A 5.3% Half That Hides a Quarter Where Every Segment Went Backward
The last post on this company closed Q1 2020 on a genuinely strong quarter - one of the best this site has recorded for Alfamart - with an open question: Q1 barely captured Indonesia's first month of Covid-19, so the real test would be the next quarter, the first to carry a full three months of lockdown in its numbers. This is PT Sumber Alfaria Trijaya Tbk's unaudited interim consolidated financial statements for the six months ended June 30, 2020, and read as a half-year blend, the headline looks fine: net revenue grew 5.3% to Rp38,085,356 million from Rp36,157,109 million, and net income attributable to owners grew 23.2% to Rp493,257 million from Rp400,361 million - both figures the Company's own management presentation highlights directly.
But a half-year blend is exactly the kind of number that can hide a bad quarter behind a good one, and this filing supplies everything needed to isolate the two: Q1's own already-published figures can simply be subtracted from this half's totals. Do that, and Q2 2020 standalone - the quarter that actually sat inside Jakarta's large-scale social restrictions for its entire span - tells a very different story: net revenue fell 3.6% year-over-year (Rp18,750,568 million vs Rp19,441,398 million), operating income fell 30.9%, EBITDA fell 11.0%, and net income to owners fell 28.1% (Rp142,854 million vs Rp198,655 million). Operating cash flow swung from +Rp1,013,349 million in Q2 2019 to -Rp1,549,354 million in Q2 2020 - not a seasonal dip, since the year-ago quarter itself was solidly positive (see Key Financial Metrics). Q1 wasn't a preview of resilience - it was the last clean quarter before the pandemic actually showed up in the numbers.
The sharpest version of this story lives in the segment note (see Segment Performance): isolating Q2 standalone shows all three geographic segments losing both revenue growth and margin year-over-year - including Outside Java, the region every post since FY2018 has named as Alfamart's real growth engine, which had never before lost momentum in this site's coverage. That thread, first raised at FY2019 and restated at Q1 2020, now has its first genuine setback.
The Prescription
Alfamart's real task now isn't finding its growth engine - Outside Java's multi-year outperformance (see Segment Performance) already proved that thesis - it's protecting that engine's economics through a pandemic that just showed it isn't immune. Management should be explicit, next quarter, about how much of Q2's segment-wide margin loss is Covid-driven demand softness (store traffic, large-format basket sizes) versus fixed-cost drag from a store network that kept expanding even as revenue slowed (net store additions continued at 442 for the half, only modestly below Q1's pace - see Key Operational Metrics) - the filing itself draws no such distinction anywhere. What it should stop doing: increasing the cash dividend nearly six-fold year-over-year (Rp555,598 million paid in H1 2020 versus Rp109,625 million in H1 2019 - see Beyond the Usual) in the same half that operating cash flow swung negative standalone in Q2 and total cash fell from Rp7.09 trillion at Q1-end to Rp1.11 trillion at Q2-end. A dividend sized to a much stronger FY2019 doesn't need to shrink, but paying it out in full while the balance sheet's cash cushion is being drawn down this fast, mid-pandemic, is a capital-allocation choice management should defend explicitly rather than leave unaddressed.
Key Financial Metrics
H1 2020 vs. H1 2019 (P&L and cash flow), June 2020 vs. December 2019 (balance sheet) - consolidated, unaudited
FX: IDR 14,194.05 = USD 1 (period-end exchange rate as of June 30, 2020, the last trading day of the quarter) - a roughly 12.8% recovery from the Rp16,277.94 used at March 31, 2020, tracking the Rupiah's broader stabilization after its Q1 pandemic-panic low.
| Metric | H1 2020 (IDR) | H1 2020 (USD) | H1 2019 (IDR) | YoY |
|---|---|---|---|---|
| Net Revenue | Rp38,085,356M | ~$2,683.2M | Rp36,157,109M | ✅ +5.3% |
| Gross Profit | Rp7,757,464M | ~$546.5M | Rp7,198,565M | ✅ +7.8% |
| Income from Operations ("Operating Income") | Rp759,310M | ~$53.5M | Rp731,997M | ✅ +3.7% |
| Finance Cost | Rp220,761M | ~$15.6M | Rp204,098M | ⚠️ +8.2% |
| Income Before Final Tax and Corporate Income Tax | Rp610,534M | ~$43.0M | Rp545,849M | ✅ +11.9% |
| Income for the Period (total) | Rp507,741M | ~$35.8M | Rp411,322M | ✅ +23.4% |
| Net Income (attributable to owners) | Rp493,257M | ~$34.8M | Rp400,361M | ✅ +23.2% |
| EPS | Rp11.88 | ~$0.0008 | Rp9.64 | ✅ +23.2% |
| EBITDA» (Operating Income + D&A) | Rp2,166,173M | ~$152.6M | Rp2,102,522M | ✅ +3.0% |
| Balance sheet metric | Jun 2020 (IDR) | Jun 2020 (USD) | Dec 2019 (IDR) | Change |
|---|---|---|---|---|
| Total Assets | Rp23,378,728M | ~$1,647.1M | Rp23,992,313M | ⚠️ -2.6% |
| Total Liabilities | Rp16,545,036M | ~$1,165.6M | Rp17,108,006M | ✅ -3.3% |
| Total Equity (attributable to owners) | Rp6,639,961M | ~$467.8M | Rp6,696,944M | ⚠️ -0.9% |
| Total Cash (incl. time deposits) | Rp1,112,627M | ~$78.4M | Rp3,909,150M | ⚠️ -71.5% |
Every balance-sheet line reversed direction from the sharp buildup Q1 2020 reported - total assets, liabilities, and cash all fell back below their December 2019 starting point in the space of one quarter, because the short-term borrowing Q1 raised got spent down in Q2 on the two bond repayments, the dividend, and continued capex (see below), not carried forward as a cushion.
"Adjusted EBITDA»" still isn't a metric Alfamart reports; the EBITDA line above is Income from Operations plus depreciation and amortization (Rp1,406,863M for H1 2020, per the segment note, versus Rp1,370,525M in H1 2019), matching the convention used in every prior post here. Isolating Q2 standalone (H1 minus the already-published Q1 figures), D&A actually declined slightly year-over-year (Rp713,331M vs Rp715,688M), so the 11.0% EBITDA decline noted above tracks operating income's decline almost directly - this isn't a depreciation-driven optical effect, it's a real drop in segment-level profitability.
Free cash flow» (operating cash flow minus capex, both from the filed cash flow statement) fell to -Rp649,524M for H1 2020, from +Rp689,691M in H1 2019 - a swing of over Rp1.3 trillion. Net cash from operations collapsed to Rp163,721M for the half (from Rp1,246,979M in H1 2019), even as cash receipts from customers grew slightly (Rp38,015,273M vs Rp36,240,904M) - the drag came from cash payments for operating expenses jumping 38.8% (Rp1,867,620M to Rp2,593,157M) and income tax payments more than doubling (Rp205,727M to Rp424,092M), both outpacing revenue growth. Capex ("Perolehan aset tetap") rose 45.9% (Rp557,288M to Rp813,245M), and isolating Q2 standalone shows capex actually accelerated into the pandemic quarter (up 83.5% year-over-year, Rp236,935M to Rp434,935M) even as operating cash flow went negative in the same quarter - a continued-expansion posture the filing doesn't explain (see The Prescription).
Debt-to-Equity Ratio (DER)» (interest-bearing debt, including finance leases, consumer financing, and the JD.com borrowing discussed at FY2018, over equity attributable to owners, excluding the right-of-use lease liability to stay on the same basis as prior posts): 0.74x at June 2020, down sharply from 1.07x at March 2020 and essentially back to December 2019's 0.74x - the Q1 spike this site flagged as breaking a five-period deleveraging streak has now fully unwound, on total interest-bearing debt of approximately Rp4,889,766 million (down from Rp7,610,965 million at March 2020), as the two 2020-maturity bonds were paid off and short-term bank borrowing was drawn back down. But net gearing tells a different story: it jumped to 0.57x at June 2020, from just 0.07x at March 2020 - because the cash raised in Q1 (which had kept net gearing artificially low even as gross debt spiked) got spent down in Q2 faster than the debt itself declined. Gross leverage looks normalized; net leverage - the measure that actually reflects how much of a cushion the Company has left - does not (see Beyond the Usual). The Company's own presentation deck reports a narrower net gearing figure of 0.45x for the same date (0.46x at FY2019), using a different debt scope than this site's consistent cross-post methodology; either way, both figures moved in the same direction.
Key Operational Metrics
- Mini-market network (Alfamart brand only): 14,752 as of June 2020 (10,978 directly owned, 3,774 under franchise agreement), up from 14,310 at December 2019 (10,614 owned, 3,696 franchised) - a net addition of 442 stores for the half, or +3.1%, disclosed directly in the financial-statement notes and matching the Company's own presentation figure exactly. Isolating Q2 standalone against Q1 2020's already-published 14,547 shows a net addition of 205 stores in Q2 alone - a meaningfully slower pace than Q1's 237, consistent with a pandemic-driven pause in expansion.
- Full network (Alfamart, Alfamidi, Lawson, Dan+Dan): 16,720 stores as of June 2020 (33% Greater Jakarta, 37% Java excluding Greater Jakarta, 30% Outside Java) - up from 16,133 at FY2019, per the corporate presentation published for this quarter (unavailable at Q1 2020, since no deck was issued for that off-cycle quarter).
- Permanent employees: 63,765 as of June 2020, up 7.7% from 59,214 at December 2019 for the half - continuing to outpace store-count growth, as it also did at Q1 2020 (+4.4% quarterly then).
- Market share: Alfamart & Alfamidi's combined share of Total Indonesia grocery grew from 10.7% to 11.8% year-to-date June 2019 vs June 2020, and their share of Modern Trade grew from 21.5% to 22.6%, per the presentation's Nielsen Retail Audit data - share gains that came despite the industry backdrop below, i.e. Alfamart took share from weaker channels rather than simply riding industry growth.
- Industry backdrop - explicit and severe, unlike any prior quarter's deck: Indonesia's total grocery trade (68 FMCG categories, Nielsen) grew just 0.7% year-to-date June 2020, down from 4.3% a year earlier; Modern Trade specifically slowed from 8.8% to 3.7% growth; Minimarket format slowed from 14.8% to 7.7%; and Super/Hyper and Traditional Trade channels both posted outright declines (-7.4% and -5.0% respectively, both worse than a year earlier). This is the first Alfamart corporate presentation this site has covered that quantifies a pandemic-scale demand shock directly - a sharp contrast with the complete silence on Covid-19 in the audited financial statements themselves (see Beyond the Usual).
- Seasonality note: Ramadan fell in April-May 2020, entirely inside this half (as it also did in H1 2019, so the year-over-year comparison is seasonally clean), but Indonesia's Ramadan-season mobility and shopping patterns were themselves disrupted by lockdown measures this year - a confound this filing doesn't quantify separately from the pandemic's broader demand effect.
Segment Performance
Alfamart reports the same three geographic segments as every prior post - Jabodetabek (greater Jakarta), Java excluding Jabodetabek, and Outside Java. Figures below use each segment's external revenue (excluding the minor inter-segment elimination Jabodetabek reports), for the six months ended June 30.
| Segment | Revenue (H1 2020) | Revenue (H1 2019) | YoY | Segment Income (H1 2020) | Segment Income (H1 2019) | YoY | Margin (2020 vs 2019) |
|---|---|---|---|---|---|---|---|
| Jabodetabek | Rp13,724,144M | Rp12,910,158M | ✅ +6.3% | Rp422,727M | Rp449,657M | ⚠️ -6.0% | ⚠️ 3.08% vs 3.48% |
| Java (excl. Jabodetabek) | Rp13,252,464M | Rp13,215,612M | ⚠️ +0.3% | Rp729,537M | Rp817,522M | ⚠️ -10.8% | ⚠️ 5.51% vs 6.19% |
| Outside Java | Rp11,108,748M | Rp10,031,339M | ✅ +10.7% | Rp447,723M | Rp387,778M | ✅ +15.4% | ✅ 4.03% vs 3.87% |
Read as a half-year blend, this looks like a manageable slowdown: two segments lost margin, but Outside Java still gained both revenue growth and margin, extending the streak Q1 2020 reported. That blend hides what actually happened in Q2 alone. Subtracting Q1 2020's already-published segment figures from this half's totals isolates the standalone quarter that sat entirely inside Jakarta's large-scale social restrictions:
| Segment | Revenue (Q2 2020, implied) | Revenue (Q2 2019, implied) | YoY | Segment Income (Q2 2020, implied) | Segment Income (Q2 2019, implied) | YoY | Margin (2020 vs 2019) |
|---|---|---|---|---|---|---|---|
| Jabodetabek | Rp6,835,815M | Rp6,825,669M | ⚠️ +0.1% | Rp188,818M | Rp251,129M | ⚠️ -24.8% | ⚠️ 2.76% vs 3.68% |
| Java (excl. Jabodetabek) | Rp6,372,986M | Rp7,186,861M | ⚠️ -11.3% | Rp320,949M | Rp498,456M | ⚠️ -35.6% | ⚠️ 5.04% vs 6.94% |
| Outside Java | Rp5,541,767M | Rp5,428,868M | ⚠️ +2.1% | Rp189,883M | Rp238,536M | ⚠️ -20.4% | ⚠️ 3.43% vs 4.39% |
Isolated this way, every one of the three segments lost margin and posted double-digit segment-income declines in Q2 2020 standalone - something this site's coverage has never recorded before across any prior quarter for any single segment, let alone all three simultaneously.
Jabodetabek's revenue growth essentially stalled (+0.1%, against +6.3% for the half), and its segment income fell 24.8% - the sharpest single-quarter reversal this site has tracked for the capital region, consistent with Jakarta carrying the country's strictest and longest lockdown measures.
Java excluding Jabodetabek was hit hardest of the three: revenue declined 11.3% standalone, and segment income fell 35.6% - a region whose H1 blended growth (+0.3%) already looked weak now shows the underlying quarter was actually contracting.
Outside Java - the region FY2019 and Q1 2020 both named as Alfamart's real growth engine, on the back of 46.5% and 72.8% segment-income growth in the respective year-ago Q1 comparisons - still posted the smallest revenue decline of the three in relative terms (+2.1% growth, barely positive) but its segment income still fell 20.4% and its margin dropped 96 basis points, the largest margin loss of any region this site has recorded for Outside Java specifically. The growth engine didn't reverse into outright decline the way Java excluding Jabodetabek did, but its multi-year streak of accelerating, margin-gaining growth is broken for the first time.
Segments Compared
Combined segment income fell 3.3% for the half (Rp1,654,957M to Rp1,599,987M) - a much smaller decline than the standalone Q2 losses above would suggest, because Q1 2020's strength (segment income of Rp900,337M, per Q1 2020) carried the half. Isolating Q2 standalone, combined segment income fell 29.2% (Rp988,121M to Rp699,650M) - and unallocated corporate overhead fell almost exactly in step (Rp603,208M to Rp433,778M, -28.1%), keeping overhead's share of combined segment income roughly flat at 62.0% in Q2 2020 standalone versus 61.1% in Q2 2019 standalone - a seasonally elevated ratio in both years (Q2 has historically run a higher overhead share than Q1 for this business), not a new deterioration. The overhead-discipline trend FY2019 and Q1 2020 both tracked held even through the pandemic quarter - corporate costs flexed down roughly in proportion to the segment-income hit, rather than staying fixed and compounding the margin damage.
Beyond the Usual
The filed financial statements still don't mention Covid-19 - even though the Company's own investor presentation does
For a second consecutive quarter, PT Sumber Alfaria Trijaya Tbk's unaudited interim consolidated financial statements contain no mention of Covid-19, the pandemic, or any related risk anywhere - not as a risk factor, not in management's discussion, not anywhere in 136 pages of notes. This time the omission is harder to explain: this is the first quarter to actually show pandemic-driven damage in the numbers (see the opening section and Segment Performance above), the filing was authorized for issue on July 27, 2020 - just 27 days after quarter-end, a far faster turnaround than Q1 2020's filing, which took nearly three months and still said nothing - and the Company's own management presentation for this same period, issued alongside these financial statements, explicitly discusses Covid-19 by name, including CSR programs distributing medical supplies to hospitals and rent relief for franchisees. The Company is demonstrably capable of writing about the pandemic in its investor communications; it has now chosen not to in the legally filed financial statements two quarters running, through the one quarter that actually needed the context to explain a standalone revenue decline and a 28% profit drop.
Net gearing quadrupled while gross leverage looked like it fully recovered
Gross Debt-to-Equity fell back to 0.74x at June 2020 from March's 1.07x spike, essentially returning to December 2019's level - on its own, that reads as a clean resolution of the leverage flagged last quarter. But net gearing (net debt over the same equity base) rose to 0.57x from just 0.07x at March 2020, because the cash Q1's borrowing raised was spent down in Q2 - on the two bond repayments, a much larger dividend (see below), and continued capex - faster than the debt itself declined. Total cash and time deposits fell from Rp7.09 trillion to Rp1.11 trillion in a single quarter. The gross ratio recovering while the net ratio quadruples is exactly the kind of divergence a reader skimming only the headline DER would miss.
The dividend payout jumped nearly six-fold in the same half operating cash flow went negative
Cash dividends paid rose to Rp555,598 million in H1 2020, from Rp109,625 million in H1 2019 - a 407% increase, reflecting a much larger FY2019 profit base being distributed. That's a defensible reason for the dividend itself to be larger. What's worth watching is the timing: this dividend was paid in the same half that net cash from operating activities fell to Rp163,721 million for the six months (from Rp1,246,979 million a year earlier), and in which Q2 standalone operating cash flow was actually negative (-Rp1,549,354 million). Paying a materially larger dividend while operating cash generation is deteriorating in real time, mid-pandemic, is a capital-allocation choice the filing doesn't address or explain.
The remaining 2018 bond series is now entirely a current liability
The Company's one remaining outstanding bond - the Rp1,000,000 million "Obligasi Berkelanjutan II Sumber Alfaria Trijaya Tahap II Tahun 2018" - moved entirely into the current-liabilities classification this quarter (Rp999,286 million net of unamortized issuance cost, with zero remaining in the long-term bucket), meaning it now matures within the next twelve months. This is the same open question this site has now tracked across four consecutive posts for the two 2020-maturity bonds already repaid in full without refinancing: no refinancing plan for this 2018 series has been disclosed either, and given the precedent just set, a cash repayment funded by short-term borrowing (rather than a new bond issuance) looks like the more likely outcome again.
A related party's guarantee fee on Alfamart's own bank borrowing is priced at 0.65%-0.925% per annum
Mitsubishi Corporation, Japan ("MC") - a related party through its stake in Alfamart's IT and R&D collaboration arrangements - agreed in October 2018 to guarantee a MUFG Bank loan to a Company subsidiary, for which the subsidiary pays MC 0.65% per annum on the remaining outstanding short-term loan principal and 0.925% per annum on the remaining long-term principal. This is a small but genuine related-party cost embedded in Alfamart's borrowing costs that doesn't appear anywhere in the headline finance-cost line - the kind of detail that only shows up by reading the significant-agreements footnote rather than the P&L.
Franchise income fell slightly even as the franchised store count grew
Income from franchise agreements (prepaid franchise fees plus progressive contribution fees on franchisee net revenue) came to Rp164,952 million for H1 2020, down 1.8% from Rp168,006 million in H1 2019 - a small decline, but a notable one given the franchised portion of the Alfamart-brand network grew 2.1% over the same period (3,696 to 3,774 stores). Since the contribution-fee component scales with each franchisee's own net revenue, a shrinking franchise-income line against a growing franchise store count is a small but real signal that individual franchisee stores' sales softened during the pandemic quarter even as the network kept expanding.
Coverage Table
| Metric | H1 2020 | H1 2019 | YoY | Why it matters |
|---|---|---|---|---|
| Net Revenue (H1) | Rp38,085,356M | Rp36,157,109M | ✅ +5.3% | Headline growth, but see the Q2-standalone figure below |
| Net Revenue (Q2 standalone, implied) | Rp18,750,568M | Rp19,441,398M | ⚠️ -3.6% | The first quarter to actually show pandemic-driven revenue decline |
| Net Income to owners (Q2 standalone, implied) | Rp142,854M | Rp198,655M | ⚠️ -28.1% | Profit fell far faster than revenue on margin compression across all segments |
| Outside Java segment income (Q2 standalone, implied) | Rp189,883M | Rp238,536M | ⚠️ -20.4% | The region named as Alfamart's growth engine in three prior posts lost momentum for the first time |
| Net gearing | 0.57x | 0.07x (Mar 2020) | ⚠️ up sharply | Cash cushion built in Q1 spent down faster than debt declined |
Target Valuation Range
Enterprise value ~Rp36.79 trillion (~$2.60B), implying 8.11x EV/EBITDA and a trailing P/E of ~27.4x - this site's eight-consecutive-period multiple-compression streak has broken. Not because the market re-rated Alfamart more expensive, but because trailing earnings actually shrank for the first time this site has recorded, as Q2's standalone profit decline outweighed the higher Q2 2019 base it replaced. The stock isn't more expensive because investors got more optimistic; it's more expensive because the "E" got smaller.
Alfamart's shares closed at Rp795 on June 30, 2020 (the last trading day of the quarter) - down slightly from Rp800 at March 2020, essentially flat over the quarter despite the operating deterioration above.
| Market cap → enterprise value | Q2 2020 |
|---|---|
| Share price (period-end) | Rp795 |
| Shares outstanding | 41,524,501,700 |
| Market capitalization | Rp33.01 trillion (~$2.33B) |
| Plus: interest-bearing debt | Rp4.89 trillion |
| Less: cash and equivalents | Rp1.11 trillion |
| Enterprise value | Rp36.79 trillion (~$2.60B) |
| Peer-multiple sanity check | Q1 2020 | Q2 2020 | Change |
|---|---|---|---|
| Trailing P/E | ~26.3x | ~27.4x | ⚠️ up |
| EV/EBITDA | ~7.24x | ~8.11x | ⚠️ up |
| P/B | ~4.68x | ~4.97x | ⚠️ up |
Trailing P/E (using trailing-twelve-month net income to owners of Rp1,205,409 million: FY2019's Rp1,112,513 million, less H1 2019's Rp400,361 million, plus this half's Rp493,257 million) rose for the first time this site has recorded, and it happened on a nearly flat share price, because trailing earnings themselves fell (from Rp1,261,210 million at Q1-end to Rp1,205,409 million now) as Q2 2020's weaker standalone profit replaced Q2 2019's stronger one in the trailing window. EV/EBITDA rose the same way, as trailing EBITDA fell from Rp4,656,847 million to Rp4,535,449 million. P/B (book value of approximately Rp6,639,961 million equity attributable to owners ÷ 41.52 billion shares) rose as retained earnings actually fell slightly quarter-over-quarter (the dividend payment outpaced H1's net income accrual to the balance sheet).
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 here: with the first quarter of genuine pandemic damage now on the record, a forward valuation needs at least one more quarter to show whether Q2's segment-wide margin loss was a one-time lockdown shock or the start of a longer reset - building a discounted cash flow model on a single damaged quarter would manufacture false precision. The share price moved within a Rp755-Rp1,025 range across the trailing two years to this quarter-end (a roughly 26.3% peak-to-trough swing, below the threshold this site treats as warranting its own section), with the June 2020 close sitting below the range's midpoint and, at month-end closes, the lowest point of the quarter itself - April and May 2020 both closed higher (Rp870 and Rp910 respectively) before June's close slipped back to Rp795.
PT Sumber Alfaria Trijaya Tbk's unaudited interim consolidated financial statements as of June 30, 2020 and for the six months then ended, and the Company's management presentation as of June 30, 2020.