8,494 10,085 channels; Gross profit 1,580 1,308 1,440 1,760 2,222 iii. Growing e-groceries trend. EBITDA 39 334 412 624 966 Depreciation and amortisation (250) (545) (538) (554) (569) Key risks Operating profit (212) (211) (125) 70 397 i. Slower result from collaboration with GoTo; Net interest (118) (267) (250) (199) (158) ii. Increasing competition. Pre-tax profit (315) (407) (289) (29) 358 Taxation (238) 2 29 6 (79) Company Profile Reported net profit (553) (404) (260) (22) 279 Matahari Putra Prima operates retail stores focusing on Recurring net profit (580) (476) (338) (100) 186 merchandising operation which includes general merchandising and food discount stores, including Cash flow (IDRb) Dec-19 Dec-20 Dec-21F Dec-22F Dec-23F hypermarkets throughout Indonesia Change in working capital 292 208 36 127 167 Cash flow from operations (260) 1,042 76 458 810 Capex (37) (19) (77) (179) (212) Cash flow from investing activities 421 (1,137) 62 (169) (250) Cash flow from financing activities (206) 90 641 (345) (383) Cash at beginning of period 349 304 300 1,079 1,023 Net change in cash (45) (5) 779 (56) 177 Ending balance cash 304 300 1,079 1,023 1,200
Balance sheet (IDRb) Dec-19 Dec-20 Dec-21F Dec-22F Dec-23F Total cash and equivalents 304 300 1,079 1,023 1,200 Total assets 3,821 4,511 5,130 5,235 5,729 Short-term debt 650 960 860 460 0 Total long-term debt 250 0 0 0 0 Total liabilities 3,290 4,326 4,499 4,626 4,841 Total equity 531 185 631 609 888 Total liabilities & equity 3,821 4,511 5,130 5,235 5,729
Key metrics Dec-19 Dec-20 Dec-21F Dec-22F Dec-23F Revenue growth (%) (19.1) (22.0) 8.9 15.6 18.7 Recurrent EPS growth (%) (7.9) (17.9) (29.0) (70.3) 0.0 Gross margin (%) 18.3 19.4 19.6 20.7 22.0 Operating EBITDA margin (%) 0.4 4.9 5.6 7.3 9.6 Net profit margin (%) (6.4) (6.0) (3.5) (0.3) 2.8 Capex/sales (%) 0.4 0.3 1.1 2.1 2.1 Interest cover (x) (1.64) (0.77) (0.49) 0.32 2.21
Source: Company data, RHB
See important disclosures at the end of this report 2
Matahari Putra Prima Indonesia Initiating Coverage
6 July 2021 Consumer Non-cyclical | Retail - Staples Internal Business Transformation On The Cards Fresh products as its primary strategy MPPA, recognised as one of Indonesia’s leading retailers, operates seven types of retail formats. Each store format is also differentiated by its brand name, target market and product offering. Figure 1: MPPA’s store format Compact Hypermarket/ Supermarket Wholesale Convenience Store
Store Format
Number 100 Hypermart, 26 Foodmart & 10 1 SmartClub 64 Boston & 14 FMX The company operates seven types of of Stores HyFresh ♦ stores with different formats and Hypermart: 3,000-6,000 sqm; Average brands Foodmart: 1,500-2,000 sqm; 3,000 sqm 80-150 sqm Store Size HyFresh: 500- 1,000 sqm ♦ This allows MPPA to cater to different Fresh food, types and needs of customers across Grocery, Fresh food, Grocery, General Health, Vitamins & Beauty Product General all segments Merchandising, Electronics (for (Boston) and Ready-To- Selection Merchandising Hypermart only) Eat, Food & Drinks (FMX) & Horeca equipment Horeca, Mom & Pops Retailers, Midde to High Income Middle to High Income Segment Target traders, Offices Segment Customers & Institutions
Source: Company
MPPA faced challenging times in 2015-2016 amidst the fall of supermarkets and high business-to-business (B2B) contribution of around 30%. This resulted in SSSG remaining either in a low single digit or negative territory during that period. However, we believe MPPA is seeing light at the end of the tunnel with the revamping of its strategies. This includes placing a greater focus on increasing the sales of fresh products. In 2020, sales stood at was at 27-28%, improving from 16% in 2017. We expect sales to reach 33% in 2023 on the back its solid strategies.
Figure 2: MPPA’s fresh product sales contribution
35% 32% 33% 30% 30% 28% 24% 25% 19% 20% 16% ♦ The company operates seven type 15% of stores to cater different customer type and needs 10%
5%
0% 2017 2018 2019 2020 2021F 2022F 2023F
Source: Company data
In 2019, MPPA began a collaboration with The Walt Disney Company Indonesia to use the latter’s brand in its product offering. This comes as MPPA sees a strong correlation between Disney and family relationships, thereby leading to higher average basket size. MPPA aims to launch eight new fresh products using the Disney logo in its packing in September. As a side note, it is also selling reusable bags with various Disney characters, ranging from Disney Princess to Mickey Mouse. All in, the collaboration with Disney has brought a positive impact to boost traffic. Our ground checks reveal that some people buy the reusable bags with different Disney characters as a collectors’ item. Worth noting that MPPA needs to comply with Disney’s stringent inspection process not only relating to the quality of products but also in terms of stringent processes. This agreement might c by year-end. However, we see the collaboration continuing as both parties are receiving positive impact from this synergy.
See important disclosures at the end of this report 3
Matahari Putra Prima Indonesia Initiating Coverage
6 July 2021 Consumer Non-cyclical | Retail - Staples
Figure 3: MPPA products with Disney’s characters Figure 4: MPPA’s Disney reusable bags
Source: Company, RHB Source: Company, RHB
Aside from this, MPPA has obtained the halal certification from MUI in Apr 2020, becoming the first and only modern retailer in Indonesia to receive this certification across all of its stores. The halal certification applies to its fresh products such as meat and poultry, fruits and vegetables, bakery, and ready-to-eat (RTE) items. The company has also obtained the ISO 22000:2005 – Food Safety Management System, and ISO 9001:2015 – Quality Management System, ensuring its product quality and safety.
Figure 5: Among MPPA’s fresh products that are certified halal
Source: Company, RHB
The strategy to boost fresh products contribution is supported by MPPA’s strong logistics facilities. It has three warehouses, with the newest facility located in Porong, East Java. We believe the Porong warehouse will help it to better serve areas outside Java, particularly East Indonesia, as logistics in that region currently remains a challenge. Note that the company has an exclusive contract with PT Freeport Indonesia to operate a store at the latter’s site in Papua since end-2019. This will be lucrative, in our view, as less intense competition, massive infrastructure development and the Government’s plan to move the capital city outside Java present ample benefit to MPPA as having the first-mover advantage.
See important disclosures at the end of this report 4
Matahari Putra Prima Indonesia Initiating Coverage
6 July 2021 Consumer Non-cyclical | Retail - Staples
Figure 6: MPPA’s warehouse facilities Figure 7: MPPA’s logistic network Balaraja, Cibitung, Location Porong, East Java Banten West Java Inventory Type Dry Goods Fresh Dry Goods and Fresh
Space 41,806 m2 8,085 m2 20,367 m2
43,000 Capacity pps 8,251 pps 29,718
No. SKUs 13,000 1,400 6,718 and 600
Source: Company data, RHB Source: Company, RHB
All in, we are positive on this strategy to push fresh produce sales due to the high barrier to entry, which may translate to higher value-add. Unlike non-perishable goods, fresh produce requires delicate handling and timely delivery, which many grocery retailers are unable to do on a national scale. This is supported by MPPA’s strong logistics network across the country. Customers are willing to pay premium for freshness and better quality. As such, fresh grocery retailers have superior value-add compared to ordinary fast moving consumer goods (FMCG) retailers. Also, competition in this segment has been benign as supermarket players focusing on fresh products remain limited, both in terms of numbers and presence. Fruit and vegetables stores like Rumah Buah, All Fresh, Total Buah, Duta Buah, Maxim, Rezeki and Jakarta Fruit Market merely have a limited number of outlets and are located in Java. Furthermore, minimarket giants, which remain as a major threat to the supermarket business (ie Alfamart and Indomaret), have very small exposure to fresh produce. We think offline stores are the preferred choice to selling fresh produce as some consumers prefer to handpick their produce. Hence, fresh groceries are the perfect example of an offline retailer business that cannot be fully disrupted by the online platform, despite some apps offering the full online groceries experience. According to a survey conducted by Snapcart, 41% of respondents said that they have never bought groceries online. Figure 8 lists the reasons for not purchasing groceries online – in our view, several reasons relate to the purchase of fresh produce. Overall, only 1% of users said that they will completely stop purchasing groceries offline post-COVID-19.
Figure 8: Why have you not bought your groceries Figure 9: How do you plan to buy groceries in physical online? (in percentage of users) stores after the pandemic is over?
I have to see the goods in person 48% I will buy groceries in physical Take too long / uncertain delivery time 46% 46% store with the same amount Expensive delivery cost 45%
Worried about freshness 44% I will stop entirely to buy my 1% Worried about hygiene of the product 34% groceries in physical store Cash on delivery portion not available 30% I cannot find the items I'm looking for 22% I will buy more groceries in 34% My area is not covered by the online services 14% physical store
Too complicated for me 13% I will buuy less groceries in More expensive price than physical stores 11% 19% physical store Others 6%
Source: Snapcart Source: Snapcart
See important disclosures at the end of this report 5
Matahari Putra Prima Indonesia Initiating Coverage
6 July 2021 Consumer Non-cyclical | Retail - Staples During the pandemic, we note that grocery retailers have become more resilient compared to other types of retailers eg fashion retailers. This is because groceries are part of a person’s core daily activities. Also, we think there has been an increase in buying fresh products as most prefer to prepare for their own meals due to the closure of restaurants and hygiene concerns. The pandemic has further raised the importance of eating healthy with the expected result of increasing one’s immunity. As COVID-19 continues, we think this trend will persist, presenting a positive impact to retailers of fresh products. A Mark Plus survey found that 37% of respondents have increased their frequency of buying fresh products from once a week to 2-7 times a week, while the average basket size has risen to IDR500,000 per transaction. Bear in mind that the average basket size of MPPA’s customers range between IDR100,000 and IDR200,000.
Figure 10: Sales growth of grocery retailers vs fashion retailers in 2020
30%
20%
10%
0% RANC HERO MPPA AMRT MAPI RALS LPPF -10%
-20%
-30%
-40%
-50%
-60%
Source: Company data, RHB
We also remain upbeat on the push for fresh groceries as they have become the key traffic pull to offline stores due to the high demand, aside from being a necessity (ie fresh vegetables or fruits are only fresh in the refrigerator for about a week). Based on our discussions with management, customers buy fresh products as frequent as 2-3 times per week while the purchase for non-fresh products is once every two weeks to a month. During the pandemic, Nielsen survey showed that 71% of people buy fresh groceries on a daily basis, 21% weekly, and only 8% do a monthly purchase. The higher frequency of visiting stores may bring about a trickle-down effect whereby the company will be able to cross sell other products. MPPA sees a high tendency of consumers buying other groceries during their trip for fresh produce, hence increasing sales value.
Figure 11: Frequency of fresh products purchase during the pandemic
8%
21% On the daily basis On the weekly basis 71% On the monthly basis
Source: Nielsen, CNN Indonesia, RHB
See important disclosures at the end of this report 6
Matahari Putra Prima Indonesia Initiating Coverage
6 July 2021 Consumer Non-cyclical | Retail - Staples Also, we also applaud MPPA for its strategy to strongly focus on the HyFresh concept. This store format will allocate 40% of its product assortment for fresh products. HyFresh will be set as a standalone format that is strategically located near highly dense residential areas. This concept will operate within a 400-600 sqm store size, allowing it to still sell fresh produce vs the minimart size of less than 400 sqm, which is more restricted. The company estimates an investment payback period of 3-4 years. More importantly, it aims to cater to the mid-to-upper segment, who have a higher purchasing power, to reap the market share from traditional markets and other modern retailers. We note that Indonesia’s retail sector is dominated by traditional outlets, accounting for 80% of the total grocery retail sales, based on the US Department of Agriculture’s and Euromonitor’s data as of 2019. Furthermore, Nielsen data states that 70% of people still prefer to buy fresh products from small mom-and-pop shops and greengrocers, while 58% purchase directly from traditional markets and a merely 9% shop in supermarkets or hypermarkets. Hence, there is a notable opportunity for monetisation ahead. MPPA is mulling to launch a campaign to promote higher health protocols in modern retail with the aim of lowering the risk of COVID-19 infections. We await the launch of this campaign as we think it will appeal to the mid-to-upper segment as traditional markets are deemed to have lax health protocols. Also, we also see the increasing middle income segment trigger a shift in purchasing behaviour. The sizeable number of Indonesia’s young population should support our long- term view of the possibility of changing grocery shopping habits to modern channels as they prefer a practical and easier way of shopping. Despite traditional markets still making up the lion’s share of fresh produce sales, the contribution has been gradually decreasing.
Figure 12: Sales of modern vs traditional retailers
120
100
80 ♦ The contribution of modern sales increased from 16.7% in 2015 to 17.4% 60 in 2019 ♦ Note that as of 2018 modern trade 40 accounted for 57% of grocery retail sales in China and is predicted to grow 20 to 66% in 2022.
0 2015 2016 2017 2018 2019
Modern Grocery Retailers Traditional Grocery Retailers
Source: USDA, Euromonitor, RHB
Solid expansion initiatives supported by revamped store formats The company will continue to open more stores ahead – spearheaded with HyFresh – emphasising on the concept of compact hypermarkets and supermarkets. Management guided that convenience stores, Boston and FMX, are not main priorities as their concepts will also be revamped. The company has hired a new Head of Merchandising to rejuvenate the concepts, particularly its beauty segment. FMX’s expansion was suspended as its stores are located in office and tourist areas, which are seeing extremely low footfall during the pandemic. We believe there is strong potential for Boston, with more agile store openings for FMX post COVID-19. However, contribution from this convenience store segment should remain marginal over the short term. Looking ahead, expansion will be focused on stand-alone locations. This should be positive given malls continue to deal a great blow during the pandemic. Also, new outlets are expected to be strategically located near residential areas in order to be closer to customers and increase footfall. With the surge of COVID-19 cases, we think this strategy should bode well as customers are able to reduce their travelling time. Currently, around 90% of its outlets are located inside the malls – management guided that it would relocate some the nonperforming stores located inside the malls. Additionally, the company has been quite aggressive in reaching out to customers via mobile vendors (Juling) ie vendors that travel in vehicles within the community selling MPPA’s products.
See important disclosures at the end of this report 7
Matahari Putra Prima Indonesia Initiating Coverage
6 July 2021 Consumer Non-cyclical | Retail - Staples Figure 13: HyFresh store Figure 14: Mobile vendor (Juling) concept
Source: RHB Source: RHB
Going forward, the company aims to launch smaller size stores, including resizing its hypermarkets and supermarkets. We remain positive on this initiative as it will help MPPA to be more agile. The smaller size concept should lead to better productivity and efficiency ahead ie lower rental and labour cost as well as less capex required.
Figure 15: MPPA’s store and size Figure 16: MPPA’s stores productivity
350 900.0 20.0 20.00% 15.00% 800.0 18.0 300 298 15.00% 239 222 222 700.0 16.0 15.00% 259 219 250 211 211 14.0 10.00% 600.0 8.00% 12.0 6.00% 200 500.0 5.00% 10.0 3.00% 400.0 1.00% 150 8.0 0.00% 300.0 100 6.0 -4.50% -5.00% 200.0 4.0 50 -10.00% 100.0 2.0 -13.00% 0 0.0 - -15.00% 2016 2017 2018 2019 2020 2021F 2022F 2023F 2016 2017 2018 2019 2020 2021F 2022F2023F
SQM (in '000) Number of Stores Sales per SQM (in IDR mn) SSSG
Source: Company, RHB Source: Company, RHB
We foresee the expansions to be slow in 2021 given the high uncertainty of the pandemic’s duration, resulting to zero net openings this year. MPPA also aims to downsize and relocate a number of its stores, especially hypermarkets and supermarkets. We estimate SSSG to turn positive to 8% and 15% in 2022 and 2023 given the expectation of a full economic recovery and other initiatives, including the company’s digital initiatives. Also, sales productivity – in terms of sales per sq m – is expected to gradually improve. The company still sees ample potential in Java. In our view, the massive infrastructure development in Java should help to increase connectivity and improving economic activities to a number of small cities. Thus, this should boost purchasing power, particularly in Tier II and Tier III cities. We like MPPA’s strategy to use the smaller store size for future expansion. In our view, the compact store ought to help it to be nimbler, which is more suitable to penetrate smaller cities. However, we see ample potential for the company to strengthen its presence outside Java. Continuous infrastructure development and the Government’s plan to move the capital city to Kalimantan should help to boost economic activity outside Java. MPPA’s strong logistics network should support this development as distribution in general remains the main challenge in cementing a footprint outside Java, particularly fresh products. The company already has around 40% of its stores located outside Java. This gives it an upper hand in solidifying its foothold due to the easier access, better experience, and first-mover advantage.
See important disclosures at the end of this report 8
Matahari Putra Prima Indonesia Initiating Coverage
6 July 2021 Consumer Non-cyclical | Retail - Staples
Figure 17: MPPA’s footprint
Source: Company, RHB
Competition wise, we are seeing a consolidation trend in the supermarket and hypermarket business. With the big supermarket and hypermarket concept waning, we believe the closure of all Giant stores in the country will help to ease competition. Hero Supermarket (HERO IJ, NR), which operates a total of 75 Giant and Giant express stores, will shut the Giant stores by the end of July. MPPA is in progress of taking over a number of Giant’s existing outlets. This ought to bring positive impact given this new location already has captive customers. Giant’s bowing out should be more positive as we believe most of the outlets are located in Java. MPPA has stronger competitive advantage compared to its closest competitors, PT Trans Retail and Lion Super Indo LLC due to it having more concepts and a wider presence. Most of the Superindo stores are located in Java and are limited in terms of the store size. Meanwhile, despite Transmart stores being predominantly located in Java, it has a limited store concept ie big store size. This, in turn, makes Transmart less agile to expand its presence, in our view. Our channel checks also found that Transmart outlets’ have been slow and the company is switching its focus towards a lifestyle concept instead. We think the big store concept has lost its steam, further amplified by the pandemic.
Figure 18: Supermarket and hypermarket retailers’ outlets as of 2020
200
180
160
140
120 MPPA's We consider Transmart and 100 ♦ Group RANC's HERO's Superindo the closest competitors to 80 Group Group Giant, which ceasing operations, given the similarities in terms of the 60 MAPI's supermarket and hypermarket Group concept as well as sizeable store 40 numbers. 20
-
Hero
AEON
Hyfresh
Foodhall
Primo
Superindo
Transmart
Hypermart
Smart Club Smart
Lotte Super Lotte Hyper Lotte
Giant Ekstra Giant & Foodmart
Ranch Market Ranch
Giant Ekspres Giant Farmers Market Farmers
Source: Company data, AMRT Investor’s Presentation, RHB
See important disclosures at the end of this report 9
Matahari Putra Prima Indonesia Initiating Coverage
6 July 2021 Consumer Non-cyclical | Retail - Staples Figure 19: Transmart outlet Figure 20: Superindo’s presence
Source: RHB Source: Company, RHB
Monetising digital system is critical Aside from the above initiatives, MPPA also has a strong focus on integrating digital systems to all its internal operations. Not only is it embracing digitalisation through expanding the e- groceries platform, the company also aims to use IT systems like automatisation and data analytics. It has utilised various systems across all integral business spectrums to sustain its future. The implementation of data analytics across every step will provide MPPA with abundant data and analytics to produce more business value. With the GoTo collaboration, we believe efforts to integrate the IT system will be amplified as more digital initiatives can be transferred to MPPA. For instance, the company aims to reduce its logistics cost to revenue from 1.7% to 1.5% in 2021, which could partly come from some automatisation development. Another interesting example is that the company recently reorganised the arrangement of its shop products. MPPA data shows that 65% of its customers are women, who are more interested in health, beauty and groceries related items. For that reason, MPPA has placed the health and beauty section in the front of the store before the electronics and groceries sections. By placing furniture and electronics between groceries and health and beauty, this should entice the majority of its women customers to browse through all sections of the store. This is in contrary to the previous arrangement where the furniture and electronics sections were in the front of the store, and generally, avoided by customers.
Figure 21: Institutionalisation of digital systems across all internal business processes
Source: Company, RHB
See important disclosures at the end of this report 10
Matahari Putra Prima Indonesia Initiating Coverage
6 July 2021 Consumer Non-cyclical | Retail - Staples Tapping Into The Enormous Potential Of e- Groceries O2O concept takes centre stage Many leading e-commerce players have established/acquired offline retails, providing a bridge between online to offline/offline to online (O2O), which is designed to draw potential online customers to physical stores. This allows a seamless digital experience at all stages. Targeted promotions are done through email or online advertising, where potential customers are then enticed to offline stores to make a purchase, and physical stores can have their own promotions to encourage further sales. Retailer JD.ID already has physical store channels, putting great emphasise on electronics, but we view the traffic as very slow, potentially due to COVID-19. There are many great examples of O2O implementation in developed countries ie Amazon acquiring Whole Foods (fresh groceries retail chain), Walmart acquiring Jet.com, and Alibaba introducing a physical groceries stores in China. Figure 22: Whole Foods’ online groceries pick-up point Figure 23: An Alibaba store
Source: The New York Times, RHB Source: Economist.com, RHB
In order to better understand the overseas online groceries industry, we elaborated further several successful concepts in developed countries that may potentially have a similar outcome in the Indonesian market.
Instacart Instacart, which is valued at USD39bn, saw a 500% YoY growth in e-groceries traffic volume in 2020 due to the pandemic. The company hit its first profitable month in Apr 2020, after nine years of operation.
Figure 24: Instacart’s mobile app
Source: Smarther, RHB
See important disclosures at the end of this report 11
Matahari Putra Prima Indonesia Initiating Coverage
6 July 2021 Consumer Non-cyclical | Retail - Staples Amazon’s Whole Foods In order to seek further growth, Amazon entered the groceries business in 2017 with the acquisition of Whole Foods for USD13.7bn as it saw the segment as highly underpenetrated. The acquisition has enabled Amazon to learn more about groceries shopping and sell its products in stores, aside from opening up lockers for delivery in certain Whole Foods locations. Operating Whole Foods has enabled Amazon to tackle the challenges of its fresh food delivery business, Amazon Fresh.
Figure 25: Amazon store
Source: Feed The Lion, RHB
Walmart Walmart, the world’s largest retailer, began offering in-home service in 2019. With a monthly subscription, groceries are delivered right to the customer’s fridge. The company has rolled this out in several major cities in the US. Other than this, the other initiative is its “curbside pickup” whereby customers order groceries online and pick them up in front of the Walmart store without the need of getting out of the car or queueing up check out.
Figure 26: Walmart’s curbside pickup
Source: Walmart, RHB
See important disclosures at the end of this report 12
Matahari Putra Prima Indonesia Initiating Coverage
6 July 2021 Consumer Non-cyclical | Retail - Staples Ocado Pioneering in the online grocery market, Ocado, valued at over USD22bn, has overtaken Tesco to become the UK’s largest groceries retail market leader, in terms of valuation. The company also offers a strong gross margin of 33%. Many have seen this company as the perfect example of an online grocery company. Automated grocery delivery system using a robotic warehouse is one of a kind in the industry. The company offers a unique and completely independent online grocer wholly focused on home delivery of high-quality food, drink and household goods. It leads the industry in customer service, thanks to its pioneering approach to overcoming the particular challenges of online grocery shopping. Everything Ocado does – from the mobile app to the way orders are picked in its warehouses – is run by the complex algorithms of its smart platform.
Figure 27: Ocado’s automated warehouse Figure 28: Ocado’s smart ecommerce system
Source: Harvard Business Review, RHB Source: Internetretailing.net
Overall, there are three common grocery delivery models, based on the Tech in Asia publication: i. Concierge model (Grab Mart, Happy Fresh, Sayur Box)
This concept is one that Indonesians are familiar with, given many digital players have started to partner with existing offline grocery operators. This allows online and offline players to coexist and work together. However, this can be a very thin-margin business for the online aggregators. Instacart in the US only achieved profitability due to the COVID-19 pandemic, which resulted in a surge in demand of online groceries, after nine years of operations. HappyFresh, on the other hand, has achieved profitability since 2017 for the ASEAN market, and 1Q20 in Indonesia, monetising other revenue streams apart from grocery delivery (ie advertisements and partnerships). The company currently works with over 400 retailers across Indonesia, Malaysia and Thailand.
Figure 29: Concierge model
Source: Tech in Asia, RHB
See important disclosures at the end of this report 13
Matahari Putra Prima Indonesia Initiating Coverage
6 July 2021 Consumer Non-cyclical | Retail - Staples ii. Warehouse model (ie Ocado, LazMart, RedMart and Grab Supermarket)
The second concept has much higher profitability potential, given the online aggregators manage and stock the grocery inventories themselves, but also bearing the inventory risk and fixed warehousing costs. Successful warehouse model example is Ocado in the UK that recorded 33% gross margin. However, this model relies on preschedule delivery, making the model inflexible and impacting the supermarkets’ ability to scale up amidst demand spikes.
Figure 30: Warehouse model
Source: Tech in Asia, RHB
iii. Group buying model (Shihuituan, Super, WeBuy, Chilibeli)
The last model – group-buying – provides discounts to encourage bulk orders and depends on “community leaders” to help with user acquisition, as well as sales and marketing efforts. This is the least popular model in South-East Asia, especially in Indonesia, as it has the small kiosk (warung) format, which is similar as the community leaders.
Figure 31: Group buying model
Source: Tech in Asia, RHB
Across the world, we have witnessed accelerated growth in the online grocery industry due to COVID-19. The e-groceries market in South-East Asia has surged 2-2.5x YoY in 2020, contributing 11% of online gross merchandise volume (GMV) vs just 4% in 2019. Management consulting firm RedSeer estimates the e-grocery market’s GMV to have grown 400% in 2020.
See important disclosures at the end of this report 14
Matahari Putra Prima Indonesia Initiating Coverage
6 July 2021 Consumer Non-cyclical | Retail - Staples
Figure 32: South-East Asia’s e-commerce GMV, retail category distribution
100%
90% 33% 31% 80% 41% 70%
60% 22% 24% 50% 21% ♦ Retailers are elevating their online 40% 12% 10% presence with the online grocery 10% 30% 6% 6% sector taking the biggest leap in 6% 2020 20% 4% 11% 15% 10% 18% 16% 14% 0% 2015 2020 2025
Other Food & Groceries Beauty & Personal Care Home & Living Apparel Consumer electronics
Source: Google, RHB
With just a 0.3% penetration for online groceries in South-East Asia currently, research has shown that the industry is already a USD350bn market. One-third of online retail traffic was driven by new users in 2020 (40m additional users), 47% of them shopped for groceries.
Figure 33: South-East Asia’s percentage of new digital consumers out of total service consumers (aggregate)
Source: Google, RHB
Indonesia e-grocery market is set to fire up Due to the COVID-19 pandemic, Indonesians have started to adopt online shopping, including groceries shopping. Nonetheless, electronics, fashion, health and beauty remain the top categories, making up almost 50% of total online sales in 2020.
See important disclosures at the end of this report 15
Matahari Putra Prima Indonesia Initiating Coverage
6 July 2021 Consumer Non-cyclical | Retail - Staples
Figure 34: e-commerce spending by category – Indonesia
0% 4% Travel, Mobility and 16% Accomodation 12% Fashion & Beauty
Electronics & Phsyical Media
12% Food and Personal Care
Furniture & Appliances 26% Toys, DIY & Hobbies
12% Digital Music
Video Games 18%
Source: HootSuite, Data Reportal, RHB
E-commerce contribution to staples companies is also still less than 3% across topline last year. Our latest report on staples companies showed that pricing competition was different for each company as Unilever Indonesia (UNVR IJ, BUY, TP: IDR8,000) and Mayora Indah (MYOR IJ, BUY, TP: IDR3,000) put their pricing above or on par with other online sellers whereas Indofood CBP (ICBP IJ, BUY, TP: IDR11,900) was selling below the average of its online sellers’ ASP. However, we note that Indonesia recently began strongly adopting the e-groceries’ trend due to the pandemic. Studies show more than 60% of internet users in Indonesia have purchased some goods online, not only because they usually offer better pricing than offline retail, but online platforms provide convenience and social distancing amidst COVID-19. So, what happens after pandemic? 93% of respondents said they will stick to online shopping post pandemic. Online shopping activities have flourished since the pandemic began over a year ago. As vaccination rollouts are being accelerated by world governments, economic activities have started to recover. Surveys by Google, Bane, and Temasek show that 93% of Indonesian correspondents are likely to continue using the digital services that they have adopted during the pandemic in 2020. In addition, another survey done by RedSeer in Aug 2020 found that up to 60% would continue to buy groceries online in the future. According to LEK Consulting’s latest insight, Indonesia’s e-groceries market could be worth at around USD1bn, from USD500m in 2019, and could jump to USD5-6bn GMV by 2025, driven by high digital enablement and c.65% population aged below 45 years old. In Indonesia, almost everyone who has a phone is using a smartphone (98.2%). Hence, the amount of time spent on the Internet on average is 37% per day. Overall, we can conclude that the nation is currently aware of the importance of the Internet despite not everyone using it for online purchases. Thanks to COVID-19, it is estimated that the penetration rate has risen to 0.3% from 0.2% in 2019. Additionally, a large portion of Indonesian consumers’ average spending is still in the primary/staples category. The country’s consumer base had spent more than USD200bn on food and beverage between 2014 and 2019 due to its high population compared to other developed and emerging countries. Latest data from Hootsuite showed that food and personal care products expenditure was at USD4.66bn in 2020. In 2014-2019, India’s and Vietnam’s e-grocery markets grew faster than Indonesia’s at a CAGR of 30%. In 2020, Indonesia’s average household monthly expenditure per capita reached IDR1.2m. Interestingly, 13% of the spending was spent on food products, particularly packaged and fresh products, with the latter leading the segment. We observe that the average basket size for online purchases was only at IDR50,000 as bulk items translate to higher delivery cost. Studies also show that grocery shopping has one of the highest shopping frequencies over a certain period of time vs non-food. Hence, there is large growth potential for online grocery items.
See important disclosures at the end of this report 16
Matahari Putra Prima Indonesia Initiating Coverage
6 July 2021 Consumer Non-cyclical | Retail - Staples
Figure 35: Breakdown of monthly household expenditure in Indonesia as of Sep 2020, by category
Packaged and fresh food 13% 6% Internet services 6% 6% Education 6% 4% Tobacco 4% 4% Personal hygiene products 4% 4% Transportation 4% 4% Welfare and savings 4% 3% Non-alcoholic beverages 3% 3% Canned food 3% 3% Audio and video electronic products 3% 3% Small household appliances 3% 3% Major household appliances 3% 2%
Source: Statista, RHB
Based on 3Q20 data, 26% of Tokopedia’s order contribution stemmed from grocery sales vs only 20% in 3Q19. This should translate to c.60% YoY online grocery revenue growth, which we believe mostly came from non-fresh items. In our view, the O2O channel and instant delivery will be the breakthrough for e-groceries as purchasing staple products require faster lead time as they are perishable goods and consumers tend to consume the goods right after ordering. Leveraging on its existence across the region, MPPA’s competitive advantage would see it tapping into the underpenetrated markets and lower-tier cities. We believe these cities would be a new source of income for MPPA as it able to leverage its own economies of scale and support from the GoTo collaboration for its last mile delivery. Currently, there are number of e-groceries apps, ranging from small to big players that are seeing strong growth during the pandemic. Some small players are just operating within one province, such as Rego Pantes and Tumbasin, which are focusing on a number of cities in Central Java. Other players with larger scalability and popularity eg Tani Hub are serving delivery to five areas including Greater Jakarta, Bandung, Yogyakarta, Surabaya-Malang, and Bali. We see Happy Fresh, Grab Mart, Sayur Box, Tani Hub and Kedai Sayur as key players in the industry, backed with strong investor profile. Happy Fresh is one of the first movers in the industry, founded in late 2014. In 2019, its raised c.USD20m series C funding led by MirateAsset-Naver Asia and several ASEAN venture capitals, including Grab Ventures. Sayur Box, with key shareholders including East Ventures, Tokopedia and Astra International (ASII IJ, BUY, TP: IDR6,900), took the lead recently after receiving fresh funding of USD5m from ASII earlier this year. Grab Mart, supported by Grab, has been successful in Malaysia’s online grocery market. Given Lippo Group’s previously close ties with Grab through the partnership in OVO – an e-wallet founded by the former – GrabMart has since partnered with MPPA, Family Mart, and Sayurbox. Gojek’s GoMart, on the other hand, has so far partnered with Sayurbox, Alfamart and Alfamidi, and the recent investment in MPPA should indicate that GoTo is seeking further partnerships to increase its presence in the segment. Note that Tokopedia has a stake in Sayurbox besides partnering with Gojek.
See important disclosures at the end of this report 17
Matahari Putra Prima Indonesia Initiating Coverage
6 July 2021 Consumer Non-cyclical | Retail - Staples
Figure 36: Key fresh products players’ start up profile Number of Year of Total Funding Funding Establishment Amount Rounds Investors Number of Downloads
Beenext, Samena Capital, SMDV, Singha Ventures, Mirae Asset - Naver Asia and Growth Happy 2014 USD30m 4 Fund, Vertex Ventures, Vertex Ventures 1,000,000+ Fresh Southeast Asia & India, LINE Ventures, Naver, Endeavor Catalyst and others
East Ventures, Tokopedia, Astra International, Sayurbox 2016 USD5m 3 500,000+ Insignia, Patamar Capital
MDI Ventures, Tenaya Capital, Flourish Ventures, Vertex Ventures, Openspace Tani Hub 2015 USD94.5m 5 500,000+ Ventures, BRI Ventures, Intude Ventures, AddVentures, UOB Venture
Kedai East Ventures, Multi Persada, Triputra Group, 2016 USD5.3m 2 10,000+ Sayur SMDV
Segari 2020 - 1 AC Ventures, Saison Capital, Beenext 10,000+
Source: Various Sources, Crunch Base, RHB
MPPA is seizing the opportunity The bulk of MPPA’s revenue is still driven by offline retail – its extensive distribution hub and several store concepts remain the backbone of MPPA’s business. However, we believe its future growth potential will be driven by the online segment. GoTo’s synergy with MPPA should also help to unlock additional value to both parties. With the hype of purchasing goods online, the weight of the delivery will likely be an issue to active users purchasing staples goods due to higher delivery charges. Thanks to the current delivery promotional war in the marketplace, consumers are able to enjoy free delivery service or have a partial discount on delivery charges. However, we think that these promotions are not sustainable in the long run as it will impact consumer behaviour. We believe the GoTo collaboration will be beneficial as it allows the new entity to leverage on Hypermart’s logictics as its O2O channels. Currently, it owns 212 stores across the region. This may help to strengthen its footprint in outside Java given logistics being a challenge. As mentioned, 40% of MPPA’s stores are located outside Java supported by a dedicated warehouse serving East Indonesia. For MPPA, the O2O channel and instant delivery should be a breakthrough for e-groceries – purchasing staple products require a faster lead time as several of them are perishable goods and consumers tend to consume quickly due to the short shelf life. Leveraging on its presence across the region, MPPA’s competitive advantage is its ability to tap into underpenetrated markets and lower-tier cities, bolstered by a faster delivery time. The company recognises the growing importance of digitalisation – it launched its own apps and website even before the pandemic. However, we note that MPPA was more aggressive in pushing its digital strategies after the pandemic forcefully slowed offline traffic. Overall, it has successfully widened its online footprint to cater to all customer types and needs through its own platform (web-based and mobile app), WhatsApp application programming interface (API) as well as established third party online marketplace platforms and e- groceries aggregators. MPPA has the widest presence compared to the other offline groceries players with nine digital store platforms. It only lags behind Sayurbox with 11 digital store platforms. However, going forward, we are confident of MPPA becoming the top e-groceries retailer should it collaborate with BukaLapak, Lazada and Happy Fresh.
See important disclosures at the end of this report 18
Matahari Putra Prima Indonesia Initiating Coverage
6 July 2021 Consumer Non-cyclical | Retail - Staples Figure 37: Groceries players’ online presence Mobile Website Bukal- Bli JD Go Grab Happy WA Tokopedia Shopee Lazada Apps Based apak Bli ID Mart Mart Fresh Offline Retail
Alfamart ✓ ✓
Alfamidi ✓ ✓ ✓
Indomaret ✓ ✓
Circle K ✓ ✓
Lawson ✓ ✓ ✓ ✓
Farmers Market ✓ ✓ ✓ ✓ ✓ ✓
Superindo ✓ ✓
Ranch Market ✓ ✓ ✓ ✓ ✓ ✓
Lotte Mart ✓ ✓ ✓ ✓ ✓ ✓
Foodmart ✓ ✓ ✓ ✓ ✓
Giant Ekspres
Hero ✓ ✓ ✓
Foodhall ✓ ✓ ✓
Hypermart ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓
Family Mart ✓ ✓ ✓ ✓ ✓ ✓
Transmart ✓ ✓
The Gourmet ✓ ✓ ✓
Rumah buah ✓
Duta buah ✓ ✓ ✓
All Fresh ✓
Total buah ✓
Online Based
Sayur Box ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓
Tani Hub ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓
Fresh Box ✓ ✓ ✓ ✓ ✓ ✓
Brambang ✓ ✓ ✓
Kecipir ✓ ✓ ✓ Tukang ✓ ✓ ✓ Sayur.co Rego Pantes ✓
Cari Sayur ✓ ✓ ✓
Nyayur ✓
Tumbasin.id ✓ ✓
Etaneeid ✓ ✓ ✓ ✓ ✓
Segari ✓ ✓ ✓ ✓ ✓
Baqoel ✓ ✓ ✓
Kedai Sayur ✓ ✓ ✓ ✓ ✓ ✓
Segari ✓ ✓
Source: Various Sources, RHB
See important disclosures at the end of this report 19
Matahari Putra Prima Indonesia Initiating Coverage
6 July 2021 Consumer Non-cyclical | Retail - Staples MPPA started its online platform – Hypermart online, in 2018. The mobile app is currently available on Google Play and Apple’s App Store. It currently covers 112 stores nationwide, covering a 10km delivery radius from each store with a 60-minute express delivery. The company sell products at the same price as its offline stores. It offers 6,200 stock keeping unit (SKUs) to cover fresh produce, groceries, and non-food. However, the company is eyeing to sell ultra-fresh products (meat/poultry/fish/vegetables/fruits) as its key value proposition. MPPA has managed to book a 30% bounce rate, faring better than other players at 40-50% on average. The company needs to work on enticing people to download its mobile app as the number of downloads merely stands at c.100,000 – much lower compared to Alfamart, Indomaret, Sayur Box, Tani Hub, and its closest competitor, Superindo. Aside from that, the company has also managed to launch a “chat and shop” service through the WhatsApp API incorporating 129 stores nationwide. Customers are able to order all the SKUs available at the store covering a 10km distance from their home. Alternatively, the customer is able to drive to store and do a park and pick-up service (have the order delivered to car). The number of transactions soared by 48% from 804 in Mar 2020 to 1,190 as of Dec 2020. We tried to use this application and found it satisfying as it took around two minutes to get a response from the shop staff. In fact, a notable portion of the transaction is made via Whatsapp chat as we believe customers want to avoid visiting the store but still need some interaction when purchasing products, especially fresh products. MPPA has also begun offering a “Park & Pick-up” feature as part of its Chat & Shop as well as Hypermart Express to its stores nationwide with designated parking spaces at stores or malls so that consumers do not need to leave from their vehicles. We think this feature – likely inspired by Walmart’s curbside pickup concept – allows consumers to place an order online and pick-up their purchases without the need for any social interaction.
Figure 38: MPPA’s Park & Pick-up feature
Source: Company, RHB
Aside from that, the company is committed to enlarging its digital footprint in online marketplace platforms as well as online aggregators. It has a presence in Tokopedia, Shopee, Blibli, JD ID, and Grab Mart. We learn that Grab Mart and Tokopedia remain the best performing platforms so far. Note MPPA’s transactions in Grab Mart surged by nine times from first week of Aug to Dec 2020. Grab is estimated to have 30m active users at this moment and most are new, providing a large untapped customer base for MPPA. Tokopedia, Shopee, and BliBli are top marketplace platforms, registering in 266m visits per month in Jan 2021.
See important disclosures at the end of this report 20
Matahari Putra Prima Indonesia Initiating Coverage
6 July 2021 Consumer Non-cyclical | Retail - Staples
Figure 39: MPPA’s digital stores in online marketplace platforms
120
103 100 95
81 81 80
60
40 30
20
3 0 Grabmart Shopee Tokopedia Blibli JD.ID Go Mart
Source: Company data, RHB
In 2020, the online sales contribution reached 4-5% from merely 0.1% in a year before. The company targets the online channel to account for 8-10% of total sales in 2021. We believe this is plausible due to several imminent initiatives to be launched by MPPA which include: i. Fully onboarding on Tokopedia by July. The performance of stores on Tokopedia has been superb, the highest among marketplaces in the country, just behind GrabMart across all third-party online platforms; ii. Fully onboarding on Go Mart by July. The company has three stores on Go Mart, which saw stronger performance compared to those on Shopee. The company aims to enlist its other stores in Go Mart immediately, based on the promising results; iii. Collaboration with Happy Fresh. In September, it plans to launch its stores on Happy Fresh. We like this strategy as Happy Fresh remains as the top e-groceries platform. Thus, the collaboration with Happy Fresh should help to boost its online sales contribution; iv. Collaboration with Bukalapak. The company is in currently discussions with Bukalapak. However, no further details have been provided as to the timeline of this collaboration. We believe MPPA’s intention here is two-fold – not only will be able to expand its online channel, the company can also utilise Bukalapak’s Mitra platform to enhance its penetration to non-Tier I cities. Worth noting that most of the Bukalapak’s revenue is derived from non-Tier I cities – the platform currently has 8m small-business owners, known as partners, on board. On the back of rising COVID-19 cases and further mobility restrictions implementation, we are optimistic that MPPA will be one of the main beneficiaries of this pandemic given its widest online presence among retailers. The company has responded well to the situation by providing incentives in terms of free delivery and some discounts for purchasing its products in digital stores. MPPA offers around a 5-15% discount for a number of its products and free delivery of 10-15km across all of its digital stores. Also, the company has managed to maintain its competitiveness in terms of quality and pricing, which entice people to shop at its stores. We conducted ground checks for several types of groceries comprising banana (the most ubiquitous fruit in Indonesia), poultry (Indonesia’s most consumed meat), instant noodle (ie Indomie – touted as Indonesia’s most popular brand), and soy sauce (a main cooking ingredient), to name a few. We found that some of the products sold by MPPA were priced lower while others were slightly higher. However, we think this should pose no issue given MPPA’s service and product quality, aside from discounts given on a number of its digital platform as well as the free delivery programme. We observe that a majority of retailers have yet to provide delivery service – customers would need to arrange for their own delivery, while some retailers charge a IDR15,000-25,000 delivery fee with a limited distance of 5-10km. Also, for online platforms such as Happy Fresh, Tani Hub and Sayurbox, customers mostly are unable to opt for an immediate delivery service, instead, they need to wait for their items for one to two days during peak periods.
See important disclosures at the end of this report 21
Matahari Putra Prima Indonesia Initiating Coverage
6 July 2021 Consumer Non-cyclical | Retail - Staples Figure 40: Price of 1kg of Cavendish banana (Brand: Sunpride) sold in offline and online stores 35,000 30,000 25,000 Average: IDR21,614/ 20,000 15,000 10,000 5,000
-
Hero
Segari
Foodhall
All Fresh All
Tani Hub Tani
Lotte Mart Lotte
Foodmart
Superindo FreshBox
Duta buah Duta Box Sayur
Hypermart
Cari Sayur Cari
Transmart
TotalBuah
Brambang
KedaiSayur
Rumahbuah
The Gourmet The
Ranch Market Ranch
Farmers Market Farmers Tukang Sayur.co Tukang
Source: Various Sources, RHB Figure 41: Price of 1kg broiler chicken sold in offline and online stores 70,000 60,000
50,000 Average: 40,000 30,000 20,000 10,000 -
Source: Various Sources, RHB
Figure 42: Price of one packet of Indomie Kari Ayam sold in offline and online stores
3,100 3,000 2,900 Average: IDR2,776 2,800 /sachet 2,700 2,600 2,500 2,400 2,300 2,200
Source: Various Sources, RHB
See important disclosures at the end of this report 22
Matahari Putra Prima Indonesia Initiating Coverage
6 July 2021 Consumer Non-cyclical | Retail - Staples
Figure 43: A bottle of Bango ketchup (275ml) price sold in offline and online stores
24,000
23,000
22,000 Average: IDR20,848/ 21,000 pcs
20,000
19,000
18,000
17,000
Source: Various Sources, RHB
We also remain optimistic on the MPPA’s online channel strategies, especially its partnership with GoTo. Not only will the former be able to a full presence on Go Mart and Tokopedia, it also aims to provide Go Pay as for payment across all stores, thereby broadening the payment option for customers. Additionally, we see future benefits with its collaboration with Tokopedia in the following: i. MPPA’s stores used as Tokopedia’s pick up point. We think this may increase frequency of visits by customers and the visit for pick up products from Tokopedia might translate to the purchase of the products, increasing sales value; ii. Leveraging on Mitra Tokopedia? Although very little is known about this possible venture, we are optimistic that should it materialise, MPPA would be able to expand its customer base and boost sales. In 2020, the number of Mitra Tokopedia’s warung reached around 8m, presenting ample potential for monetisation; iii. GoTo capitalising on MPPA’s logistics network. We think this will help to free up some of MPPA’s idle space and definitely improve productivity. Should this transpire, it will likely lead to better efficiency and stronger profitability ahead for MPPA. Another push factor for its digital stores is the Jakarta Government’s recent plan to impose hourly parking fees at IDR60,000 for cars and IDR18,000 for motorcycles. As this is substantially higher than the current price, customers may be attracted to use online channels to purchase groceries. Again, we think MPPA should be the main beneficiary given its vast online footprint, vast product offering and solid track record. Bear in mind that sales from Jakarta made up around 16% of the company’s total sales.
See important disclosures at the end of this report 23
Matahari Putra Prima Indonesia Initiating Coverage
6 July 2021 Consumer Non-cyclical | Retail - Staples Financial Outlook We estimate MPPA to book 9% revenue growth in 2021F before accelerating to 16% and 19% in 2022F-2023F. However, the continued COVID-19 pandemic, translating to continued strict mobility restrictions, will likely curb the company’s growth. As such, it is mindful about its expansion plans in 2021. Moreover, we also see Giant’s strategy to flush out inventory by giving massive discounts before its permanent closure could also affect MPPA’s sales. Moreover, it is still in the midst of consolidating its business with the GoTo ecosystem. As such, full benefits from digitalisation have yet to fully kick in. However, we see compelling growth in 2022F and 2023F, given the massive vaccine rollout ought to translate to more manageable COVID-19 cases. This should allow economic activities to almost fully recover to pre-pandemic levels. MPPA’s expansion pace should be stronger and the other initiative in pushing the sales of fresh products should bring more meaningful impact. This is coupled with the full impact of its digitalisation strategy of setting up a presence in almost e-groceries channels and marketplace platforms by end -2021. Note that the company has plans to conduct a share issuance, which is pending EGMS approval in mid-Jul 2021. In our view, it is highly likely GoTo will increase its stake through this scheme. This, in turn, should be positive to strengthen its digital strategy ahead.
Figure 44: Net revenue profile
16,000 25%
14,000 20% 15% 12,000 10% 10,000 5% 8,000 0%
6,000 -5% -10% 4,000 -15% 2,000 -20% - -25% 2016 2017 2018 2019 2020 2021F 2022F 2023F
Revenue (in IDR bn) % growth
Source: Company data, RHB
We foresee company’s transformation across all segments leading to continuous margin expansion ahead. Its strategy to resize its store area should result in better efficiency ie labour and rental costs. Additionally, its digital transformation should help to improve its internal business as well. As mentioned earlier, automatisation should lead to better efficiencies as well, ie logistic cost while better utilisation of data analysis will help enhance its profitability. A further collaboration with Tokopedia may also potentially lower its space management cost. Aside from that, we think MPPA’s leading position in the offline space should help to reduce its commission cost with online marketplace players. In light of its sizeable customer base, number of transactions and vast presence, MPPA has the bargaining power to negotiate with e-groceries players for a favourable commission rate. The company is in the process of cutting in half its commission rate with one of the key e-groceries players.
See important disclosures at the end of this report 24
Matahari Putra Prima Indonesia Initiating Coverage
6 July 2021 Consumer Non-cyclical | Retail - Staples
Figure 45: EBITDA profile
1,500 15%
1,000 10%
500 5%
- 0% 2016 2017 2018 2019 2020 2021F 2022F 2023F
(500) -5%
(1,000) -10%
(1,500) -15%
EBITDA (in IDR bn) % Margin
Source: Company data, RHB
Going forward, MPPA is expected to maintain a healthy balance sheet profile. We have seen continuous efforts to manage its inventory level, from IDR2.8trn in 2016 to IDR965bn in 2020. This has help to free up cash and improve its working capital management system. The above initiatives should solidify its working capital management, improve working capital days and gradually pare down its debt to post a net cash position from 2021F.
Figure 46: Cash conversion days
16
14
12
10
8
6
4
2
- 2016 2017 2018 2019 2020 2021F 2022F 2023F
CCC Days
Source: Company data, RHB
See important disclosures at the end of this report 25
Matahari Putra Prima Indonesia Initiating Coverage
6 July 2021 Consumer Non-cyclical | Retail - Staples Valuation Initiate coverage with a BUY and 12-month SOP-based IDR1,750 TP, 50% upside. We divided our valuation based on fresh and non-fresh products. We believe the monetisation of digital initiatives will be prevalent for the fresh products as this is the segment that GoTo should benefit from MPPA’s extensive logistics network. Note that we use 2023F as our base number since we believe full benefits should emerge in that year. We use 1.7x P/S, which is based on the average valuation multiple from recent acquisitions or funding investment in the groceries industry globally. On top of this, we use 11x EV/EBITDA for non- fresh products, largely similar to consensus valuation for Sumber Alfaria Trijaya (AMRT IJ, NR). Risks to our call include continued high COVID-19 cases, slower-than-expected vaccine rollout, weaker-than-expected economic recovery post COVID-19, slower-than-estimated stores expansion, and increasing competition.
Figure 47: MPPA’s valuation
Fresh Products Sales (33% contribution) – in IDR bn 3,328 P/S (x) 1.7 EV (in IDR bn) 5,658
Non Fresh Sales (in IDR bn) 6,757 EBITDA (72% contribution) – in IDR bn 696 EV/EBITDA 9x) 11.0 EV (in IDR bn) 7,654
TOTAL EV (in IDR bn) 13,311 Net Debt (Cash) – in IDR bn (1,200) Equity Value – in IDR bn 14,511
Equity Value Per Shares 1,752
Source: RHB
Figure 48: Recent acquisitions or funding investment in the groceries industry globally
Deal Value Perform Valuation Country Target Acquiror Year (in USD mn ) (in USD mn ) multiple (x)
United States Instacart Sequoia 2021 39,000 35,000 1.1
United States Boxed Seven Oaks 2021 900 187 4.8
United States Fresh Direct Ahold Delhaize 2021 300 600 0.5
India Big Basket Tata Group 2021 2,000 1,000 2.0
China Dingdong Maicai Softbank 2021 3,500 1,730 2.0
China Dada Nexus JD.com 2021 6,800 1,638 4.2
England Ocado M&S 2019 1,044 2,332 0.4
United States Shipt Target 2017 550 1,000 0.6
China Sun Art Retail Alibaba 2017 3,600 14,542 0.2
United States Whole Foods Amazon 2017 13,700 16,000 0.9
China Missfresh Tencent 2018 3,000 1,500 2.0
Average 1.7
Source: Various Sources, RHB
See important disclosures at the end of this report 26
Matahari Putra Prima Indonesia Initiating Coverage
6 July 2021 Consumer Non-cyclical | Retail - Staples
Figure 49: Peer comparison Last price Market Cap BBG Ticker (LCY) (USDm) P/S (x) EV/EBITDA (x) Local Supermarkets 2020 2021 2022 2020 2021 2022 Matahari Putra Prima MPPA IJ Equity 1,170 608 1.3 1.2 1.0 28.5 20.8 13.2
Hero Supermarket HERO IJ Equity 1,385 400 0.7 N/A N/A -10.3 N/A N/A
Supra Boga Lestari RANC IJ Equity 790 85 0.4 N/A N/A 5.6 N/A N/A Sumber Alfaria Trijaya AMRT IJ Equity 1,250 3,584 0.7 0.6 0.6 11.2 11.5 9.8
Average 0.8 0.9 0.8 8.7 16.2 11.5
Foreign, Emerging
Avenue Supermarts DMART IN Equity 3,314 28,810 8.6 9.0 6.8 101.5 126.1 84.2
CP ALL CPALL TB Equity 59.8 16,721 1.0 1.0 0.9 16.8 16.8 15.2 Yonghui Superstores 601933 CH Equity 4.8 6,998 0.5 0.5 0.4 20.0 22.4 19.4 Sun Art Retail Group 6808 HK Equity 5.7 6,952 0.6 0.6 0.5 4.9 4.7 5.1 PGOLD PM Pure Gold Equity 41.5 2,431 0.7 0.7 0.6 8.0 7.9 7.4 Cia Brasileira de Distribuicao PCAR3 BZ Equity 39.2 2,084 0.2 0.2 0.2 5.3 6.4 6.0
Jiajiayue Group 603708 CH Equity 17.4 1,634 0.6 0.6 0.5 16.5 14.7 12.8
Almacenes Exito EXITO CB Equity 13,290 1,582 0.4 0.4 0.4 7.9 6.8 6.2 Organizacion SORIANAB MM Soriana Equity 18.1 1,646 0.2 0.2 0.2 5.0 5.0 5.0
Aeon AEON MK Equity 1.29 435 0.4 0.4 0.4 6.2 5.9 5.7
BGF Retail 282330 KS Equity 168,000 2,564 0.5 0.4 0.4 4.8 5.1 4.8
Massmart Holdings MSM SJ Equity 6,314 969 16.0 15.5 15.6 6.6 5.3 4.9 Shanghai Bailan Group 600827 CH Equity 19.4 4,974 0.9 0.8 0.7 9.6 13.0 13.2
Average 2.4 2.3 2.1 16.4 18.5 14.6
Foreign, Developed
Walmart WMT US Equity 140 392,609 0.7 0.7 0.7 12.8 12.5 12.3
Costco COST US Equity 399 176,359 1.1 0.9 0.9 24.0 21.4 19.7
Seven & I 3382 JT Equity 5,197 41,421 0.9 0.8 0.6 6.5 7.3 5.5
Kroger KR US Equity 38.4 28,672 0.2 0.2 0.2 7.9 6.9 7.1
Tesco TSCO LN Equity 225 23,971 29.9 29.7 29.4 6.8 8.1 7.0
Carrefour CA FP Equity 16.9 16,356 0.2 0.2 0.2 6.9 6.0 5.6
Sainsbury SBRY LN Equity 272 8,411 21.0 20.8 21.0 6.2 6.1 5.4
E-mart Korea 139480 KS Equity 158,000 3,889 0.2 0.2 0.2 9.0 7.9 7.4
Ahold Delhaize AD NA Equity 25.3 31,286 0.4 0.4 0.4 8.0 6.9 6.7 Albertsons Companies ACI US Equity 20.0 9,312 0.1 0.1 0.1 5.9 5.4 6.8
Coles Supermarkets COL AU Equity 16.7 16,730 0.6 0.6 0.6 9.6 9.2 8.8
Target TGT US Equity 247 121,989 1.6 1.3 1.2 17.1 14.5 12.0 Woolworths Supermarkets WOW AU Equity 37.6 35,743 0.7 0.7 0.8 12.6 10.7 11.4
Average 4.4 4.4 4.3 10.2 9.4 8.9
Source: Bloomberg, RHB
See important disclosures at the end of this report 27
Matahari Putra Prima Indonesia Initiating Coverage
6 July 2021 Consumer Non-cyclical | Retail - Staples Company Profile Matahari Putra Prima (MPPA) was established as a national department store chain in 1986. The company went public company in 1992 and expanded into the supermarket business in 1995. In 2010, MPPA divested its ownership in Matahari Department Store to Meadow Asia Company Limited, a JV between MPPA and CVC Capital Partners. The company also divested its non-division, by divesting Timezone, Books&Beyond, several restaurants and property through the sale of 100% shares in PT Matahari Pacific (MP) and PT Putra Nadya Investama (NPI) to PT Multipolar Tbk (MLPL).
Figure 50: MPPA’s milestones
Description 1986 MPPA established as a retailing company to manage a national department store chain 1992 IPO on Jakarta and Surabaya Stock Exchange 1995 Began supermarket operations 2002 Introduced and launched Boston Health & Beauty 2004 Introduced and launched Hypermart as the compact hypermarket 2007 Opened the third distribution center 2008 Introduced and launched Foodmart 2009 Received ISO 22000:2005 Certification for Food Safety and Management System 2010 Divestment of Matahari Department Stores valued at IDR7.2trn 2012 Divestment of non-core assets/businesses. Introduced and launched the first premium supermarket, Foodmart Primo, wholesale format SmartClub, FMX convenience store, 2015 and new concept Boston Health & Beauty
Completed the inventory actions designed to improve the productivity of inventories 2016 Completed the shift from retail accounting method to the cost accounting method Received ISO 9001:2015 Certification for Quality Management System
Important strategic initiatives implementation 2017 Received HAS 23000 and SNI 99001:2016 Certifications for Halal Management System into its food safety protocols
Transformation of business strategy to focus more towards customers with quality products at competitive prices 2018 Reinvent omni-channel strategy with development of Hypermart Mobile Received ISO 22000:2018 Certification for Food Safety Management System
Realigning MPPA’s business strategy: Bringing Best Of Fresh Products To Consumers & Refocus To Consumer Retailing Collaboration with Walt Disney Company Indonesia 2019 Introduced eight HyFresh stores Opened a new distribution center at Porong, East Java Opened and operated seven stores at the campground of PT Freeport Indonesia in Timika - Papua
Placing higher focus on selling best of fresh products Strengthening omnichannel and digital payment systems 2020 Collaboration with leading marketplace operators: GrabMart, Shopee, and Tokopedia Received the halal certification for 150 locations of multiformat stores, distribution centers and head office by implementing the Halal Assurance System (HAS) from the MUI
Source: Company, RHB
See important disclosures at the end of this report 28
Matahari Putra Prima Indonesia Initiating Coverage
6 July 2021 Consumer Non-cyclical | Retail - Staples
Figure 51: Board of Commissioners Name Position Description
John Bellis John Bellis began working as an Independent Commissioner in 2004, becoming President President Commissioner in 2013 and Independent President Commissioner in 2019. He joined the Matahari Commissioner Putra Prima in 2001 as Senior Advisor and CEO of Matahari Department Store. Currently, he also (Independent) serves as the company’s Chairman of Audit Committee and Chairman of Nomination and Remuneration Commitee, as well as Independent President Commissioner and Chairman of Nomination and Remuneration Committee of PT Matahari Department Store. He is an NRDC graduate of St. Martin’s College, London, UK.
Dicky Setiadi Moechtar Dicky Setiadi Moechtar was appointed as Commissioner of Matahari Putra Prima in 2015. He also Independent serves as Independent Commissioner and Chairman of Audit Committee PT Multipolar Technology Commissioner Tbk (since 2019) and Commissioner PT Visionet Data International (since 2020). Previously, he held key positions at numerous organisations in Indonesia including as Managing Director IT, Operation, General Affair, Asset Administarion and Financial Services Distribution at PT. Bank Lippo. He graduated from Universitaet des Saarlandes, Republic of Germany.
John Riady John Riady was appointed as Commissioner of Matahari Putra Prima in 2015. He is a Professor of Law at Universitas Pelita Harapan (UPH) Faculty of Law, one of Indonesia’s leading universities; Editor Commissioner at Large of the Jakarta Globe since 2005 and Director of the Lippo Group. Furthermore, he also serves as President Commissioner of PT Siloam International Hospitals and Director of PT Lippo Karawaci while being a member of The World Economic Forum Council on South-East Asia. He obtained his Bachelor's Degree in Political Philosophy and Economics at Georgetown University in 2006, followed by an MBA from the Wharton School of Business, graduating as a Palmer Scholar (2008) and a Juris Doctor from Columbia University Law School, US (2011).
Rudy Ramawy Rudy Ramawy was appointed as an Independent Commissioner of the company in 2018. He has over 20 years in experience and leadership at various industries related to consumers: FMCG (Procter & Commissioner Gamble in 1994), Content Media (Warner in 1999 and Sony Music until 2005), and Media (MNC Group and RCTI during 2008-2011). He is the Founder and Managing Partner of Venturra Capital, and actively involved at several important positions at OVO (fintech), Ruangguru (edutech), Sociolla and others while currently also serving as Vice President Director of PT Multipolar. He obtained his Bachelor’s Degree in Chemical Engineering from University of California, Berkeley, USA.
Fendi Santoso He was appointed as a Commissioner of Matahari Putra Prima in 2017 while he previously served as Commissioner Director of the company. He has 19 years of experience in private equity and corporate, including at The Abraaj Group as a Director overseeing investments in South-East Asia and Northstar Group where he was involved in several transactions in various sectors, including several consumer-facing businesses. Currently he also serves as Director of PT Multipolar, and Commissioner of PT Lenox Pasifik Investama, PT Star Pacific and PT Ciptadana Capital.
Source: Company, RHB
See important disclosures at the end of this report 29
Matahari Putra Prima Indonesia Initiating Coverage
6 July 2021 Consumer Non-cyclical | Retail - Staples
Figure 52: Board of Directors Name Position Description
Adrian Suherman Adrian Suherman concurrently serves as President Director at Matahari Putra Prima (since 2020) and PT Multipolar (since 2019) as well as President Commissioner at PT Multipolar Technology President Director and Commissioner at PT Matahari Department Store. Previously, he has successfully established the startup company Dealkeren (eventually sold to Livingsocial) and aCommerce, before accepting a post as CEO with OVO (PT Visionet Internasional) until 2019. He received his Bachelor's Degree in Computer Engineering from the University of Arizona in 1995, a Master's Degree in Electrical Engineering from Stanford University, and an MBA in Corporate Strategy and Operations from the European Institute for Business Administration in 2006.
Herry Senjaya Herry Senjaya joined Matahari Putra Prima in 2003 and currently also serves as the Chief Financial Officer. Previously, he has worked as a Senior Auditor at Prasetio Utomo & Co., Senior Consultant Director and Chief at Pricewaterhouse Coopers, and Associate Manager at PT Siddharta Consulting (KPMG) among Financial Officer others. He is a graduate of Parahyangan Catholic University. He obtained his Bachelor's Degree in Engineering from Universitas Trisakti, Indonesia and MBA degree from Greenwich University, Hawaii.
Andre Rumantir
Andre Rumantir joined the Lippo Group in Oct 2004 and was appointed Director of Matahari Putra Director Prima since May 2005. Previously, he held several key positions at leading corporations, including PT International Nickel Indonesia (1978-1986) and PT Goodyear Indonesia (1986-2002).
Johanes Jany
Johanes Jany joined the Matahari Putra Prima in 1989 and served as Director of Property & Asset Management in 2011, member of the Board of Directors in 2013 and Commissioner in 2014. Director Previously, he held several important positions, including as Director of Real Estate & Store Planning and member of Commissioner of PT Matahari Department Stores, Director of PT Lippo Karawaci, CEO of LippoMalls Indonesia. He is a graduate of University of North Sumatra, Medan, majoring in Accounting.
Source: Company, RHB
See important disclosures at the end of this report 30
Matahari Putra Prima Indonesia Initiating Coverage
6 July 2021 Consumer Non-cyclical | Retail - Staples
Figure 53: Management team Name Position Description
Elliot Dickson Elliot Dickson appointed Chief Executive Officer of Matahari Putra Prima in 2018. Prior to this, he was Chief Operating Officer (COO) of Walmart China Chief Executive (2016-2018). He has 41 years of professional career in international Officer retailing of hypermarket and supermarket industries with several key positions including Director of Operations & Director of Logistics of Delhaize Group in 2011 and President Director of PT. Lion Super Indo (part of Delhaize Group) in 2012-2016. He is a graduate from Northeast Louisiana University, Monroe, Louisiana, US, majoring in Accounting.
Kyutae Park Kyutae Park joined Matahari Putra Prima in Mar 2015 as Director of Boston Health & Beauty Operations. He has 20 years of experience in the retail Director of industry and a prominent figure in establishing Watsons chain in Asia. He Merchandising & has assumed several key positions, such as Director of Carrefour and Marketing Watsons Korea (2007-2012) and Watsons Indonesia (2012-2015).
Anto Suwartono He joined Matahari Putra Prima in Aug 2005 as Store Manager Hypermart and since then, has occupied four different positions: Regional Manager Director of Large Store Opening, Regional Manager, Vice President Sales Development, Stores Format and Vice President for Operational and Sales Development. Before joining the company, he had nine years working in retail at Ramayana for three years, and Carrefour for six years, with the last position as Store Manager.
Wirawan Winarto
Wirawan Winarto joined Matahari Putra Prima in 2018. He started his career in retail since 1994 at PT Lion Super Indo until 2018 where he held Director of Small several important functions in the area of store operations, merchandising, Stores Format corporate communications and sustainability as well as procurement and logistics, with latest position as Vice President of Buying, Logistic & Indirect Procurement.
Iwan Goenadi He was appointed as Head of Management Information Systems (MIS) of Director of Matahari Putra Prima in 1988. He was appointed as Head of Store Information Operations Supermarket in 1999 and Chief of MIS since 2002. Technology
Danny Kojongian Danny Kojongian joined Matahari Putra Prima in 1996. His career in the Director of Corporate Company has grown from Senior Manager Secretary & Public Investor Relations and Public Relations to the present position. Previously, Affairs he started his professional career in PT Duta Pertiwi as Treasury Senior Staff (1994-1996)
See important disclosures at the end of this report 31
Matahari Putra Prima Indonesia Initiating Coverage
6 July 2021 Consumer Non-cyclical | Retail - Staples
Lydiawati Kurniawan Lydiawati Kurniawan joined Matahari Putra Prima in 1994-2011 and 2019 until present. She has held several important positions such as Store Vice President Operation Specialist and Organization Development & Staffing General Human Capital Manager. Previously, she has also worked at SOHO Group with positions surrounding recruitment, talent management and public affairs. She earned her Bachelor's Degree in Psychology from the University of Indonesia in 1994.
Purwanto Purwanto joined Matahari Putra Prima in 1991. He has experience in compliance audits, store operational management audits, indirect Head of Internal Audit procurement in the retail business for the provision of the project and maintenance section of the company and previously at PT Matahari Department Store. He graduated from YKPN Yogyakarta College of Economics, majoring in Accounting.
Source: Company, RHB
Recommendation Chart
Date Recommendation Target Price Price Price Close 2021-07-05 2,500 Source: RHB, Bloomberg
2,000
1,500
1,000
500
0 Jul-16 Oct-17 Jan-19 Apr-20
Source: RHB, Bloomberg
See important disclosures at the end of this report 32
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RHB Bank Berhad’s Singapore research analysts, or person associated or to ensure the independence of this report, investors should also be aware that such connected to it do not have any interest in the acquisition or disposal of, the conflict of interest may exist in view of the investment banking activities undertaken by securities, specified securities based derivatives contracts or units in a collective the RHBIB Group as mentioned above and should exercise their own judgement investment scheme covered by the Singapore research analysts in this report. before making any investment decisions. 6. RHB Bank Berhad’s Singapore research analysts do not receive any compensation or benefit in connection with the production of this research report In Singapore, investment research activities are conducted under RHB Bank Berhad or recommendation on the issuer covered by the Singapore research analysts. (Singapore branch), and the disclaimers above similarly apply. Analyst Certification Malaysia The analyst(s) who prepared this report, and their associates hereby, certify that: Save as disclosed in the following link RHB Research conflict disclosures – June 2021 (1) they do not have any financial interest in the securities or other capital market and to the best of our knowledge, RHBIB hereby declares that: products of the subject companies mentioned in this report, except for: 1. RHBIB does not have a financial interest in the securities or other capital market products of the subject company(ies) covered in this report. Analyst Company 2. RHBIB is not a market maker in the securities or capital market products of the - - subject company(ies) covered in this report.
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(2) no part of his or her compensation was, is or will be directly or indirectly related to the specific recommendations or views expressed in this report.
KUALA LUMPUR JAKARTA RHB Investment Bank Bhd PT RHB Sekuritas Indonesia Level 3A, Tower One, RHB Centre Revenue Tower, 11th Floor, District 8 - SCBD Jalan Tun Razak Jl. Jendral Sudirman Kav 52-53 Kuala Lumpur 50400 Jakarta 12190 Malaysia Indonesia Tel : +603 9280 8888 Tel : +6221 509 39 888 Fax : +603 9200 2216 Fax : +6221 509 39 777
BANGKOK SINGAPORE RHB Securities (Thailand) PCL RHB Bank Berhad (Singapore branch) 10th Floor, Sathorn Square Office Tower 90 Cecil Street 98, North Sathorn Road, Silom #04-00 RHB Bank Building Bangrak, Bangkok 10500 Singapore 069531 Thailand Tel: +66 2088 9999 Fax :+66 2088 9799
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