RALS - 6M25

Earnings Update 6M25

Overview

As one of the oldest department store operators in Indonesia established in 1978, RALS has a significant share in the mid-to-lower market segment. Its business segments include department store and supermarket which consist of 96 outlets spread all over Indonesia as of the end of March 2025. RALS is a consistent dividend-paying company with the exception of 2021 due to the severe impact of the Covid-19 outbreak. Halfway into FY25, RALS continues to face headwinds on the back of sluggish purchasing power and continued shift towards e-commerce which has notably changed consumers’ buying pattern.

Financial highlights

After an anaemic growth in revenues in FY24, the Company’s revenues have declined by almost 10% (yoy) in 6M25. On the other hand, net profit also slipped by 7.1% (yoy) in the same period, reversing 3.6% (yoy) gains posted in FY24. The Company’s balance sheet remains healthy however, as RALS continued to be debt-free. Total assets fell by 7.8% (ytd) at the end of June 2025 vs. the end of FY24 on the back of a notable reduction in short-term investment, while total liabilities have also dropped due to lower trade payables and lease liabilities, whilst total equity edged lower as unappropriated retained earnings fell, partly used for dividend payment. In 2025, RALS has paid Rp60 per share as dividend to its shareholders, representing 113% of its net profit in FY24, which was higher than Rp50 per share paid in the preceding year.

In terms of ROA and ROE, the performance has been mixed as ROA managed to tick higher whereas ROE has slipped at the end of June 2025. Elsewhere, the Company’s profitability margins have all improved to 52.9% (GPM), 14.3% (COPM), and 15.3% (NPM).

Valuation

We utilize three methods of valuation for RALS: the price multiples, DCF and DDM. According to these methods, the blended target price for RALS is at Rp510 per share, which implies 1.2x PRR (TTM), 10.2x PER (TTM) and 0.9x PBV (MRQ). Currently, RALS is trading at Rp394 which represents PRR (TTM), PER (TTM) and PBV (MRQ) of 0.9x, 7.9x, and 0.7x, respectively. The target price also represents a 29.4% upside potential from the current price, making it attractive for BUY. Debt-free status and lucrative dividend yield are also considered as key positive factors. In terms of risk, RALS is facing persistent risk coming from the retail industry transformation as well as sluggish domestic economy which may put purchasing power under pressure.