MAPI FY2010 results in line by Jessica Irene - CLSA

Headline results came broadly in line with our and consensus numbers. We will put out some more details post our meeting with the management today.

Key highlights of MAPI’s 2010 results are:
• 2010 revenues grew by 15% YoY, in line with expectations. 4Q10 sales grew by 6% QoQ and a whopping 22% YoY due to coming from a low base last year and deferred expansion towards 4Q last year.
• Gross profit grew by 16% YoY with gross margins maintained at slightly above 50% levels. 4Q10 gross margin is 52%, matching 4Q09 gross margins.
• Operating profit in 2010 grew by 46% YoY, in line with our forecasts but 9% above consensus numbers. Operating margins improved to 9.5% from 7.5% the previous year; this is the highest since 2005.
• 4Q10 operating profit grew by 27% QoQ and 34% YoY. This brings MAPI’s operating margin to 11.1% in 4Q10, up from 9.3% in 3Q10 and 10.1% in 4Q09. 4Q is seasonally the strongest due to the end of the year discounts.
• 2010 net profit is slightly diluted by the one-time write-off for Harvey Nichols.
Net profit grew by 23% YoY, 4% below our forecasts and 3% below consensus. Taking the write-off aside implies 48% YoY net profit growth for MAPI.
• Net gearing fell below 50% levels in 2010, down from 72% the previous year. This is in line with the management’s target to have 20% net gearing levels in four years time. Interest expenses showed no improvements YoY since MAPI converted its Yen-denominated debt to Rupiah debt, which has higher interest rates but less prone to currency volatility.
• Inventory days fell to 167 days from 204 days the previous year. This is the contribution from the third party consultant specializing in inventory management and the formation of a special team formed to focus on allocating inventories to stores.
• The growth momentum should continue this year. Majority of MAPI’s expansions are deferred to 4Q10, hence the full contribution of the new stores should be booked this year. First two months 2011 sales showed a promising growth of 19% YoY and 11% SSG. Paired with deleveraging balance sheet, and improving inventory days, we expect MAPI’s net profit to grow by 40% Cagr over the next two years.
• MAPI is currently trading at 14.7x 11CL earnings and 11.1x 12CL earnings. Top BUY in the consumer sector.