CIMB Ramayana Lestari

2008 was a good year for Ramayana, though marred by investment losses. Ramayana’s sales exceeded Rp5tr, of which over 40% came from outside Java. Same-store growth was 6.5%, ahead of its 5.5% target. 2009 will be a trying period as outer-Java same-store sales are contracting faster than in Java. Management has marked down store expansion by 40-45%, and targeting 0.3% same-store growth. We have cut our earnings estimates by 1-8% to reflect lower space expansion but maintaining margin assumptions. Downgrade to Neutral from Outperform with a lower target price of Rp560 (from Rp600), still DCF- derived.