Financial highlights

RALS reported a net profit of Rp273 billion in 9M25, up 8% year-on-year (YoY) from Rp253 billion in 9M24. Total revenue, however, remained soft, declining 11.2% YoY to Rp1,878 billion from Rp2,114 billion over the same period.

The improvement in the bottom line was mainly driven by lower selling, general, and administrative (SG&A) expenses, along with higher net other income.

From a balance sheet perspective, the company remains free of bank loans, with lease liabilities as its only interest-bearing debt. Total assets contracted by nearly 10% year-to-date (YTD) compared to the end of FY24, primarily due to lower cash and cash equivalents following the Rp60 per share dividend payment in the second quarter, as well as declines in short-term investments and net inventories, which more than offset the increase in time deposits and right-of-use assets. The dividend payout, while reducing cash balances, also offset retained earnings accumulation, leaving total equity broadly unchanged despite modest earnings growth.

Total liabilities, meanwhile, fell sharply by almost 30% YTD, driven mainly by reductions in trade payables and lease liabilities, while RALS maintained its debt-free status.

With improved profitability, ROA and ROE edged higher to 7.5% and 9.5%, respectively, based on the annualized 9M25 net profit. Gross profit margin (GPM), core operating profit margin (cOPM), and net profit margin (NPM) also improved to 53.6%, 7.2%, and 14.5%, respectively.

Valuation

Using a blended valuation approach, we derived a new target price of Rp550 per share, up from Rp510 in our previous update. This target price implies 1.3x P/RR (TTM), 11x P/E (TTM), and 0.9x P/BV (MRQ).

At the current market price of Rp440 per share, the stock offers an upside potential of around 25%.

RALS’ debt-free balance sheet, attractive dividend yield, and improving bottom line remain key positives. However, the ongoing transformation in the retail industry and a sluggish domestic economic outlook, which could weigh on consumer purchasing power, continue to pose key risks to the company.