Corporate Result Flash Mitra Adiperkasa - Bahana

1Q11 performance
§ MAPI reported 1Q11 earnings which were solid, but only in line with our and consensus estimates, accounting for 13-14% of full-year projections. Note that 1Q performance tends to be the weakest for a retailer like MAPI.
§ On the back of 10% same-store sales growth (SSG), 1Q11 top line reached nearly IDR1.3t, up 21% y-y although down 4% on seasonality.
§ With top line growth slightly outstripping growth in operating costs and expansion in gross margin, 1Q11 operating and net margins improved compared to 1Q10 level. This paved the way for bottom line growth of 33.7% y-y in 1Q11, compared to our full year estimate of 55.2% y-y growth (exhibit 3).

Outlook
1Q11’s 10% SSG translated to positive real SSG (after taking into account inflation), and we expect this to persist for the rest of this year, helped by MAPI’s more resilient middle-up target market. Going forward, we expect 2011 growth to come from additional 40,000sqm in new floor space (end 2010: 423k sqm) coupled with new brand acquisitions: He Mango, Berskha, Strdivarious, Payless and Linea.

Recommendation and valuation
As we continue to like MAPI’s fundamentals, we raise our target price (TP) from IDR3,200 to IDR3,675, reflecting Price/ Sales of 1.1x. However, as the this leaves just 12% upside potential, we cut our rating from Buy to HOLD, particularly as the stock has outperformed the market by 20% ytd (exhibit 4). On valuation, MAPI currently trades on 2011 PE of 17.4x, at par with its regional peers which are trading on 17.1x PE (exhibit 6), despite MAPI’s relatively smaller market capitalization and less liquid turnover. HOLD.