CIMB Quick Takes – Ramayana Lestari – Good start to festive months

Maintain Outperform and target price of Rp1,070 for Ramayana, still based on 14x CY11 earnings. Ramayana is entering its high sales season when it expects to book sales of Rp2tr, or a third of its full-year revenue over the next two months. This is literally a make-or-break period. Given a good July, management’s suggestion that inventory issues have been taken care of (following a weak 1H) and a buoyant retail market, sales and margins should be strong. We expect stock catalysts from strong sales over the next two months. On the flip side, anything less could trigger a de-rating.