Good morning,
♦ Arwana’s
share price took a dive yesterday, down 21% with most of the correction
happened just before market close. As we believe that fundamental remains
unchanged, Arwana’s current share price offers an attractive entry points.
The stock is currently trading at 19x 2017 PE, with 55% earnings growth.
♦ Based
on market data, the biggest seller on Arwana share yesterday was one of the
local brokers, which is likely due to the rebalancing activity. Our
conversation with the CFO yesterday revealed that company’s condition and
operation are still largely intact, without any negative surprise update. As
we highlighted in our recent report, Arwana indicated that 4Q16 sales are
likely to reach 12.7m sqm (+16% QoQ, +11% YoY). Hence, FY16F sales volume may
reach 47m sqm (+19% YoY), in line with our expectations. In addition,
finished goods’ inventory days declined to 22-23 days in November (from 31
days in 3Q16). Arwana also recorded better sales mix with UNO sales (higher
margin product) contribution continues to improve at the expense of lower
margin product, Best Buy.
♦ Arwana’s
management also believes that this good performance is likely to continue in
2017, driven by: i. Higher sales volumes – estimated to reach 52-55m sqm
(11-17% YoY growth); ii. Better sales mix – UNO and regular ceramic sales’
contributions to increase to 40% each, while Best Buy’s contribution to
decline to 20%.
♦ All
in all, we see the recent sharp correction as an opportunity to enter.
Maintain BUY on the counter with TP IDR550, offers 34% upside from current
level. (Andrey Wijaya)
Link to daily report: Indonesia Morning Cuppa - 050117
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Media
Highlights:
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Corporates
Ace Hardware opens the first new store this
year in Tangerang
Deltamas sold 52.9ha industrial land area
in FY16
Kimia Farma launched its ecommerce
PP Properti obtained marketing sales of
IDR2.4trn in FY16
Ramayana has completed 161.5m shares
buyback
Wika Gedung aims IDR3trn from IPO this year
Economy
Higher high-octane fuel price
Government to release its 15th economic
stimulus package
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Our
Recent Publication:
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Strategy: Opportunity In Adversity
Link to report: Strategy
- Indonesia: Opportunity In Adversity
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Company update: Arwana Citra Mulia -
Improvements Internally But Market Demand Still Weak
|
Company update: Malindo Feedmill – Banking
on Lebaran
Link to report: Banking
On Lebaran
|
Company update: Eagle High Plantations -
Flying High Like An Eagle
Link to report: Eagle
High Plantations : Flying High Like An Eagle
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Company update: Astra Agro Lestari -
Sizable Earnings Recovery Ahead
Link to report: Astra
Agro Lestari: Sizable Earnings Recovery Ahead
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Company update: Astra International - LTV
Policy Relaxation To Rev Up Sales Even More
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Company update: Waskita Karya – Key
Takeaways From Solo-Ngawi Toll Road Site Visit
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Economic Update: Exports and Imports
Accelerate in November
Link to report: Exports
and Imports Accelerate in November
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Economic Update: Bank Indonesia Maintains
The Key Rate At 4.75%
Link to report: Bank
Indonesia Maintains The Key Rate At 4.75%
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Sector Update: Regional Plantation - 2017 –
a Bumper Crop Year?
Link to report: 2017
– a Bumper Crop Year?
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Best regards,
Helmy Kristanto
Director
Head of Indonesia
Research
PT. RHB Securities
Indonesia