Indonesia’s Matahari Buyback Shares US$86M

Indonesia Fashion Forward Designer At 16th Matahari Department Store - Photo by the Company

JAKARTA (TheInsiderStories) PT Matahari Department Stores Tbk (IDX: LPPF) announces Rp1.25 trillion (US$86.21 million) share buyback program, said the company on Wednesday (29/08). It said, buyback program may result in purchase of up to 7 percent of the company’s common shares

The retail platform company to buy the shares at a maximum price of Rp13,330 per share. Matahari will hold an Extraordinary General Meeting of the Shareholders on Oct. 8, 2018, where it expects its shareholders to vote in favor of the Board’s proposal.

The CEO and Vice President Director Richard Gibson commented: “As the leading retail platform in Indonesia we believe that we have considerable room to further grow our large format stores, which will enable us to better serve our target middle income segment in the years to come.”

In addition, he stated, the LPPF will also make further investments in logistics capabilities to reduce the operational costs of its core business and support the fast growing E-commerce business and increasingly profitable 3rd party services.

In the coming year, he continued Matahari are planning to increase its capital investment in PT Matahari Nusantara Logitik, the company’ 100 percent subsidiary, by approximately Rp500 billion. The fund will use to purchase of a new multi-purpose distribution facility, with a size in excess of 50,000 m2.

Gibson also reported that PT Global Ecommerce Indonesia (GEI), of which Matahari is a minority shareholder, has indicated it expects to complete an additional round of financing by the end of the year. As was previously indicated, Matahari will not be participating, but is very pleased to see its investment in GEI continue to progress well.

GEI also indicated that it has made successful investments in a number of companies including: Red Carpet Logistics, a last mile logistics service provider, and Mbiz, a leading B to B eCommerce platform with revenues of over Rp800 billion in 2017, which includes Tokyo Century as a minority shareholder.

Matahari is the largest retail platform in Indonesia, with 155 stores in 74 cities across Indonesia. Its merchandise is available at its stores and also on-line at

Based on data from the Central Bureau of Statistics, the growth of public consumption, was recorded only rose at 4.95 percent in the first quarter of 2018, which was almost stagnant if compared to consumption rate in the first quarter last year at 4.94 percent.

The slow growth of consumption reflects on the financial performance of five benchmark retailers namely Matahari, PT Sumber Alfaria Trijaya Tbk (IDX: AMRT), PT Ace Hardware Indonesia Tbk (ACES), PT Mitra Adiperkasa Tbk (IDX: MAPI), and PT Ramayana Lestari Sentosa Tbk (IDX: RALS).

Only two companies that recorded impressive revenue growth of more than 10 per cent, Mitra Adiperkasa and Ace Hardware. MAPI recorded a strong performance in the first quarter (1Q) of 2018 with its revenue growing by 19 percent to Rp4.3 trillion from Rp3.6 trillion in the first quarter last year. The company booked 506 percent rise in net income to Rp358 billion from Rp59 billion in the 1Q of 2017.

Home appliances retailer Ace Hardware was also still able to raise its revenue by 21.7 per cent in the first quarter of 2018 to Rp1.57 trillion from Rp1.29 trillion in the first quarter last year. In addition, the company booked Rp208.89 billion in net income, a 35.54 percent rise compared to the first quarter of 2017.

However, the three companies recorded weak financial performance under 10 percent in the 1Q of 2018. The Ramayana recorded minus growth of 1.86 per cent to Rp1.05 trillion in the 1Q 2018 from Rp1.07 trillion during the 1Q of 2017. However, the company still recorded 410.86 percent growth in net income to Rp14.67 billion in the 1Q 2018 from Rp2.87 billion in the 1Q 2017.

Furthermore, Matahari booked the lowest revenue growth of 5.94 percent to Rp1.96 trillion from Rp1.85 trillion in the 1Q 2017. As a result, the company’s net profit rose only 1.04 percent to Rp246.73 billion in the 1Q 2018 from Rp244.17 billion in the 1Q 2017.

Sumber Alfaria recorded 6.61 percent in revenue in the 1Q 2018 to Rp14.67 trillion from Rp13.76 trillion in the 1Q 2017. Fortunately, the company was able to increase its net profit by 64.66 percent to Rp120.77 billion in theQ1 2018 from Rp73.3 billion in the 1Q 2017.

The weak purchasing power also drove retailers to close outlets throughout 2017. Ramayana  had closed 16 outlets last year to decrease production cost. MAPI also closed a number of outlets under Debenhams and Lotus brands due to the sales slowdown.

In our view the retail players must followed the rapidly growing trade trends through online trading to improve their financial performance in the future. Based on Indonesian E-Commerce Association data, growing GDP per capita figures, coupled with rising internet penetration and smartphone usage, give online shopping significant growth potential.

The retailers should change their mindset, the way of work, change the organizational model, increase the productivity, take an innovation to survive.

Written by Staff Writter, Email: