ADD (no change) IPO should unlock sportswear value ... · We continue to believe that the IPO will help to unlock value. ... a multi-brand sportswear chain ... affordable footwear

Retail│Indonesia│December 12, 2017

Company Note

IMPORTANT DISCLOSURES, INCLUDING ANY REQUIRED RESEARCH CERTIFICATIONS, ARE PROVIDED AT THE END OF THIS REPORT. IF THIS REPORT IS DISTRIBUTED IN THE UNITED STATES IT IS DISTRIBUTED BY CIMB SECURITIES (USA), INC. AND IS CONSIDERED THIRD-PARTY AFFILIATED RESEARCH.

Powered by the EFA Platform

Insert Insert

Mitra Adi Perkasa IPO should unlock sportswear value ■ MAA, arguably MAP’s crown jewel, has been posting strong low-teens SSSG and

stable 8-9% OPM due to its dominance in sportswear and strong brand portfolio. ■ MAA could go public as early as 1H18, which could raise Rp2.6tr-3.1tr (10-12x 2018

EV/EBITDA) and unlock major value for MAP. ■ This could be a share price catalyst in the next 12 months, in addition to the ongoing

restructuring which should drive an earnings CAGR of 37% in FY17-19F. ■ We maintain our Add call, and trim our SOP-based TP to Rp9,500.

Mitra Aktif Adiperkasa: the largest sportswear retailer in Indonesia MAP, through its subsidiary Mitra Aktif Adiperkasa (MAA), is the largest sportswear retailer in Indonesia with exclusive distribution and licensing rights for more than 40 brands, including Nike and Adidas, grabbing c.70% market share nationwide. The business is MAP’s bread and butter, contributing c.37% of MAP’s FY17F revenue and some 45% of EBIT, in our estimate.

Strong demand and better margins should sustain growth Rising health consciousness has helped to drive demand for sportswear. Amidst a weak consumption environment in 2017, MAA chalked up SSSG in the low-teens in 9M17 and should end the year with low-teens SSSG, in our estimate. Coupled with the completed restructuring in which unprofitable stores were closed and inventory problems resolved, we expect stable 8-9% EBIT margin going forward, leading to Rp615bn EBIT in FY18F (c.44% contribution to consolidated EBIT).

MAA could be listed as early as 1H18 With rising confidence in FY18F purchasing power and general elections scheduled in Apr 19, we think the IPO could be conducted in late 1H18/early 2H18F (4 years after the CB was set in Mar 15). Though the Rp1.5tr CB (for 30% stake in MAA) implied some 14x FY15 EV/EBITDA during its issuance, we think the IPO may raise Rp2.6tr-3.1tr, implying 10-12x FY18F EV/EBITDA. We note that FY15 was MAA’s weakest year and it should register a 33% EBITDA CAGR in FY15-18F, in our estimate.

Small earnings dilution, but positive for balance sheet 30% of MAP’s ownership in MAA will be transferred to CVC, and we think the latter will most likely retain a 10-15% stake in MAA. We project Rp69bn and Rp160bn of MAP’s earnings will be moved to minorities in FY18F and FY19F, which should be partially offset by some Rp46bn and Rp92bn deduction in amortisation expenses. All in, we expect net dilution of Rp23bn-69bn in FY18F and FY19F. Following the CB conversion, we expect net gearing to improve to 11/1% in FY18-19F.

A cheap option to MAA listing; maintain Add with Rp9,500 TP We continue to believe that the IPO will help to unlock value. Its strong earnings delivery and continuous earnings improvement are still largely underappreciated by investors. Dilution from the IPO leads us to cut FY18-19 earnings by 2-4%, though we still expect strong core net profit growth of 49%/20% in FY18/19F. We apply a 15% holding discount to MAP, and arrive at a TP of Rp9,500. Maintain Add; risks to our call include increasing competition in the F&B landscape and slower turnaround in department stores.

SOURCE: COMPANY DATA, CIMB FORECASTS

Indonesia

ADD (no change) Consensus ratings*: Buy 19 Hold 0 Sell 1

Current price: Rp6,475

Target price: Rp9,500

Previous target: Rp9,700

Up/downside: 46.7%

CIMB / Consensus: 18.2%

Reuters: MAPI.JK

Bloomberg: MAPI IJ

Market cap: US$793.1m

Rp10,748,500m

Average daily turnover: US$0.93m

Rp12,536m

Current shares o/s: 1,660m

Free float: 44.0% *Source: Bloomberg

Key changes in this note

FY18F EPS decreased by 2.3%.

FY19F EPS decreased by 4.5%.

Source: Bloomberg

Price performance 1M 3M 12M Absolute (%) -1.2 -7.5 25.7

Relative (%) -1.3 -10.1 12.2

Major shareholders % held PT Satya Mulia Gemilang 56.0

Insert

Analyst(s)

Kevie ADITYA

T (62) 21 3006 1738 E [email protected]

Financial Summary Dec-15A Dec-16A Dec-17F Dec-18F Dec-19F

Revenue (Rpb) 12,833 14,150 16,201 18,769 21,712

Operating EBITDA (Rpb) 1,101 1,511 1,817 2,184 2,559

Net Profit (Rpb) 30.1 230.4 373.1 577.8 695.7

Core EPS (Rp) 11.7 146.1 233.8 348.0 419.1

Core EPS Growth (67%) 1150% 60% 49% 20%

FD Core P/E (x) 554.1 44.3 27.7 18.6 15.5

DPS (Rp) 0.00 0.00 24.90 44.95 69.62

Dividend Yield 0.00% 0.00% 0.38% 0.69% 1.08%

EV/EBITDA (x) 12.45 8.81 7.32 6.04 5.08

P/FCFE (x) NA 10.91 NA 53.20 31.48

Net Gearing 106% 86% 45% 7% 1%

P/BV (x) 3.61 3.36 3.04 2.66 2.33

ROE 0.7% 7.9% 11.5% 15.3% 16.1%

% Change In Core EPS Estimates (0.01%) (2.31%) (4.53%)

CIMB/consensus EPS (x) 0.97 1.11 1.05

94.0

107.3

120.7

134.0

4,500

5,500

6,500

7,500

Price Close Relative to JCI (RHS)

5

10

Dec-16 Mar-17 Jun-17 Sep-17

Vo

l m

Retail│Indonesia│Mitra Adi Perkasa│December 12, 2017

2

IPO should unlock sportswear value

THE CROWN JEWEL: MITRA AKTIF ADIPERKASA

Strong revenue growth drives superior earnings

Mitra Aktif Adiperkasa (MAA) comprises MAP’s sports, golf, kids, and lifestyle businesses, with a total of 944 stores nationwide as of 9M17. The business is categorised under MAP’s specialty stores division and we estimate sales from this business to contribute c.34% and c.37% to FY16 and FY17F sales, respectively, or some 50-52% of total specialty stores sales. MAA is MAP’s biggest growth driver this year, with some double-digit SSSG and gross margin improvement as it has cleared excess inventory. We expect the division to see c.40% gross margin and c.9% EBIT margin throughout the next couple of years, and contribute c.45% to MAP’s FY17F EBIT.

Figure 1: Sales contribution to MAP’s FY17F revenue Figure 2: Sales contribution to MAP’s FY17F EBIT

SOURCE: CIMB RESEARCH, COMPANY SOURCE: CIMB RESEARCH, COMPANY

Its most successful format is the Sports Station, a multi-brand sportswear chain with 328 stores nationwide as of 9M17. We expect this business to continue to expand given its versatility in serving a huge market, ranging from the lower-middle class (e.g. through brands like Airwalk and Diadora) to the middle-upper class (e.g. through brands like Nike and Adidas). As a result, it has the flexibility to expand to second- or third-tier cities, or even neighbouring countries (e.g. Vietnam).

Another growth driver for the division is affordable, casual footwear, i.e. Payless ShoeSource, which is rapidly growing at an estimated c.20% SSSG this year and has expanded to second- and third-tier cities within the country. Arguably, we think it has successfully taken some market share away from another affordable footwear retailer, Bata, which also targets the middle class. As of 9M17, Payless Shoes has 67 outlets nationwide, which we expect to continue to grow in the next few years.

Title:

Source:

Please fill in the values above to have them entered in your report

15.4%

36.6%

33.8%

12.9%

1.3%

Department stores Specialty stores - Active Specialty stores - Fashion F&B Others

Title:

Source:


1.5%

44.5%

39.5%

17.0%

-2.5%

Department stores Specialty stores - Active Specialty stores - Fashion F&B Others


3

Figure 3: MAP’s business structure

SOURCE: COMPANY

Since CVC came on board with MAA in Mar 2015, MAA has been rapidly expanding by opening around 100 stores/year, although it is also closing several non-performing stores, resulting in a declining number of total stores from 922 stores at end-FY15 to 893 stores at end-FY16. Nevertheless, we have seen a net addition of 61 stores in 3Q17, resulting in 944 stores at end-9M17 from 883 stores at end-6M17, which we think should continue going into 2018F.

Figure 4: MAP Active’s number of stores

SOURCE: CIMB RESEARCH, COMPANY

With rising health consciousness among Indonesians, particularly the Millennials, sportswear demand in the country has surged significantly within the last few years. With the increasing number of middle-upper class fitness centre chains (Celebrity Fitness, Gold’s Gym, and Fitness First are the three main chains), as well as boutique fitness centres, the demand for sports apparel and footwear has also risen, as they have also become a status symbol. For example, Gold’s Gym’s active members increased by c.40% yoy in mid-2016 to around 70,000 members.

MAA, which has exclusive distribution and licensing rights for more than 40 sports brands, occupies 70% of sportswear market share (sports footwear in

Title:

Source:


664

837

882

922

893

944

500

550

600

650

700

750

800

850

900

950

1,000

2012 2013 2014 2015 2016 9M17


4

particular), according to Global Business Guide (GBG). With growing footprints in second- and third-tier cities in Indonesia and reputable brands, we believe MAA should be able to at least maintain, if not increase, its market share amidst competition from other sporting goods retailers (e.g. the newly opened French sporting goods retailer, Decathlon). We estimate that MAA could record low-teens SSSG in FY17F and expect it to maintain this in the next few years.

Figure 5: Specialty stores’ SSSG improved strongly in the last few quarters, thanks to strong demand from the Active division


In addition to opening new retail stores, MAA has also expanded its presence as a consignee in various department stores, such as Ramayana (RALS.IJ, Add, TP: Rp1,600), even though the two retailers seem to have different target markets. MAA, under the Sports Station banner, mostly supplies past season Reebok products at up to a 70% discount, as well as other more affordable sport brands such as Airwalk and Diadora which are mostly priced below US$50. According to our checks with RALS’s management, these sportswear products by MAA continue to do well and offer growth amid RALS’s lacklustre SSSG due to weakness in the middle-lower class segment’s purchasing power.

With growing demand for sportswear, other retailers like Matahari Department Store (LPPF.IJ, Add, TP: Rp12,300) plan to increase sports-related merchandise in their stores, which opens up possibilities for MAA as the largest sportswear distributor to become a consignee, and further enlarge its market share.

A glance back to the deal with CVC

In Mar 2015, MAP announced the issuance of Rp1.5tr (US$111m) 5-year zero-coupon convertible bonds (CB) to Asia Sportswear Holdings, a unit of CVC, the private equity firm that successfully turned around Matahari Department Store in 2010-2016. In return, MAP granted Montage Company Limited, which is another unit of CVC, an option to purchase a 30% stake in MAA.

We estimate that MAA booked Rp4.2tr sales and Rp361bn EBITDA in FY15, hence the Rp1.5tr transaction implied c.14x FY15 EV/EBITDA at the time.

Expecting MAA IPO in late 1H18 or early 2H18F

We believe late 1H18 or early 2H18F will be the right time for MAA to go public, as we are confident about rising consumption in 2018F, as Presidential elections are expected to be held the following year. Through the IPO, MAP will release a 30% stake in MAA to Montage Company Limited (a unit of CVC). From the 30% stake in MAA that will be transferred from MAP to CVC, the latter will most likely retain a 10-15% stake in MAA and sell the remaining 15-20% stake to the public, in our view.

Following the division’s strong SSSG and rapid expansion, we expect it to book 24% and 17% revenue growth in FY18F and FY19F, respectively. With an EBIT margin of c.8.7% in FY18-19F, assuming the IPO is conducted in early 2H18F,

Title:

Source:


-15.0%

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

Cu

mu

lati

ve S

SSG

Specialty stores Department stores F&B Others MAP - consolidated


5

we pencil in a deduction of Rp69bn and Rp160bn from MAP’s consolidated core net profit in FY18F and FY19F, respectively.

Nevertheless, as the Rp1.5bn bonds are converted into shares of minorities, we expect 1) net gearing to continuously improve to 11% and 1% in FY18F and FY19F, respectively, from 55% in FY17F and 2) interest expenses to fall by Rp112bn in FY18F and Rp60bn in FY19F, from Rp399bn in FY17F, following no more amortisation expenses from MAA’s convertible bonds and repayment of some interest-bearing bonds in FY17F.

All in all, we project some Rp23bn dilution to MAP’s core net profit from MAA’s possible IPO in FY18F (4% dilution from FY18F earnings before IPO assumptions) and Rp69bn dilution in FY19F (9% dilution from FY19F earnings before IPO assumptions).

Figure 6: Mitra Aktif Adiperkasa

SOURCE: CIMB RESEARCH

Figure 7: We think gross debt could fall from Rp3.3tr to Rp2.0tr post-MAA’s IPO expected in early 2H18F

Figure 8: We expect net gearing to improve to 31%/11% in FY18F/19F from 51% in FY17F

SOURCE: CIMB RESEARCH, COMPANY SOURCE: CIMB RESEARCH, COMPANY

2015 2016 2017F 2018F 2019F

Revenue 4,247 4,857 6,025 7,056 8,205

Growth (%) 13.3% 14.4% 24.1% 17.1% 16.3%

EBIT 165 345 495 615 713

Growth (%) -33.8% 109.3% 43.4% 24.2% 15.9%

Net profit 124 259 372 461 535

Assuming IPO early 2H18

MAPI (70%) 392 374

CVC & Public (30%) (69) (160)

Gain from amortization exp. 46 92

Net gain (loss) (23) (69)

Assumptions :

% revenue to specialty stores 52% 52% 52%

% EBIT to specialty stores 53% 55% 55%

Title:

Source:


-

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

2012 2013 2014 2015 2016 2017F 2018F 2019F

Gross debt (Rp bn) Interest bearing debt (Rp bn)

Title:

Source:


0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

120.0%

-

500

1,000

1,500

2,000

2,500

3,000

3,500

2012 2013 2014 2015 2016 2017F 2018F 2019F

Net debt (Rp bn) Net gearing (%)


6

Figure 9: Interest expenses should fall after interest-bearing bond repayments and lower amortised interest expense post-MAA IPO expected in early 2H18F


Coupled with the impact from the IPO of Mitra Boga Adiperkasa (MAPB IJ, Not Rated) in Jun 2017, we estimate a Rp15bn and Rp71bn core net profit dilution in FY18F and FY19F, respectively.

Figure 10: CIMB estimates on possible impact of IPOs


Title:

Source:


-

50

100

150

200

250

300

350

400

450

2014 2015 2016 2017F 2018F 2019F

Interest expenses (Rp bn) Amortised interest expenses on non-interest bearing bond (Rp bn)

2017F 2018F 2019F

Mitra Boga Adiperkasa (MBA)

Net sales 1,968 2,531 3,213

EBIT 175 241 315

Core profit 102 166 221

Loss to minority interests (11) (35) (46)

Gain from amortization exp. 22 43 43

Net gain (loss) 11 9 (3)

Mitra Aktif Adiperkasa (MAA)

Net sales 6,025 7,056 8,205

EBIT 495 615 713

Core profit 372 461 535

Loss to minority interests (69) (160)

Gain from amortization exp. 46 92

Net gain (loss) (23) (69)

MBA + MAA

Loss to minority interests (11) (104) (207)

Gain from amortization exp. 22 89 135

Net gain (loss) 11 (15) (72)

Impact to balance sheet

Gross debt 3,298 2,008 1,937

Interest bearing debt 1,799 1,680 1,600

Net debt 1,944 452 40

Interest expenses 399 288 227


7

Figure 11: Earnings revision


We expect the IPO to raise Rp2.6tr to Rp3.1tr for the 30% stake issued by MAP (with total equity value of Rp8.5tr to Rp10.3tr), which should imply some 10-12x 2018F EV/EBITDA. This is c.14-29% lower than the 14x 2015 EV/EBITDA implied when CVC entered into the CB agreement, but c.70-105% higher than the initial Rp1.5tr investment, bearing in mind that MAA’s EBITDA should rise by a 33% CAGR 2015-18F, in our estimate.

Figure 12: We estimate MAA’s EBITDA to grow by some 33% CAGR in 2015-18F


2017F 2018F 2019F 2017F 2018F 2019F 2017F 2018F 2019F

Key Driver

Net space added, sqm 30,000 50,000 50,000 30,000 50,000 50,000 0.0% 0.0% 0.0%

Total space, sqm 738,526 788,526 838,526 738,526 788,526 838,526 0.0% 0.0% 0.0%

SSSG 3.3% 4.6% 4.0% 3.3% 4.6% 4.0%

_ Specialty stores 8.0% 8.0% 6.0% 8.0% 8.0% 6.0%

_ F&B 0.0% 2.0% 4.0% 0.0% 2.0% 4.0%

_ Department stores 0.0% 2.0% 2.0% 0.0% 2.0% 2.0%

_ Others -5.0% -5.0% -5.0% -5.0% -5.0% -5.0%

Financial Performance

Net sales, Rp bn 16,201 18,769 21,712 16,201 18,769 21,712 0.0% 0.0% 0.0%

Gross profit, Rp bn 7,950 9,211 10,655 7,950 9,211 10,655 0.0% 0.0% 0.0%

EBIT, Rp bn 1,113 1,407 1,705 1,113 1,407 1,705 0.0% 0.0% 0.0%

EBITDA, Rp bn 1,817 2,184 2,559 1,817 2,184 2,559 0.0% 0.0% 0.0%

Net profit, Rp bn 365 591 729 373 578 696 2.3% -2.3% -4.5%

Core net profit, Rp bn 388 591 729 388 578 696 0.0% -2.3% -4.5%

Core EPS, Rp 234 356 439 234 348 419 0.0% -2.3% -4.5%

Profitability

Gross margin 49.1% 49.1% 49.1% 49.1% 49.1% 49.1%

EBIT margin 6.9% 7.5% 7.9% 6.9% 7.5% 7.9%

EBITDA margin 11.2% 11.6% 11.8% 11.2% 11.6% 11.8%

Net profit margin 2.3% 3.2% 3.4% 2.3% 3.1% 3.2%

Core net profit margin 2.4% 3.2% 3.4% 2.4% 3.1% 3.2%

Growth

Space growth, yoy 4.2% 6.8% 6.3% 4.2% 6.8% 6.3%

Net sales growth, yoy 14.5% 15.9% 15.7% 14.5% 15.9% 15.7%

EBITDA growth, yoy 20.2% 20.2% 17.2% 20.2% 20.2% 17.2%

Net profit growth, yoy 58.3% 62.2% 23.2% 62.0% 54.8% 20.4%

Core net profit growth, yoy 60.1% 52.4% 23.2% 60.1% 48.8% 20.4%

Previous Current Changes

Title:

Source:


0%

10%

20%

30%

40%

50%

60%

-

200

400

600

800

1,000

1,200

2015 2016 2017F 2018F 2019F


8

Figure 13: Using DCF method, we estimate MAA to be valued at Rp9.2tr


Figure 14: Sector comparisons


VALUATION AND RECOMMENDATION

Maintain Add with Rp9,500 target price

We continue to like MAP as we feel that its strong earnings delivery is still largely underappreciated by investors. We expect MAP to book: 1) revenue growth of c.16% p.a. in FY18-19F, 2) EBIT margin improvement of 60/40bp in FY18/19F and 3) further moderation in interest expenses, following bond repayments and conversion of CBs post IPOs.

Nevertheless, as we now expect MAP Active to go public in late 1H18 or early 2H18 (instead of end-FY18F previously), we expect a Rp23bn and Rp69bn core net profit dilution in FY18F and FY19F from the transaction, respectively, leading us to cut earnings by 2-4% in FY18F-19F. All in all, we still project strong core net profit growth of 49% in FY18F and 20% in FY19F.

0 1 2 3 4 5 6 7 8 9 10

2018F 2019F 2020F 2021F 2022F 2023F 2024F 2025F 2026F 2027F 2028F

Net profit 461 535 623 716 812 912 1,015 1,120 1,227 1,335 1,443

(+) Depreciation 239 263 288 314 341 370 400 432 465 500 537

(-) Capex (254) (266) (280) (294) (308) (324) (340) (357) (375) (393) (413)

FCF 447 531 632 736 845 958 1,075 1,195 1,318 1,442 1,567

Discount factor 1.0 1.2 1.3 1.5 1.8 2.0 2.3 2.7 3.1 3.6 4.2

NPV 447 461 475 480 478 470 458 441 422 400 377

Terminal growth 3.0%

WACC 15.3%

Adj. Beta 1.0

Risk-free rate 6.90%

Market risk-premium 8.40%

Terminal value 13,120

NPV of TV 3,160

Total company value 8,069

(+) Cash 1,089

(-) Debt -

Equity value 9,158

Name Ticker Recom. Price

(local curr)

Tgt px (local

curr)

Mkt Cap

(US$ m)

3-year EPS

CAGR

2017F 2018F 2017F 2018F 2017F 2018F

Indonesia

Ace Hardware Indonesia ACES IJ Add 1,240IDR 1,500IDR 1,569.2 27.4 24.1 20.6 18.1 14.1% 23.5% 22.8%

Matahari Department Store LPPF IJ Add 9,850IDR 12,300IDR 2,120.8 14.5 13.0 9.7 8.6 5.0% 92.9% 77.9%

Mitra Adi Perkasa MAPI IJ Add 6,475IDR 9,500IDR 793.1 27.7 18.6 7.3 6.0 43.3% 11.5% 15.3%

Ramayana Lestari RALS IJ Add 1,025IDR 1,600IDR 536.7 18.3 14.3 9.3 7.2 11.1% 11.7% 14.2%

Simple average 22.0 17.5 11.7 10.0 18.4% 34.9% 32.5%

Malaysia

Bonia BON MK Add 0.52MYR 0.78MYR 102.8 12.4 11.9 4.9 4.2 N/A 7.8% 7.6%

Hong Kong

Anta Sports Products Ltd 2020 HK* Not rated 33.05HKD N/A 11,365.7 24.3 20.5 15.4 12.7 N/A 26.7% 26.8%

Li Ning Co Ltd 2331 HK* Not rated 6.30HKD N/A 1,758.1 24.3 16.5 10.1 7.4 N/A 11.7% 14.8%

China Dongxiang Group Co 3818 HK* Not rated 1.44HKD N/A 1,046.8 7.4 8.4 7.0 7.0 N/A 10.0% 8.6%

Giordano International Ltd 709 HK* Not rated 4.09HKD N/A 822.9 13.0 11.9 6.8 6.4 N/A 18.7% 20.0%

Simple average 17.3 14.3 9.8 8.4 N/A 16.8% 17.6%

Phillipines

SSI Group Inc SSI PM* Not rated 3.08PHP N/A 202.8 17.5 15.7 6.0 5.7 N/A 5.3% 5.8%

Simple average (all) 18.7 15.5 9.7 8.3 18.4% 22.0% 21.4%

*) Bloomberg consensus data

P/E (x) EV/EBITDA (x) ROE


9

Given MAA’s upcoming IPO, we now apply a 15% holding discount to MAP (vs. A 20% holding discount for INDF, which is its historical 2-year average), and reach a slightly lower target price of Rp9,500, amid our expectation of lower gross debt following the conversion of CB during MAA’s IPO. Our target price implies 22.7x FY19F P/E, which is at a 13% discount to our Ace Hardware Indonesia (ACES IJ, Add, TP: Rp1,500) target multiple of 26.2x but at an 18% premium over our target 19.3x for Ramayana Lestari (RALS IJ, Add, TP: Rp1,600) and 50% premium over our target 15.1x for Matahari Department Store (LPPF IJ, Add, TP Rp12,300).

Figure 15: SOP valuation


With MAP currently valued at 6.0x 2018F EV/EBITDA, which is at c.40-50% discount to our estimated valuation for MAA at 10-12x 2018 EV/EBITDA, we believe this is a great opportunity to have a piece of MAA through MAP. Nevertheless, MAP’s other business units, such as its fashion specialty stores and F&B units, should offer a lot of SSSG upside potential going into 2018F with a broadly stable margin. The two divisions saw lacklustre SSSG this year due to weaker overall purchasing power, but we believe it should recover in FY18F as purchasing power strengthens, especially given its portfolio of reputable brands which include Inditex brands (eg. Zara, Pull & Bear, Stradivarius, Bershka, etc.) and Starbucks.

Its only struggling division is department stores, which is currently undergoing a restucturing: 1) dropping two unprofitable department store brands, Lotus and Debenhams, 2) organisational improvement to increase employee productivity, as well as 3) a better merchandise mix. We believe these restructuring efforts should bear fruit going into FY18F and FY19F, with operating margin of 2.5% in FY18F and 3.9% in FY19F (from 0.7% in FY17F), in our estimate.

Figure 16: MAP is currently trading at 18.9x P/E

SOURCE: BLOOMBERG, CIMB RESEARCH

Division Valuation Valuation Basis Note

Specialty Business - Active (Rp bn) 6,145 9.9x FY19F EV/EBITDA 70% owned

Specialty Business - Fashion (Rp bn) 6,740 7.6x FY19F EV/EBITDA 100% owned

F&B Business (Rp bn) 4,444 12.4x FY19F EV/EBITDA 70% owned

Department Stores (Rp bn) 1,924 6.4x FY19F EV/EBITDA 100% owned

Others (Rp bn) (205) 7.6x FY19F EV/EBITDA 100% owned

TOTAL (Rp bn) 19,048

Cash (Rp bn) 1,167 75% of total cash

Debt (Rp bn) 1,680

EV (Rp bn) 18,534

Target Price (Rp) 11,165

Target Price - after 15% holding disc (Rp) 9,491

Target Price - Rounded (Rp) 9,500

Title:

Source:


10x

15x

20x

25x

30x

35x

Jan-1

1

Apr-

11

Jul-11

Oct-11

Jan-1

2

Apr-

12

Jul-12

Oct-12

Jan-1

3

Apr-

13

Jul-13

Oct-13

Jan-1

4

Apr-

14

Jul-14

Oct-14

Jan-1

5

Apr-

15

Jul-15

Oct-15

Jan-1

6

Apr-

16

Jul-16

Oct-16

Jan-1

7

Apr-

17

Jul-17

Oct-17

MAPI P/E Mean +1 s.d. -1 s.d.


10

Figure 15: MAP is trading at 6.4x 12M forward EV/EBITDA, a much cheaper alternative to MAA that we expect to be valued at 10-12x EV/EBITDA


Title:

Source:


3.0

4.0

5.0

6.0

7.0

8.0

9.0

10.0

11.0

12.0

Dec-

14

Jan-1

5

Feb

-15

Mar-

15

Apr-

15

May-

15

Jun-1

5

Jul-15

Aug-1

5

Sep-1

5

Oct-15

Nov-

15

Dec-

15

Jan-1

6

Feb

-16

Mar-

16

Apr-

16

May-

16

Jun-1

6

Jul-16

Aug-1

6

Sep-1

6

Oct-16

Nov-

16

Dec-

16

Jan-1

7

Feb

-17

Mar-

17

Apr-

17

May-

17

Jun-1

7

Jul-17

Aug-1

7

Sep-1

7

Oct-17

Nov-

17

MAP - EV/EBITDA 3-year mean +1 s.d. +2 s.d. -1 s.d. -2 s.d.


11

BY THE NUMBERS

SOURCE: CIMB RESEARCH, COMPANY DATA

0.0%

4.2%

8.3%

12.5%

16.7%

20.8%

25.0%

1.2

2.2

3.2

4.2

5.2

6.2

7.2

Jan-13A Jan-14A Jan-15A Jan-16A Jan-17F Jan-18F

P/BV vs ROE

Rolling P/BV (x) (lhs) ROE (rhs)

-210%-50%110%270%430%590%750%910%1,070%1,230%1,390%

050

100150200250300350400450500

Jan-13A Jan-14A Jan-15A Jan-16A Jan-17F Jan-18F

12-mth Fwd FD Core P/E vs FD Core EPS Growth

12-mth Fwd Rolling FD Core P/E (x) (lhs)

FD Core EPS Growth (rhs)

Profit & Loss

(Rpb) Dec-15A Dec-16A Dec-17F Dec-18F Dec-19F

Total Net Revenues 12,833 14,150 16,201 18,769 21,712

Gross Profit 5,783 6,873 7,950 9,211 10,655

Operating EBITDA 1,101 1,511 1,817 2,184 2,559

Depreciation And Amortisation -579 -623 -704 -777 -854

Operating EBIT 523 888 1,113 1,407 1,705

Financial Income/(Expense) -388 -411 -368 -259 -193

Pretax Income/(Loss) from Assoc. 0 0 0 0 0

Non-Operating Income/(Expense) 34 -53 -58 -31 -31

Profit Before Tax (pre-EI) 169 423 686 1,117 1,481

Exceptional Items

Pre-tax Profit 169 423 686 1,117 1,481

Taxation -138 -193 -303 -470 -579

Exceptional Income - post-tax

Profit After Tax 30 230 384 647 902

Minority Interests 0 0 -11 -69 -207

Preferred Dividends

FX Gain/(Loss) - post tax

Other Adjustments - post-tax

Net Profit 30 230 373 578 696

Recurring Net Profit 19 243 388 578 696

Fully Diluted Recurring Net Profit 19 243 388 578 696

Cash Flow


EBITDA 1,101 1,511 1,817 2,184 2,559

Cash Flow from Invt. & Assoc.

Change In Working Capital -514 253 -236 -447 -512

(Incr)/Decr in Total Provisions

Other Non-Cash (Income)/Expense

Other Operating Cashflow -148 -185 -99 -106 -147

Net Interest (Paid)/Received -388 -411 -368 -259 -193

Tax Paid -138 -193 -303 -470 -579

Cashflow From Operations -87 975 810 903 1,129

Capex -315 -689 -800 -725 -761

Disposals Of FAs/subsidiaries

Acq. Of Subsidiaries/investments

Other Investing Cashflow -241 -144 255 42 44

Cash Flow From Investing -556 -833 -545 -683 -717

Debt Raised/(repaid) 284 843 -437 -18 -71

Proceeds From Issue Of Shares

Shares Repurchased

Dividends Paid 0 0 -41 -75 -116

Preferred Dividends

Other Financing Cashflow 390 20 41 75 116

Cash Flow From Financing 674 863 -437 -18 -71

Total Cash Generated 31 1,005 -172 202 341

Free Cashflow To Equity -359 985 -172 202 341

Free Cashflow To Firm -243 563 664 508 640


12

BY THE NUMBERS… cont’d

SOURCE: CIMB RESEARCH, COMPANY DATA

Balance Sheet


Total Cash And Equivalents 507 1,741 1,353 1,555 1,897

Total Debtors 568 578 750 869 1,005

Inventories 3,356 3,007 3,391 3,928 4,544

Total Other Current Assets 1,264 1,290 1,477 1,712 1,980

Total Current Assets 5,696 6,616 6,971 8,064 9,426

Fixed Assets 2,438 2,637 2,733 2,680 2,587

Total Investments 187 193 162 131 100

Intangible Assets 38 0 0 0 0

Total Other Non-Current Assets 1,124 1,237 1,237 1,237 1,237

Total Non-current Assets 3,787 4,067 4,132 4,048 3,924

Short-term Debt 790 753 700 700 700

Current Portion of Long-Term Debt 147 1,136 119 0 0

Total Creditors 1,766 1,638 2,057 2,383 2,757

Other Current Liabilities 587 655 742 860 995

Total Current Liabilities 3,291 4,181 3,618 3,943 4,451

Total Long-term Debt 2,719 2,609 2,479 1,308 1,237

Hybrid Debt - Debt Component

Total Other Non-Current Liabilities 461 656 656 656 656

Total Non-current Liabilities 3,180 3,265 3,135 1,964 1,893

Total Provisions 38 34 42 53 66

Total Liabilities 6,508 7,480 6,795 5,960 6,410

Shareholders' Equity 2,975 3,203 3,535 4,038 4,619

Minority Interests 0 0 773 2,114 2,321

Total Equity 2,975 3,204 4,308 6,153 6,940

Key Ratios

Dec-15A Dec-16A Dec-17F Dec-18F Dec-19F

Revenue Growth 8.5% 10.3% 14.5% 15.9% 15.7%

Operating EBITDA Growth 2.7% 37.2% 20.2% 20.2% 17.2%

Operating EBITDA Margin 8.6% 10.7% 11.2% 11.6% 11.8%

Net Cash Per Share (Rp) -1,897 -1,661 -1,171 -272 -24

BVPS (Rp) 1,792 1,930 2,128 2,433 2,782

Gross Interest Cover 1.31 2.11 2.79 4.89 7.50

Effective Tax Rate 82.1% 45.6% 44.1% 42.1% 39.1%

Net Dividend Payout Ratio NA NA 11.1% 12.9% 16.6%

Accounts Receivables Days 9.86 9.18 9.57 9.95 9.96

Inventory Days 169.8 160.0 141.5 139.7 139.8

Accounts Payables Days 59.78 55.57 53.82 56.82 56.86

ROIC (%) 9.1% 13.8% 17.2% 20.7% 23.7%

ROCE (%) 8.0% 12.0% 14.5% 17.7% 19.9%

Return On Average Assets 4.60% 6.36% 6.90% 7.80% 8.60%

Key Drivers

Dec-15A Dec-16A Dec-17F Dec-18F Dec-19F

ASP (% chg, main prod./serv.) N/A N/A N/A N/A N/A

Unit sales grth (%, main prod./serv.) N/A N/A N/A N/A N/A

No. of POS (main prod/serv) 1,938 1,921 2,121 2,321 2,521

SSS grth (%, main prod/serv) 4.0% 3.0% 3.3% 4.6% 4.0%

ASP (% chg, 2ndary prod./serv.) N/A N/A N/A N/A N/A

Unit sales grth (%,2ndary prod/serv) N/A N/A N/A N/A N/A

No. of POS (2ndary prod/serv) N/A N/A N/A N/A N/A

SSS grth (%, 2ndary prrod/serv) N/A N/A N/A N/A N/A


13

DISCLAIMER #01

The content of this report (including the views and opinions expressed therein, and the information comprised therein) has been prepared by and belongs to CIMB and is distributed by CIMB.

This report is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation.

By accepting this report, the recipient hereof represents and warrants that he is entitled to receive such report in accordance with the restrictions set forth below and agrees to be bound by the limitations contained herein (including the “Restrictions on Distributions” set out below). Any failure to comply with these limitations may constitute a violation of law. This publication is being supplied to you strictly on the basis that it will remain confidential. No part of this report may be (i) copied, photocopied, duplicated, stored or reproduced in any form by any means or (ii) redistributed or passed on, directly or indirectly, to any other person in whole or in part, for any purpose without the prior written consent of CIMB.

The information contained in this research report is prepared from data believed to be correct and reliable at the time of issue of this report. CIMB may or may not issue regular reports on the subject matter of this report at any frequency and may cease to do so or change the periodicity of reports at any time. CIMB is under no obligation to update this report in the event of a material change to the information contained in this report. CIMB has no, and will not accept any, obligation to (i) check or ensure that the contents of this report remain current, reliable or relevant, (ii) ensure that the content of this report constitutes all the information a prospective investor may require, (iii) ensure the adequacy, accuracy, completeness, reliability or fairness of any views, opinions and information, and accordingly, CIMB, or any of their respective affiliates, or its related persons (and their respective directors, associates, connected persons and/or employees) shall not be liable in any manner whatsoever for any consequences (including but not limited to any direct, indirect or consequential losses, loss of profits and damages) of any reliance thereon or usage thereof. In particular, CIMB disclaims all responsibility and liability for the views and opinions set out in this report.

Unless otherwise specified, this report is based upon sources which CIMB considers to be reasonable. Such sources will, unless otherwise specified, for market data, be market data and prices available from the main stock exchange or market where the relevant security is listed, or, where appropriate, any other market. Information on the accounts and business of company(ies) will generally be based on published statements of the company(ies), information disseminated by regulatory information services, other publicly available information and information resulting from our research.

Whilst every effort is made to ensure that statements of facts made in this report are accurate, all estimates, projections, forecasts, expressions of opinion and other subjective judgments contained in this report are based on assumptions considered to be reasonable as of the date of the document in which they are contained and must not be construed as a representation that the matters referred to therein will occur. Past performance is not a reliable indicator of future performance. The value of investments may go down as well as up and those investing may, depending on the investments in question, lose more than the initial investment. No report shall constitute an offer or an invitation by or on behalf of CIMB or its affiliates to any person to buy or sell any investments.

CIMB, its affiliates and related companies, their directors, associates, connected parties and/or employees may own or have positions in securities of the company(ies) covered in this research report or any securities related thereto and may from time to time add to or dispose of, or may be materially interested in, any such securities. Further, CIMB, its affiliates and its related companies do and seek to do business with the company(ies) covered in this research report and may from time to time act as market maker or have assumed an underwriting commitment in securities of such company(ies), may sell them to or buy them from customers on a principal basis and may also perform or seek to perform significant investment banking, advisory, underwriting or placement services for or relating to such company(ies) as well as solicit such investment, advisory or other services from any entity mentioned in this report.

CIMB or its affiliates may enter into an agreement with the company(ies) covered in this report relating to the production of research reports. CIMB may disclose the contents of this report to the company(ies) covered by it and may have amended the contents of this report following such disclosure.

The analyst responsible for the production of this report hereby certifies that the views expressed herein accurately and exclusively reflect his or her personal views and opinions about any and all of the issuers or securities analysed in this report and were prepared independently and autonomously. No part of the compensation of the analyst(s) was, is, or will be directly or indirectly related to the inclusion of specific recommendations(s) or view(s) in this report. CIMB prohibits the analyst(s) who prepared this research report from receiving any compensation, incentive or bonus based on specific investment banking transactions or for providing a specific recommendation for, or view of, a particular company. Information barriers and other arrangements may be established where necessary to prevent conflicts of interests arising. However, the analyst(s) may receive compensation that is based on his/their coverage of company(ies) in the performance of his/their duties or the performance of his/their recommendations and the research personnel involved in the preparation of this report may also participate in the solicitation of the businesses as described above. In reviewing this research report, an investor should be aware that any or all of the foregoing, among other things, may give rise to real or potential conflicts of interest. Additional information is, subject to the duties of confidentiality, available on request.

Reports relating to a specific geographical area are produced by the corresponding CIMB entity as listed in the table below. The term “CIMB” shall denote, where appropriate, the relevant entity distributing or disseminating the report in the particular jurisdiction referenced below, or, in every other case, CIMB Group Holdings Berhad ("CIMBGH") and its affiliates, subsidiaries and related companies.

Country CIMB Entity Regulated by

Hong Kong CIMB Securities Limited Securities and Futures Commission Hong Kong

India CIMB Securities (India) Private Limited Securities and Exchange Board of India (SEBI)

Indonesia PT CIMB Sekuritas Indonesia Financial Services Authority of Indonesia

Malaysia CIMB Investment Bank Berhad Securities Commission Malaysia

Singapore CIMB Research Pte. Ltd. Monetary Authority of Singapore

South Korea CIMB Securities Limited, Korea Branch Financial Services Commission and Financial Supervisory Service

Thailand CIMB Securities (Thailand) Co. Ltd. Securities and Exchange Commission Thailand

(i) As of December 11, 2017 CIMB has a proprietary position in the securities (which may include but not limited to shares, warrants, call warrants and/or any other derivatives) in the following company or companies covered or recommended in this report:


14

(a) -

(ii) As of December 12, 2017, the analyst(s) who prepared this report, and the associate(s), has / have an interest in the securities (which may include but not limited to shares, warrants, call warrants and/or any other derivatives) in the following company or companies covered or recommended in this report:

(a) -

This report does not purport to contain all the information that a prospective investor may require. CIMB or any of its aff iliates does not make any guarantee, representation or warranty, express or implied, as to the adequacy, accuracy, completeness, reliability or fairness of any such information and opinion contained in this report. Neither CIMB nor any of its affiliates nor its related persons shall be liable in any manner whatsoever for any consequences (including but not limited to any direct, indirect or consequential losses, loss of profits and damages) of any reliance thereon or usage thereof.

This report is general in nature and has been prepared for information purposes only. It is intended for circulation amongst CIMB and its affiliates’ clients generally and does not have regard to the specific investment objectives, financial situation and the particular needs of any specific person who may receive this report. The information and opinions in this report are not and should not be construed or considered as an offer, recommendation or solicitation to buy or sell the subject securities, related investments or other financial instruments or any derivative instrument, or any rights pertaining thereto.

Investors are advised to make their own independent evaluation of the information contained in this research report, consider their own individual investment objectives, financial situation and particular needs and consult their own professional and financial advisers as to the legal, business, financial, tax and other aspects before participating in any transaction in respect of the securities of company(ies) covered in this research report.

The securities of such company(ies) may not be eligible for sale in all jurisdictions or to all categories of investors.

Australia: Despite anything in this report to the contrary, this research is provided in Australia by CIMB Securities (Singapore) Pte. Ltd. and CIMB Securities Limited. This research is only available in Australia to persons who are “wholesale clients” (within the meaning of the Corporations Act 2001 (Cth) and is supplied solely for the use of such wholesale clients and shall not be distributed or passed on to any other person. You represent and warrant that if you are in Australia, you are a “wholesale client”. This research is of a general nature only and has been prepared without taking into account the objectives, financial situation or needs of the individual recipient. CIMB Securities (Singapore) Pte. Ltd. and CIMB Securities Limited do not hold, and are not required to hold an Australian financial services licence. CIMB Securities (Singapore) Pte. Ltd. and CIMB Securities Limited rely on “passporting” exemptions for entities appropriately licensed by the Monetary Authority of Singapore (under ASIC Class Order 03/1102) and the Securities and Futures Commission in Hong Kong (under ASIC Class Order 03/1103).

Canada: This research report has not been prepared in accordance with the disclosure requirements of Dealer Member Rule 3400 – Research Restrictions and Disclosure Requirements of the Investment Industry Regulatory Organization of Canada. For any research report distributed by CIBC, further disclosures related to CIBC conflicts of interest can be found at https://researchcentral.cibcwm.com .

China: For the purpose of this report, the People’s Republic of China (“PRC”) does not include the Hong Kong Special Administrative Region, the Macau Special Administrative Region or Taiwan. The distributor of this report has not been approved or licensed by the China Securities Regulatory Commission or any other relevant regulatory authority or governmental agency in the PRC. This report contains only marketing information. The distribution of this report is not an offer to buy or sell to any person within or outside PRC or a solicitation to any person within or outside of PRC to buy or sell any instruments described herein. This report is being issued outside the PRC to a limited number of institutional investors and may not be provided to any person other than the original recipient and may not be reproduced or used for any other purpose.

France: Only qualified investors within the meaning of French law shall have access to this report. This report shall not be considered as an offer to subscribe to, or used in connection with, any offer for subscription or sale or marketing or direct or indirect distribution of financial instruments and it is not intended as a solicitation for the purchase of any financial instrument.

Germany: This report is only directed at persons who are professional investors as defined in sec 31a(2) of the German Securities Trading Act (WpHG). This publication constitutes research of a non-binding nature on the market situation and the investment instruments cited here at the time of the publication of the information.

The current prices/yields in this issue are based upon closing prices from Bloomberg as of the day preceding publication. Please note that neither the German Federal Financial Supervisory Agency (BaFin), nor any other supervisory authority exercises any control over the content of this report.

Hong Kong: This report is issued and distributed in Hong Kong by CIMB Securities Limited (“CHK”) which is licensed in Hong Kong by the Securities and Futures Commission for Type 1 (dealing in securities), Type 4 (advising on securities) and Type 6 (advising on corporate finance) activities. Any investors wishing to purchase or otherwise deal in the securities covered in this report should contact the Head of Sales at CIMB Securities Limited. The views and opinions in this research report are our own as of the date hereof and are subject to change. If the Financial Services and Markets Act of the United Kingdom or the rules of the Financial Conduct Authority apply to a recipient, our obligations owed to such recipient therein are unaffected. CHK has no obligation to update its opinion or the information in this research report.

This publication is strictly confidential and is for private circulation only to clients of CHK.

CIMB Securities Limited does not make a market on other securities mentioned in the report.

India: This report is issued and distributed in India by CIMB Securities (India) Private Limited (“CIMB India”) which is registered with the National Stock Exchange of India Limited and BSE Limited as a trading and clearing member under the Securities and Exchange Board of India (Stock Brokers and Sub-Brokers) Regulations, 1992. In accordance with the provisions of Regulation 4(g) of the Securities and Exchange Board of India (Investment Advisers) Regulations, 2013, CIMB India is not required to seek registration with the Securities and Exchange Board of India (“SEBI”) as an Investment Adviser. CIMB India is registered with SEBI as a Research Analyst pursuant to the SEBI (Research Analysts) Regulations, 2014 ("Regulations").

This report does not take into account the particular investment objectives, financial situations, or needs of the recipients. It is not intended for and does not deal with prohibitions on investment due to law/jurisdiction issues etc. which may exist for certain persons/entities. Recipients should rely on their own investigations and take their own professional advice before investment.

The report is not a “prospectus” as defined under Indian Law, including the Companies Act, 2013, and is not, and shall not be, approved by, or filed


15

or registered with, any Indian regulator, including any Registrar of Companies in India, SEBI, any Indian stock exchange, or the Reserve Bank of India. No offer, or invitation to offer, or solicitation of subscription with respect to any such securities listed or proposed to be listed in India is being made, or intended to be made, to the public, or to any member or section of the public in India, through or pursuant to this report.

The research analysts, strategists or economists principally responsible for the preparation of this research report are segregated from the other activities of CIMB India and they have received compensation based upon various factors, including quality, accuracy and value of research, firm profitability or revenues, client feedback and competitive factors. Research analysts', strategists' or economists' compensation is not linked to investment banking or capital markets transactions performed or proposed to be performed by CIMB India or its affiliates.

CIMB Securities (India) Pte Ltd has not received any investment banking related compensation from the companies mentioned in the report in the past 12 months.

CIMB Securities (India) Pte Ltd has not received any compensation from the companies mentioned in the report in the past 12 months.

Indonesia: This report is issued and distributed by PT CIMB Securities Indonesia (“CIMBI”). The views and opinions in this research report are our own as of the date hereof and are subject to change. If the Financial Services and Markets Act of the United Kingdom or the rules of the Financial Conduct Authority apply to a recipient, our obligations owed to such recipient therein are unaffected. CIMBI has no obligation to update its opinion or the information in this research report. Neither this report nor any copy hereof may be distributed in Indonesia or to any Indonesian citizens wherever they are domiciled or to Indonesian residents except in compliance with applicable Indonesian capital market laws and regulations.

This research report is not an offer of securities in Indonesia. The securities referred to in this research report have not been registered with the Financial Services Authority (Otoritas Jasa Keuangan) pursuant to relevant capital market laws and regulations, and may not be offered or sold within the territory of the Republic of Indonesia or to Indonesian citizens through a public offering or in circumstances which constitute an offer within the meaning of the Indonesian capital market law and regulations.

Ireland: CIMB is not an investment firm authorised in the Republic of Ireland and no part of this document should be construed as CIMB acting as, or otherwise claiming or representing to be, an investment firm authorised in the Republic of Ireland.

Malaysia: This report is issued and distributed by CIMB Investment Bank Berhad (“CIMB”) solely for the benefit of and for the exclusive use of our clients. If the Financial Services and Markets Act of the United Kingdom or the rules of the Financial Conduct Authority apply to a recipient, our obligations owed to such recipient therein are unaffected. CIMB has no obligation to update, revise or reaffirm its opinion or the information in this research reports after the date of this report.

New Zealand: In New Zealand, this report is for distribution only to persons who are wholesale clients pursuant to section 5C of the Financial Advisers Act 2008.

Singapore: This report is issued and distributed by CIMB Research Pte Ltd (“CIMBR”). CIMBR is a financial adviser licensed under the Financial Advisers Act, Cap 110 (“FAA”) for advising on investment products, by issuing or promulgating research analyses or research reports, whether in electronic, print or other form. Accordingly CIMBR is a subject to the applicable rules under the FAA unless it is able to avail itself to any prescribed exemptions.

Recipients of this report are to contact CIMB Research Pte Ltd, 50 Raffles Place, #19-00 Singapore Land Tower, Singapore in respect of any matters arising from, or in connection with this report. CIMBR has no obligation to update its opinion or the information in this research report. This publication is strictly confidential and is for private circulation only. If you have not been sent this report by CIMBR directly, you may not rely, use or disclose to anyone else this report or its contents.

If the recipient of this research report is not an accredited investor, expert investor or institutional investor, CIMBR accepts legal responsibility for the contents of the report without any disclaimer limiting or otherwise curtailing such legal responsibility. If the recipient is an accredited investor, expert investor or institutional investor, the recipient is deemed to acknowledge that CIMBR is exempt from certain requirements under the FAA and its attendant regulations, and as such, is exempt from complying with the following : (a) Section 25 of the FAA (obligation to disclose product information); (b) Section 27 (duty not to make recommendation with respect to any investment product without having a reasonable basis where you may be reasonably expected to rely on the recommendation) of the FAA; (c) MAS Notice on Information to Clients and Product Information Disclosure [Notice No. FAA-N03]; (d) MAS Notice on Recommendation on Investment Products [Notice No. FAA-N16]; (e) Section 36 (obligation on disclosure of interest in securities), and (f) any other laws, regulations, notices, directive, guidelines, circulars and practice notes which are relates to the above, to the extent permitted by applicable laws, as may be amended from time to time, and any other laws, regulations, notices, directive, guidelines, circulars, and practice notes as we may notify you from time to time. In addition, the recipient who is an accredited investor, expert investor or institutional investor acknowledges that a CIMBR is exempt from Section 27 of the FAA, the recipient will also not be able to file a civil claim against CIMBR for any loss or damage arising from the recipient’s reliance on any recommendation made by CIMBR which would otherwise be a right that is available to the recipient under Section 27 of the FAA, the recipient will also not be able to file a civil claim against CIMBR for any loss or damage arising from the recipient’s reliance on any recommendation made by CIMBR which would otherwise be a right that is available to the recipient under Section 27 of the FAA.

CIMB Research Pte Ltd ("CIMBR"), its affiliates and related companies, their directors, associates, connected parties and/or employees may own or have positions in securities of the company(ies) covered in this research report or any securities related thereto and may from time to time add to or dispose of, or may be materially interested in, any such securities. Further, CIMBR, its affiliates and its related companies do and seek to do business with the company(ies) covered in this research report and may from time to time act as market maker or have assumed an underwriting commitment in securities of such company(ies), may sell them to or buy them from customers on a principal basis and may also perform or seek to perform significant investment banking, advisory, underwriting or placement services for or relating to such company(ies) as well as solicit such investment, advisory or other services from any entity mentioned in this report.

As of December 11, 2017, CIMBR does not have a proprietary position in the recommended securities in this report.

CIMB Research Pte Ltd does not make a market on the securities mentioned in the report.

CIMB Securities Singapore Pte Ltd does not make a market on the securities mentioned in the report.

CIMB Bank Berhad, Singapore branch does not make a market on the securities mentioned in the report.


16

South Korea: This report is issued and distributed in South Korea by CIMB Securities Limited, Korea Branch (“CIMB Korea”) which is licensed as a cash equity broker, and regulated by the Financial Services Commission and Financial Supervisory Service of Korea. In South Korea, this report is for distribution only to professional investors under Article 9(5) of the Financial Investment Services and Capital Market Act of Korea (“FSCMA”).

Spain: This document is a research report and it is addressed to institutional investors only. The research report is of a general nature and not personalised and does not constitute investment advice so, as the case may be, the recipient must seek proper advice before adopting any investment decision. This document does not constitute a public offering of securities.

CIMB is not registered with the Spanish Comision Nacional del Mercado de Valores to provide investment services.

Sweden: This report contains only marketing information and has not been approved by the Swedish Financial Supervisory Authority. The distribution of this report is not an offer to sell to any person in Sweden or a solicitation to any person in Sweden to buy any instruments described herein and may not be forwarded to the public in Sweden.

Switzerland: This report has not been prepared in accordance with the recognized self-regulatory minimal standards for research reports of banks issued by the Swiss Bankers’ Association (Directives on the Independence of Financial Research).

Thailand: This report is issued and distributed by CIMB Securities (Thailand) Company Limited (“CIMBS”) based upon sources believed to be reliable (but their accuracy, completeness or correctness is not guaranteed). The statements or expressions of opinion herein were arrived at after due and careful consideration for use as information for investment. Such opinions are subject to change without notice and CIMBS has no obligation to update its opinion or the information in this research report.

If the Financial Services and Markets Act of the United Kingdom or the rules of the Financial Conduct Authority apply to a recipient, our obligations owed to such recipient are unaffected.

CIMB Securities (Thailand) Co., Ltd. may act or acts as Market Maker, and issuer and offerer of Derivative Warrants and Structured Note which may have the following securities as its underlying securities. Investors should carefully read and study the details of the derivative warrants in the prospectus before making investment decisions.

AAV, ADVANC, AMATA, ANAN, AOT, AP, BA, BANPU, BBL, BCH, BCP, BCPG, BDMS, BEAUTY, BEC, BEM, BJC, BH, BIG, BLA, BLAND, BPP, BTS, CBG, CENTEL, CHG, CK, CKP, COM7, CPALL, CPF, CPN, DELTA, DTAC, EA, EGCO, EPG, GFPT, GLOBAL, GLOW, GPSC, GUNKUL, HMPRO, INTUCH, IRPC, ITD, IVL, KBANK, KCE, KKP, KTB, KTC, LH, LHBANK, LPN, MAJOR, MALEE, MEGA, MINT, MONO, MTLS, PLANB, PSH, PTL, PTG, PTT, PTTEP, PTTGC, QH, RATCH, ROBINS, S, SAWAD, SCB, SCC, SCCC, SIRI, SPALI, SPRC, STEC, STPI, SUPER, TASCO, TCAP, THAI, THANI, THCOM, TISCO, TKN, TMB, TOP, TPIPL, TRUE, TTA, TU, TVO, UNIQ, VGI, WHA, WORK.

Corporate Governance Report:

The disclosure of the survey result of the Thai Institute of Directors Association (“IOD”) regarding corporate governance is made pursuant to the policy of the Office of the Securities and Exchange Commission. The survey of the IOD is based on the information of a company listed on the Stock Exchange of Thailand and the Market for Alternative Investment disclosed to the public and able to be accessed by a general public investor. The result, therefore, is from the perspective of a third party. It is not an evaluation of operation and is not based on inside information.

The survey result is as of the date appearing in the Corporate Governance Report of Thai Listed Companies. As a result, the survey result may be changed after that date. CIMBS does not confirm nor certify the accuracy of such survey result.

Score Range: 90 - 100 80 - 89 70 - 79 Below 70 or No Survey Result

Description: Excellent Very Good Good N/A

United Arab Emirates: The distributor of this report has not been approved or licensed by the UAE Central Bank or any other relevant licensing authorities or governmental agencies in the United Arab Emirates. This report is strictly private and confidential and has not been reviewed by, deposited or registered with UAE Central Bank or any other licensing authority or governmental agencies in the United Arab Emirates. This report is being issued outside the United Arab Emirates to a limited number of institutional investors and must not be provided to any person other than the original recipient and may not be reproduced or used for any other purpose. Further, the information contained in this report is not intended to lead to the sale of investments under any subscription agreement or the conclusion of any other contract of whatsoever nature within the territory of the United Arab Emirates.

United Kingdom and European Economic Area (EEA): In the United Kingdom and European Economic Area, this material is also being distributed by CIMB Securities (UK) Limited (“CIMB UK”). CIMB UK is authorized and regulated by the Financial Conduct Authority and its registered office is at 27 Knightsbridge, London, SW1X7YB. The material distributed by CIMB UK has been prepared in accordance with CIMB Group’s policies for managing conflicts of interest arising as a result of publication and distribution of this material. This material is for distribution only to, and is solely directed at, selected persons on the basis that those persons: (a) are eligible counterparties and professional clients of CIMB UK; (b) have professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended, the “Order”), (c) fall within Article 49(2)(a) to (d) (“high net worth companies, unincorporated associations etc”) of the Order; (d) are outside the United Kingdom subject to relevant regulation in each jurisdiction, material(all such persons together being referred to as “relevant persons”). This material is directed only at relevant persons and must not be acted on or relied on by persons who are not relevant persons. Any investment or investment activity to which this material relates is available only to relevant persons and will be engaged in only with relevant persons. Where this material is labelled as non-independent, it does not provide an impartial or objective assessment of the subject matter and does not constitute independent “research” (cannot remove research from here under the applicable rules of the Financial Conduct Authority in the UK. Consequently, any such non-independent material will not have been prepared in accordance with legal requirements designed to promote the independence of research (cannot remove research from here) and will not subject to any prohibition on dealing ahead of the dissemination of research. Any such non-independent material must be considered as a marketing communication.

United States: This research report is distributed in the United States of America by CIMB Securities (USA) Inc, a U.S. registered broker-dealer and a related company of CIMB Research Pte Ltd, CIMB Investment Bank Berhad, PT CIMB Securities Indonesia, CIMB Securities (Thailand) Co. Ltd, CIMB Securities Limited, CIMB Securities (India) Private Limited, and is distributed solely to persons who qualify as “U.S. Institutional Investors” as defined in Rule 15a-6 under the Securities and Exchange Act of 1934. This communication is only for Institutional Investors whose ordinary business activities involve investing in shares, bonds, and associated securities and/or derivative securities and who have professional experience in such investments. Any person who is not a U.S. Institutional Investor or Major Institutional Investor must not rely on this communication. The delivery of this research report to any person in the United States of America is not a recommendation to effect any transactions in the securities discussed


17

herein, or an endorsement of any opinion expressed herein. CIMB Securities (USA) Inc, is a FINRA/SIPC member and takes responsibility for the content of this report. For further information or to place an order in any of the above-mentioned securities please contact a registered representative of CIMB Securities (USA) Inc.

CIMB Securities (USA) Inc does not make a market on other securities mentioned in the report.

Neither CIMB Securities (USA) Inc., nor its affiliates have managed or co-managed a public offering of any of the securities mentioned in the past 12 months.

Neither CIMB Securities (USA) Inc., nor its affiliates have received compensation for investment banking services from any of the company mentioned in the past 12 months.

Neither CIMB Securities (USA) Inc., nor its affiliates expects to receive or intends to seek compensation for investment banking services from any of the company mentioned within the next 3 months.

Other jurisdictions: In any other jurisdictions, except if otherwise restricted by laws or regulations, this report is only for distribution to professional, institutional or sophisticated investors as defined in the laws and regulations of such jurisdictions.

Spitzer Chart for stock being researched ( 2 year data )

Mitra Adi Perkasa (MAPI IJ)

Rating Distribution (%) Inv estment Banking clients (%)

Add 53.5% 4.3%

Hold 35.9% 2.6%

Reduce 9.7% 0.2%

Distribution of stock ratings and inv estment banking clients for quarter ended on 30 September 2017

1285 companies under cov erage for quarter ended on 30 September 2017

2,300

3,300

4,300

5,300

6,300

7,300

8,300

Dec-14 Jun-15 Dec-15 Jun-16 Dec-16 Jun-17

Price Close

6,1

50

7,7

50

7,1

75

5,5

50

4,6

50

4,6

00

4,4

00

5,0

00

5,7

50

6,0

00 5,7

50

7,9

00

8,2

00

9,7

00

Recommendations & Target Price

Add Hold Reduce Not Rated


18

Corporate Governance Report of Thai Listed Companies (CGR). CG Rating by the Thai Institute of Directors Association (Thai IOD) in 2017, Anti-Corruption 2017

AAV – Very Good, n/a, ADVANC – Excellent, Certified, AEONTS – Good, n/a, AMATA – Very Good, n/a, ANAN – Excellent, n/a, AOT – Excellent, Declared, AP – Excellent, Declared, ASK – Very Good, Declared, ASP – Very Good, Certified, BANPU – Excellent, Certified, BAY – Excellent, Certified, BBL – Very Good, Certified, BCH – Good, Declared, BCP - Excellent, Certified, BCPG – Very Good, n/a, BEM – Very Good, n/a, BDMS – Very Good, n/a, BEAUTY – Good, n/a, BEC – Very Good, n/a, , BGRIM – not available, n/a, BH - Good, n/a, BJC – Very Good, Declared, BJCHI – Very Good, Declared, BLA – Very Good, Certified, BPP – Good, n/a, BR - Good, Declared, BTS - Excellent, Certified, CBG – Good, n/a, CCET – Good, n/a, CENTEL – Very Good, Certified, CHG – Very Good, Declared, CK – Excellent, n/a, COL – Very Good, Declared, CPALL – not available, Declared, CPF – Excellent, Declared, CPN - Excellent, Certified, DELTA - Excellent, n/a, DEMCO – Excellent, Certified, DIF – not available, n/a, DTAC – Excellent, Certified, EA – Very Good, n/a, ECL – Very Good, Certified, EGCO - Excellent, Certified, EPG – Very Good, n/a, GFPT - Excellent, Declared, GGC – not available, Declared, GLOBAL – Very Good, Declared, GLOW – Very Good, Certified, GPSC – Excellent, Declared, GRAMMY - Excellent, n/a, GUNKUL – Excellent, Declared, HANA - Excellent, Certified, HMPRO - Excellent, Certified, ICHI – Excellent, n/a, III – not available, n/a, INTUCH - Excellent, Certified, IRPC – Excellent, Certified, ITD – Very Good, n/a, IVL - Excellent, Certified, JAS – not available, Declared, JASIF – not available, n/a, JUBILE – Good, Declared, KAMART – not available, n/a, KBANK - Excellent, Certified, KCE - Excellent, Certified, KGI – Very Good, Certified, KKP – Excellent, Certified, KSL – Very Good, Certified, KTB - Excellent, Certified, KTC – Excellent, Certified, LH - Very Good, n/a, LPN – Excellent, Certified, M – Very Good, n/a, MACO – Very Good, n/a, MAJOR – Very Good, n/a, MAKRO – Very Good, Declared, MALEE – Very Good, n/a, MBKET – Very Good, Certified, MC – Very Good, Declared, MCOT – Excellent, Certified, MEGA – Very Good, n/a, MINT - Excellent, Certified, MTLS – Very Good, Declared, NYT – Excellent, n/a, OISHI – Very Good, n/a, PLANB – Excellent, Declared, PLAT – Very Good, Certified, PSH – Excellent, Certified, PSL - Excellent, Certified, PTT - Excellent, Certified, PTTEP - Excellent, Certified, PTTGC - Excellent, Certified, QH – Excellent, Certified, RATCH – Excellent, Certified, ROBINS – Excellent, Certified, RS – Very Good, n/a, SAMART - Excellent, n/a, SAPPE - Good, n/a, SAT – Excellent, Certified, SAWAD – Very Good, n/a, SC – Excellent, Declared, SCB - Excellent, Certified, SCBLIF – not available, n/a, SCC – Excellent, Certified, SCN – Very Good, Declared, SCCC - Excellent, Declared, SIM - Excellent, n/a, SIRI – Very Good, Declared, SPA - Good, n/a, SPALI - Excellent, n/a, SPRC – Excellent, Declared, STA – Very Good, Declared, STEC – Excellent, n/a, SVI – Excellent, Certified, TASCO – Very Good, n/a, TCAP – Excellent, Certified, THAI – Very Good, n/a, THANI – Very Good, Certified, THCOM – Excellent, Certified, THRE – Very Good, Certified, THREL – Excellent, Certified, TICON – Very Good, Declared, TIPCO – Very Good, Certified, TISCO - Excellent, Certified, TK – Very Good, n/a, TKN – Very Good, Declared, TMB - Excellent, Certified, TNR – Good, n/a, TOP - Excellent, Certified, TPCH – Good, n/a, TPIPP – not available, n/a, TRUE – Excellent, Declared, TTW – Very Good, n/a, TU – Excellent, Declared, TVO – Excellent, Declared, UNIQ – not available, Declared, VGI – Excellent, Declared, WHA – not available, Declared, WHART – not available, n/a, WORK – not available, n/a.

Companies participating in Thailand’s Private Sector Collective Action Coalition Against Corruption programme (Thai CAC) under Thai Institute of Directors (as of October 28, 2016) are categorized into:

- Companies that have declared their intention to join CAC, and

- Companies certified by CAC

CIMB Recommendation Framework

Stock Ratings Definition:

Add The stock’s total return is expected to exceed 10% over the next 12 months.

Hold The stock’s total return is expected to be between 0% and positive 10% over the next 12 months.

Reduce The stock’s total return is expected to fall below 0% or more over the next 12 months.

The total expected return of a stock is defined as the sum of the: (i) percentage difference between the target price and the current price and (ii) the forward net dividend yields of the stock. Stock price targets have an investment horizon of 12 months.

Sector Ratings Definition:

Overweight An Overweight rating means stocks in the sector have, on a market cap-weighted basis, a positive absolute recommendation.

Neutral A Neutral rating means stocks in the sector have, on a market cap-weighted basis, a neutral absolute recommendation.

Underweight An Underweight rating means stocks in the sector have, on a market cap-weighted basis, a negative absolute recommendation.

Country Ratings Definition:

Overweight An Overweight rating means investors should be positioned with an above-market weight in this country relative to benchmark.

Neutral A Neutral rating means investors should be positioned with a neutral weight in this country relative to benchmark.

Underweight An Underweight rating means investors should be positioned with a below-market weight in this country relative to benchmark.

Insert Insert

Documents

ADD (no change) IPO should unlock sportswear value ... · We continue to believe that the IPO will help to unlock value. ... a multi-brand sportswear chain ... affordable footwear