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MPPA: Been Oversold, Time to Bottom-fish!
12 Nov 2018

MPPA: Been Oversold, Time to Bottom-fish!

The share price has drop as much as 52.1% YTD on 1) negative sentiment on the recent case that hit Lippo Group, 2) investor’s concern on potential MSCI’s exclusion, 3) soft performance growth YTD, and 4) negative news on store closures. Recently on Oct 8th, the EGM has approved the share buyback program in order to retire up to Rp1.25 trillion (c.7% stake) to reduce equity on its balance sheet and regain shareholder’s trust on the stock.

We expect LPPF sales in 2018F/19F to grow by 4.6%/5.0% YoY on the back of conservative 4% SSSG, respectively. Hence we generate a target price of Rp8,000/ share, which offers a 69.1% upside, as we believe the stock has been oversold YTD. Our TP implies PER and EV/EBITDA 2019F of 11.6x and 7.7x, respectively, while the stock is currently traded at 6.8x and 3.6x PER and EV/EBITDA 2019F.

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