Kim Eng Ramayana Target Price is Rp650 (43% potential upside)

Ramayana reported sales were up 0.4% YoY to Rp336.5b in Jan 09. Same-store growth was in negative territory of -2.1%, the first negative SSG since July 2007. This was worse than the company’s guideline of 0.3% and our assumption of 0%. Although we assume a zero SSG, we still expect sales to grow by 4.1% this year, on the back of four new stores opening, fewer than management guideline of six new stores. Other drivers for sales growth this year is the election, government economy stimulus and wage increase which we believe could help purchasing power especially middle-low consumers. Maintain BUY, target price is Rp650 (43% potential upside).

Sales volume of 4W in January 09 fell by 22% YoY to 32,167 units. Toyota is reported gaining market share to around 40% compared to 33% in January 08. Sales volume drop in January 09 is lower than industry expectation of 32%. We see that slower economic growth, lower commodity prices as well as tight liquidity in banking sector discourage buyers to purchase big ticket items. We maintain HOLD recommendation on