Discovering Hidden Treasure
Key Takeaways:
• PT Hartadinata Abadi Tbk (HRTA IJ) is a well-known gold jeweler in Indonesia engaged in integrated manufacturing, wholesaling, retailing, and refining gold jewelry.
• The company plans to increase the contribution of pure gold (EmasKITA and Kencana) sales to 56% to total revenue in FY23F.
• HRTA conducts partnerships with several businesses, including: 1) Aneka Tambang (ANTM) to produce micro and gold bar and fine-gold jewelry products; 2) financial institutions; 3) ~1300 Alfamart retailers (AMRT) and PT Pos Indonesia to attract mid-low segment consumers, offering a pawn business.
• HRTA also plans to open 125 new outlets across Indonesia in FY25F and launch an e-commerce platform and digital application to facilitate the transactions of EmasKITA and Kencana by the end of this year.
• 4 macro factors limiting downside risk of gold: 1) lower oil production; 2) failure of crypto assets; 3) slump economic growth; 4) monetary policy uncertainty.
• The company has recorded a strong revenue growth trend with CAGR (2017–2021) of 20.5% p.a, while net profit surged with CAGR (2017–2021) of 15.2%.
• We recommend BUY for HRTA IJ with a target price of IDR530, which implies PE 3.2x/3.1x and PBV 0.5x/0.4x on FY23E/FY24F.
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