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Stock Index
Bahana Securities

26 Sep 2018 | 14:21 WIB
INDEX
SCORE
POIN
%
COMPOSITE
5.868,683
-13,537
-0,230%
Last 1 day
IDX30
506,973
-0,768
-0,151%
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MBX
1.653,686
-3,096
-0,187%
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971,592
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1.192,279
-3,365
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512,788
-1,257
-0,245%
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Currencies
Bahana Securities

26 Sep 2018 | 14:21 WIB
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Retail walkabout: Going grocery shopping

Our survey of hypermarkets (Hypermart, Giant and Trans Mart) based on 13 popular grocery items show that average price increases in the past 9 months were subdued at just 3.8% (exhibit 1), compared to the 13.3% hike back in September of last year. This is in line with our low inflation outlook in 2016 of just 3.9%.


We believe that the minimal average price increase was supported by IDR appreciation of 7.2% in the past 9M, while leading up to September 2015 period the IDR was in a depreciation mode. By store, Hypermart was the most expensive, with our basket of items totaling IDR242,150, followed by Giant.

That said, our survey indicates that Trans Mart (previously Carrefour), owned by Chairul Tanjung, remains the cheapest place to shop for grocery items in Jakarta, with a total basket price of IDR231,680, 4.3% cheaper than MPPA’s Hypermart.

Based on 7 supermarkets in our supermarket survey (exhibit 2), our total basket of popular items was most expensive in Kemchicks at IDR315,480, followed by Foodhall at just below IDR300k, in line with its high-end target market.

At the other end of the spectrum, the cheapest place to shop was Foodmart (owned by MPPA), amounting to IDR239,305, 32% cheaper than Kemchicks, but still 1% more expensive than the average total price of our basket of goods at the hypermarkets.

In the past 9M, our hypermarket survey (exhibit 1) reveals that most items with strong brands like Coca Cola booked the biggest average price hike of nearly 48% in the hypermarkets. This was followed by Baygon (insect repellent), which experienced a 32% price increase in the hypermarkets.

However, Bimoli cooking oil (belonging to INDF) displayed the biggest drop of more than 19% in the hypermarkets, suggesting a difficult operating environment. Note that three months prior to our recent survey, the CPO price averaged USD680/ton, compared to USD631/ton 3M prior to our previous survey, suggesting little pricing power on the cooking oil front.

Chicken prices also declined by more than 15% in the past 9 months, suggesting that the government’s recent decision to go into the chicken industry to help maintain prices may be unnecessary.

With prices of basic commodity-related items coming down as shown in our above-mentioned surveys, we believe low-end Indonesian consumers will benefit most, particularly given several Jokowi initiatives (i.e., lower administered prices, higher non-taxable income tax threshold and smart cards) to help support the grass-roots level. Therefore, within the retail sector, we prefer mass market exposed companies like Ramayana (RALS IJ-BUY- TP:IDR850).

Apart from improved purchasing power at the low end, other catalysts for RALS include: (1) Jane Tumewu’s (owner’s daughter) proactive stance as the new chief merchandiser and head of marketing; (2) the new #kerenhaksegalabangsa ad campaign; (3) the gojek partnership and (4) the stock’s cheap valuation, trading on less than 15x 2016 PE, compared to the sector average of nearly 26 times.

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