A P&L Recovery, A Balance-Sheet Relapse
The prior post showed 2015's financing crisis easing in the second half, undone instead by a corporate-overhead line the earnings deck never shows. This is PT Sumber Alfaria Trijaya Tbk's interim consolidated financial statements for the six months ended June 30, 2016 (unaudited) - and on the surface, it reads like the recovery finally arrived: net revenue grew 21.5% to Rp26.87 trillion, and net income attributable to owners jumped 76.4% to Rp90.4 billion, reversing two straight periods of decline.
Indonesia's grocery market grew 10.2% YoY in the same period, but the minimarket channel - Alfamart's own format - grew 18.0%, up sharply from 12.4% a year earlier, and Alfamart's share of Indonesia's total modern-trade channel rose from 19.3% to 20.4%. The growth backdrop is genuinely strong. But the reason net income jumped isn't that the underlying stores got much more profitable - operating income barely moved at all (+1.0%) - it's that finance cost actually fell 17.3% year-over-year, continuing the deleveraging trend the prior post flagged taking hold in H2 2015. That's the good half of the story. The other half: total liabilities grew 43.9% in just six months, almost entirely from short-term bank loans that more than tripled (from Rp789.9 billion to Rp2.75 trillion) across three separate banks - a fast reversal of the very deleveraging that made this quarter's P&L look clean, and one that funded, among other things, a Rp290 billion related-party land-and-building purchase from the Company's own founder (see Beyond the Usual).
The Prescription
Alfamart's real opportunity this half is the same one flagged after FY2015: it has now shown twice in a row (H2 2015, and again on the P&L side of H1 2016) that a lower-finance-cost, more disciplined capital structure translates directly into a much better bottom line without needing operating income to do any extra work. That's worth protecting and extending - continuing to term out short-duration bank debt into longer, fixed-rate instruments like the 2015 bond tranches, rather than treating revolving bank credit as a permanent feature of the funding stack.
What it should stop doing: drawing down Rp1.95 trillion of new short-term revolving credit from three separate banks in a single half, then using part of that same balance sheet capacity to pay Rp290 billion, in full, in one week, for land and a building it already occupied and had been renting from its own founder (see Beyond the Usual). A company that spent 2015 telling the market it was deleveraging shouldn't spend 2016 re-leveraging to fund an insider transaction it could have financed - or simply continued renting - on far less urgent terms.
Key Financial Metrics
H1 2016 vs. H1 2015 (P&L), and June 2016 vs. Dec 2015 (balance sheet) - consolidated
FX: IDR 13,180 = USD 1 (the Company's own foreign-currency translation rate as of June 30, 2016, per its accounting-policy footnote).
The H1 2015 comparative figures used below are this filing's own restated comparative column, not the originally published H1 2015 post's numbers - net revenue here is Rp22,118,593M versus the Rp22,413,693M originally reported, and operating income is Rp345,400M versus the originally reported Rp332,066M (see Beyond the Usual for what changed and why).
| Metric | H1 2016 (IDR) | H1 2016 (USD) | H1 2015 (IDR, restated) | YoY |
|---|---|---|---|---|
| Net Revenue | Rp26,870,277M | ~$2,038.7M | Rp22,118,593M | ✅ +21.5% |
| Gross Profit | Rp5,030,132M | ~$381.7M | Rp4,172,300M | ✅ +20.6% |
| Income from Operations ("Operating Income") | Rp348,918M | ~$26.5M | Rp345,400M | ⚠️ +1.0% |
| Finance Cost | Rp232,196M | ~$17.6M | Rp280,736M | ✅ -17.3% |
| Income Before Tax | Rp87,448M | ~$6.6M | Rp51,559M | ✅ +69.6% |
| Net Income (attributable to owners) | Rp90,372M | ~$6.9M | Rp51,232M | ✅ +76.4% |
| EPS | Rp2.18 | ~$0.0002 | Rp1.32 | ✅ +65.2% |
| EBITDA» (Operating Income + D&A) | Rp1,306,791M | ~$99.1M | Rp1,124,430M | ✅ +16.2% |
| Balance sheet metric | June 2016 (IDR) | June 2016 (USD) | Dec 2015 (IDR) | Change |
|---|---|---|---|---|
| Total Assets | Rp19,655,311M | ~$1,491.3M | Rp15,195,887M | ✅ +29.3% |
| Total Liabilities | Rp14,887,386M | ~$1,129.5M | Rp10,345,671M | ⚠️ +43.9% |
| Total Equity | Rp4,767,925M | ~$361.8M | Rp4,850,216M | ⚠️ -1.7% |
| Total Cash | Rp892,350M | ~$67.7M | Rp764,766M | ✅ +16.7% |
| Net Cash from Operations (H1) | Rp519,944M | ~$39.4M | Rp642,551M (H1 2015) | ⚠️ -19.1% |
| Capital Expenditures (H1) | Rp1,098,188M | ~$83.3M | Rp668,220M (H1 2015) | ⚠️ +64.3% |
"Adjusted EBITDA»" still isn't a metric Alfamart reports; the EBITDA line above is Income from Operations plus depreciation and amortization (Rp957,873M for H1 2016, per the segment note), matching the company's own presentation-deck figure. Free cash flow» (operating cash flow minus capex) swung to -Rp578,244M in H1 2016, from -Rp25,669M in H1 2015 - net cash from operations fell 19.1% year-over-year at the same time capex jumped 64.3%, mostly funded by the new short-term bank borrowing detailed in Beyond the Usual. H1 has been the seasonally weaker half for cash generation in every period covered on this site so far (see the prior post's H1/H2 split), so a negative H1 free cash flow figure alone isn't unusual - but this H1's decline against an already negative year-ago H1 is worth watching into H2.
Debt-to-Equity Ratio (DER)» (interest-bearing debt, including finance leases and consumer financing, over equity attributable to owners, computed directly from this filing's own two balance-sheet columns): 1.30x at June 2016, up from 0.84x at December 2015 - a genuine re-leveraging in a single half, not a rounding artifact, driven almost entirely by the short-term bank loans detailed below. The Company's own presentation this quarter uses a differently labeled "Net Gearing Ratio" (net debt over total equity) instead of the "DER" label used in earlier decks - 1.07x at June 2016 versus 0.87x a year earlier - the same directional story on a net basis.
ROAA» / ROAE» (half-year, not annualized, equity attributable to owners): 0.46% / 1.95% in H1 2016, up from the previously reported 0.34% / 1.37% in H1 2015 - both improving in line with the net income jump.
Key Operational Metrics
- Total store network: 12,971 stores as of June 2016 (11,711 Alfamart, 1,125 Alfamidi, 36 Lawson, 99 Dan+Dan), up from 12,258 at the end of 2015 - a net addition of 713 stores in six months, slower than H2 2015's 899 net adds. Permanent employees: 40,855, up 7.8% from 37,907 at the end of 2015 - headcount growth now roughly tracks revenue growth, unlike the two prior periods where it outpaced it.
- Warehouses: 40 nationwide (32 for Alfamart, 7 for Alfamidi, 1 for Dan+Dan), up from 39 at the end of 2015 - one new warehouse (Gorontalo, supporting North Sulawesi expansion) against 713 net new stores, a much lighter distribution build-out than H2 2015's zero new warehouses against 899 net new stores.
- Market share: Alfamart's share of Indonesia's total modern-trade channel rose to 20.4% from 19.3% YoY, and its share of the minimarket-format modern-trade channel to 30.4% from 30.3% - both per this quarter's own management presentation (Nielsen Retail Audit data), which frames market share slightly differently than the mid-market-share figures in the two prior posts.
- Inventories grew 49.0% in six months (Rp4,545,921M to Rp6,775,341M) - far outpacing the 21.5% revenue growth rate, and the single largest driver of the balance-sheet expansion discussed above.
- Alfamind, described in the presentation as Indonesia's first virtual store using augmented-reality technology, launched this half - too early to have a reportable financial impact, but a real first for the format.
Segment Performance
Alfamart reports the same three geographic segments as the two prior posts - Jabodetabek (greater Jakarta), Java excluding Jabodetabek, and Outside Java.
| Segment | Revenue (H1 2016) | Revenue (H1 2015, restated) | YoY | Segment Income (H1 2016) | Segment Income (H1 2015, restated) | YoY | Segment Margin (2016 vs 2015) |
|---|---|---|---|---|---|---|---|
| Jabodetabek | Rp11,651,208M | Rp10,272,108M | ✅ +13.4% | Rp446,325M | Rp317,168M | ✅ +40.7% | 3.83% vs 3.09% |
| Java (excl. Jabodetabek) | Rp9,397,302M | Rp7,733,867M | ✅ +21.5% | Rp378,395M | Rp408,908M | ⚠️ -7.5% | 4.03% vs 5.29% |
| Outside Java | Rp5,821,767M | Rp4,112,618M | ✅ +41.6% | Rp21,744M | Rp11,218M | ✅ +93.8% | 0.37% vs 0.27% |
Jabodetabek completed the turnaround the prior post first spotted in its derived H2 2015 numbers - segment income grew 40.7%, the fastest of the three, and margin expanded from 3.09% to 3.83%. Alfamart's flagship, most competitive market is now its best-performing segment on both growth and margin, a full reversal of the picture in the very first post.
Java excluding Jabodetabek is the mirror image: the strongest segment in both prior posts, it's now the only one where segment income fell (-7.5%) even as revenue grew a healthy 21.5% - margin compressed from 5.29% to 4.03%. Nothing in the filed notes explains the reversal; it's the segment worth watching most closely next report.
Outside Java nearly doubled segment income (+93.8%) off a still-tiny base, and margin improved from 0.27% to 0.37% - continuing the recovery the prior post's derived H2 2015 figures first showed, though at well under half a percent it remains by a wide margin the thinnest-margin region of the three, three reports running.
Segments Compared
Revenue growth once again ranks by distance from Jabodetabek - Outside Java (+41.6%) grew roughly three times faster than Jabodetabek (+13.4%) - the same pattern as both prior periods. But for the first time across the three reports covered on this site, the segment carrying the P&L is Jabodetabek, not Java excluding Jabodetabek: Jabodetabek's 40.7% segment-income growth outpaced both other regions by a wide margin, while the previously-strongest Java-ex-Jabodetabek segment is now the one dragging - a genuine change in which part of the business is doing the work, not just noise in one quarter's numbers.
Beyond the Usual
The founder sold the Company its own warehouse for Rp290 billion the same week a dividend was approved
On May 25, 2016, the Company purchased land and a building totaling 37,902 square meters in Bandung, West Java, from Djoko Susanto - the Company's own founder, classified in the filed statement as "key management" - for a total of Rp290,000 million, paid in full on June 1, 2016. The filed statement discloses that this same land and building had previously been rented from Djoko Susanto and used as a warehouse functioning as a distribution center for the Company's stores in the surrounding area - meaning the Company converted an existing related-party lease into an outright related-party purchase, in cash, in a single week. Two days earlier, on May 27, 2016, the Company's Annual General Meeting approved a Rp180,632 million cash dividend. No independent valuation of the land and building is disclosed anywhere in the filed statement, and this transaction alone represents 26.6% of the Company's entire fixed-asset additions for the half - by far the largest and most direct insider transaction across the three periods covered on this site, an order of magnitude larger than the Rp27.9 billion land purchase from a different director flagged in the first post.
Short-term bank borrowing more than tripled in six months, across three separate lenders
Short-term bank loans grew from Rp789,937M at December 2015 to Rp2,745,692M at June 2016 - a 247.6% increase in a single half, drawn across three banks: a new Rp800,000M revolving facility from Bank Mandiri, a new Rp400,000M facility from The Bank of Tokyo-Mitsubishi UFJ, and an expanded Rp1,050,000M facility from Bank Central Asia (up from Rp497,708M), plus a smaller subsidiary-level BCA facility. Bonds payable, by contrast, stayed essentially flat (Rp1,994,260M to Rp1,995,523M). This directly reverses the deleveraging the prior post flagged taking hold in H2 2015, and it's short-duration, revolving credit rather than the longer-tenor bonds the Company used for its 2015 financing - a riskier funding mix for the same underlying leverage increase.
A related party's air-conditioner rental income is now nearly the entire equipment-rental expense line
PT Perkasa Internusa Mandiri ("PIM") - already flagged in the FY2015 post as supplying 47.7% of the Company's full-year 2015 "rental of equipment, furniture and fixtures" expense through its AC-rental deal - now accounts for 88.2% of that entire expense line in H1 2016 alone (Rp74,643M), up from 51.7% (Rp31,864M) in the H1 2015 comparative period - both percentages disclosed directly in the related-party note. A single related party now supplies almost the entirety of one operating-expense category, with no competitive-tender process disclosed for the arrangement, continuing a trend that's widened every period it's been tracked.
The unallocated overhead line is still growing faster than the stores it sits above
Unallocated operating expenses - the corporate-overhead line the FY2015 post found surging 62.1% in H2 2015 alone - grew 27.0% year-over-year in H1 2016 (Rp391,894M to Rp497,546M), still outpacing the 14.8% growth in combined segment income across all three geographic segments. This is the same structural gap flagged before: the stores are doing fine, but a cost line invisible in the earnings presentation is still growing faster than the business generating it.
Three small presentation and disclosure updates
A tax-presentation change (following revised PSAK 46) now shows final tax on rental revenue as its own line below operating income rather than embedded within operating expenses - the reason this filing's H1 2015 comparative operating income (Rp345,400M) reads Rp13,334M higher than originally reported (Rp332,066M); income-before-tax and net income are unaffected either way. The same restatement shows up one level down, too: the segment note's H1 2015 external revenue (Rp22,118,593M) is roughly Rp295,100M lower than originally reported, spread across all three segments - consistent with routine segment-classification touch-ups rather than anything more concerning. And separately, long-term rental commitments for stores and warehouses now stretch to 2035, two years further out than the FY2015 filing's 2033 horizon - simply tracking the pace of new, longer-tenor leases as the network expands.
The Philippines associate got recapitalized rather than just re-levered
Alfamart's 35%-owned Philippines associate, flagged in both prior posts as scaling its balance sheet mostly through liabilities while losing money, took a different shape this half: the Company injected an additional US$1,875,670 (~Rp25,538M) on May 27, 2016, keeping its stake at exactly 35.00%. The associate's net asset value nearly tripled as a result (Rp31,517M to Rp95,631M), and its total liabilities actually fell (Rp325,701M to Rp318,274M) even as total assets grew further (Rp357,218M to Rp413,905M) - a genuine capital-structure improvement, though the Company's cumulative share of the associate's losses still grew, from Rp14,392M to Rp16,473M.
One related party's rebate income to the Company jumped nearly seven-fold
Rebate income from related party PT Atri Distribusindo jumped from Rp400M in H1 2015 to Rp2,710M in H1 2016 - a 577.5% increase - alongside continued promotional-participation income (Rp1,966M) and space-rental income (Rp776M) from the same counterparty, part of the same web of founding-family-linked commerce detailed in the FY2015 post.
Target Valuation Range
Enterprise value ~Rp30.04 trillion (~$2.28B), implying 10.1x EV/EBITDA - a multiple that looks stable only because EBITDA growth offset a debt load that's 51.2% higher than six months ago. The P&L recovery is real, but it was financed in part by the same short-term borrowing spree detailed in Beyond the Usual, which a trailing-earnings multiple doesn't see.
Alfamart's shares closed at Rp600 on June 30, 2016. The Company's only stock split (10-for-1, July 2013) predates this quarter and remains reflected in both the filed share count and today's historical price data - no further split has occurred since (confirmed against public split-history records, used only to validate that no adjustment is required, not as a source for any number in this post).
| Market cap → enterprise value | H1 2016 |
|---|---|
| Share price (period-end) | Rp600 |
| Shares outstanding | 41,524,501,700 |
| Market capitalization | Rp24.91 trillion (~$1.89B) |
| Plus: interest-bearing debt | Rp6.02 trillion |
| Less: cash and equivalents | Rp0.89 trillion |
| Enterprise value | Rp30.04 trillion (~$2.28B) |
| Peer-multiple sanity check | FY2015 | H1 2016 | Change |
|---|---|---|---|
| Trailing P/E | ~51.6x | ~50.8x | ➖ essentially flat |
| EV/EBITDA | ~9.6x | ~10.1x | ⚠️ up |
| P/B | ~5.1x | ~5.37x | ⚠️ up slightly |
Trailing P/E (~50.8x, using approximate TTM net income of Rp490.2 billion) is essentially unchanged from the ~49.3x and ~51.6x seen in the two prior periods - the market hasn't re-rated the stock despite this half's much stronger bottom line. EV/EBITDA (using approximate TTM EBITDA of Rp2.99 trillion) sits close to the ~9.6x-10.7x range seen in both prior periods, but the debt figure feeding this multiple is now 51.2% higher than it was just six months ago. P/B (book value per share ~Rp111.7) is in line with the ~5.1x-5.7x range from the two prior periods, though equity itself shrank slightly this half as the dividend paid out exceeded the period's retained profit.
No listed domestic peer still exists for a direct minimarket-format comparison - Indomaret remains privately held under the Salim Group. A full DCF still isn't included: this is only the third period of coverage for this company, and three data points - covering barely over a year - aren't yet enough to responsibly model a multi-year store-growth, margin, and cost-of-capital trajectory, the same reasoning given in both prior posts. The share price itself has been essentially flat across all three periods covered here (Rp595 in June 2015, Rp580 in December 2015, Rp600 now) - under a 1% net move over the full year from June 2015 to June 2016, and about 3.4% up from the December 2015 print - well short of the threshold that would warrant its own dedicated section.
PT Sumber Alfaria Trijaya Tbk's interim consolidated financial statements as of June 30, 2016 and for the six-month period then ended (unaudited), and the Company's management presentation as of June 30, 2016.