Mitra Adiperkasa (MAPI IJ) 4Q20: Net Income Swings To Profit After Heavy Losses In 2Q20 And 3Q20
Mitra Adiperkasa (MAPI IJ) 4Q20: Net Income Swings To Profit After Heavy Losses In 2Q20 And 3Q20 The most important aspect of MAPI’s 4Q20 net income is that it recorded a profit of Rp51.6b compared with a Rp197b loss in 3Q20 and Rp416b loss in 2Q20. Sales rose 38.5% qoq in 4Q20, indicating a recovery after the stores’ reopening.
We expect MAPI to record Rp575.6b in 2021 net income, compared with a Rp554b loss in 2020. With the strong 4Q20 net income, MAPI’s 2020 net income beat expectations. Maintain BUY and target price of Rp1,000 (25% upside).
2020 net loss of Rp553.7b is ahead of both our and consensus forecasts. Mitra Adiperkasa (MAPI) posted a loss of Rp553.7b in 2020 compared with a Rp933.5b profit in 2019. The 2020 net loss was ahead of both our (23.3% ahead) and consensus (7% ahead) forecasts of Rp721.9b and Rp595.6b respectively.
• 4Q20 swings to profit compared with losses in 3Q20 and 2Q20. 4Q20 profit was Rp51.6b compared with Rp290.7b in 4Q19. 4Q20 net income significantly improved qoq compared with a Rp197b loss in 3Q20 and Rp416b loss in 2Q20. Sales in 4Q20 rose by 38.5% qoq. MAPI said that the stores’ reopening translated to sales recovery in 4Q20.
• Comments: 4Q20 positive net income was driven by a 38.5% sales growth. We expect profitability to further expand and reach Rp576b in 2021. At 17.7x 2021F PE, MAPI is trading at below average PE.
Speciality retail: 2020 loss before tax was Rp291.4t compared with a Rp1,210.4b profit in 2019. COVID-19 resulted in the stores’ closures that materially impacted the business. 4Q20 profit before tax was Rp291.4t compared with a Rp370.7b profit in 4Q19. This was a significant improvement compared with a Rp184.4b loss before tax in 3Q20.
• Department store: 2020 loss before tax was Rp198.8b compared with a Rp192.8b profit in 2019. 4Q20 loss before tax was Rp25.2b compared with a Rp76b profit in 4Q19. This was a significant improvement compared with a Rp82.6b loss before tax in 3Q20.
• Food and beverage: 2020 loss before tax was Rp206.3b compared with a Rp227.8b profit in 2019. 4Q20 loss before tax was Rp18.8b compared with a Rp83b profit in 4Q19. This was a significant improvement compared with a Rp39.2b loss before tax in 3Q20.
• Others: 2020 loss before tax came in at Rp27.3b compared with a Rp54.8b loss in 2019. 4Q20 loss before tax came in at Rp108.5b compared with a Rp3.4b loss in 2019. This division made a profit in 9M20, but a huge loss in 4Q20 caused 9M20 profit to swing to a loss for the year. EARNINGS REVISION/RISK
• We raise our 2021/2022 forecasts by 2.7%/6.4% respectively. Our forecasts are 7.4% and 6.5% below the Street’s.
MAPI trades at below average 2021F PE. Maintain BUY and a target price of Rp1,000, based on 22.4x 2018-19F (+0.5SD) average PE applied to 2021F core EPS.
From a loss of Rp554b in 2020, we expect a net income of Rp576b in 2021 and Rp888b profit in 2022. Despite the fact that we raise our core net income forecast for 2021 by 7.4%, our target price is unchanged as the multiple used declined from 22.7x to 22.4x.
As 2020 net income was above our expectations and with 25% upside to our target price, we maintain BUY on MAPI.
COMPANY DESCRIPTION Mitra Adiperkasa operates high-end department stores in Indonesia, as well as specialty stores and F&B outlets. STOCK DATA GICS sector Consumer Discretionary Bloomberg ticker: MAPI IJ Shares issued (m): 16,600.0 Market cap (Rpb): 13,280.0 Market cap (US$m): 916.0 3-mth avg daily t’over (US$m): 1.3
BUY (Maintained) Share Price Rp800 Target Price Rp1,000 Upside +25.0%
– UOB Kay Hian Research