Mitra Adiperkasa No surprises in 4Q12

Mitra Adiperkasa: No surprises in 4Q12 (MAPI, Rp9,100, Neutral, TP: Rp6,300)

We donot expect any surprises in 2013 earnings growth. Sector valuation rerating has recently driven MAPI as the laggard, weighing down costs pressures concern. We do not see much upside from this level. We keep our Neutral stance, while adjusting up our TP to Rp7,950.

FY12 sales formed 100% of our estimate and 103% of consensus, while NPAT formed 100% of our and 97% of consensus. Decline in margin was within our expectation, though consensus was a bit too upbeat.

MAPI guided for 25% sales growth with 8-10% SSSG and 100k sqm expansion in FY13. Top-line target is above the street, but not for the bottom-line. Amidst costs pressures and competition, the company guided for 30-40bps reduction in FY13 operating margin, lower than our initially conservative forecast. We have revised down our FY13F EBIT to incorporate higher costs pressures, especially from the wages as FY13 expansion will remain aggressive at 100k sqm.

We incorporated FY12 results into our model and fine-tuned FY13F and FY14F EPS by -6.3% and +0.1%. Higher wages were the main drag in our assumptions. For more detailed assumptions, please refer to Figure 10.

Sector re-rating has triggered a P/E re-rating in MAPI as a laggard, weighing down concerns over its margin pressures. We revised up our TP to Rp7,950 pegging MAPI with higher FY13F P/E multiple at 25x. We stay Neutral at this juncture, on costs pressures concern.