CLSA INDO - Ramayana 1q09 results disappointing

Ramayana reported disappointing 1Q09 results. Please see comments from Swati below. Maintain Sell.

Ramayana posted net profit of Rp43bn for 1Q09 (12% of our FY09 forecasts). Operating profits was only Rp5bn (1% of our FY09 forecasts). Operating margin was only 0.6% compared to 3.2% for 1Q08.

Ramayana has a high operating leverage. Almost 60% of Ramayana’s operating expenses are fixed. Weak sales means operating margins get squeezed sharply.

Ramayana -0.1% operating margin in 4Q08 was the worst ever since 2Q95. The 0.6% operating margin in 1Q09 was the second worst since 2Q95! Rp5bn in operating profit is also the second lowest since 2Q95.

Overall ssg for 1Q09 was -8.9% yoy. We have forecasted -7% for 09CL.

We will be reviewing our numbers for downward revision on back of higher opex/sales and lower sales.

Maintain Sell