CIMB Ramayana Lestari Company update - Turning the corner

(RALS IJ / RALS.JK, OUTPERFORM - Maintained, Rp570 - Tgt. Rp800, Consumer)

Ramayana's May sales hit Rp401bn, with 5M09 SSG at -5.8% yoy, much improved from the -8% yoy in 4M09, supporting our view that the worst could be over. A recovery is in sight, with sharply declining inflation and improving SSG. Ramayana has decided to revamp its supermarket model, and opened a pilot store recently. We believe downside risk is limited, with upside aplenty. We raise our earnings estimates by 4-9% to factor in lower tax assumptions and lift our DCF-based target price to Rp800 from Rp560, implying 15.1x and 10.8x CY09-10 earnings. Maintain OUTPERFORM.