Poised to Enjoy Handset Volume Growth
Key Takeaways:
▪️ ERAA started FY24E on a positive note, with 1Q24 revenue rising by +12.6% YoY to IDR16.6 tn (vs IDR14.8 tn in 1Q23). 1Q24 net profit climbed by +8.4% YoY to IDR255.3 bn (vs IDR235.5 bn in 1Q23), with PAT increasing by +14.8% YoY. NPM remained stable at 1.5% (vs 1.6% in 1Q23), despite higher OPEX/revenue of 8.3% (vs 7.8% in 1Q23).
▪️ Our expectation of continued volume growth was in-line. ERAA reported robust handset volume growth of +25.1% YoY in 1Q24. Since Mar-24, we have seen several brands releasing new handset line-ups at affordable prices, such as the Realme C65, Redmi Note 13 new variant, and Oppo A60. We believe volume growth will remain steady, supported by the availability of affordable brands.
▪️ One interesting aspect that caught our attention is the multi-brand consumer electronic store called Erablue. We conservatively estimate that Erablue’s sales will contribute ~2% (~IDR1.2 tn) to ERAA’s total turnover in FY24E. Notably, Erablue’s NPM rose to -6.9% in 1Q24 from -15.5% in 1Q23, indicating a promising direction towards attaining a positive profit margin.
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