People’s purchasing power has improved, following recommendations for issuers in the retail sector

Reporter: Hikma Dirgantara | Editor: Khomarul Hidayat

KONTAN.CO.ID – JAKARTA. After stumbling around last year along with the economic slowdown and people’s purchasing power due to the Covid-19 pandemic, the retail sector is now considered to have a potentially better outlook.

RHB Sekuritas analyst Vanessa Karmajaya said one of the positive catalysts for the retail sector is the ongoing Covid-19 vaccination process. According to him, vaccination will not only accelerate the recovery of economic activity, but will also support the improvement of the performance of retail sector issuers.

“With vaccination, social restrictions are now relatively more relaxed, plus people’s purchasing power has also begun to improve. This condition can eventually encourage people to go back to shopping, which in turn will have a positive impact on the performance of retail issuers, ”said Vanessa when contacted by Kontan.co.id, Friday (19/3).

Likewise, Ciptadana Sekuritas analyst Robert Sebastian also assessed that the Covid-19 vaccination process will be able to reduce the spread of Covid-19 cases so that social restrictions are no longer extended. This condition will eventually make people travel again and can increase visitor traffic.

Also Read: Buyback is a positive sentiment for Ramayana Lestari (RALS), this is the recommendation of the analyst

Furthermore, Robert also saw that the momentum of Eid al-Fitr this year will be much better than last year. In 2020, the government at that time gave a ban on going home along with the imposition of social restrictions. This in turn caused retail issuers’ sales to plummet during Eid.

“With the Lebaran momentum, issuers such as PT Ramayana Lestari Sentosa Tbk (RALS) and PT Matahari Department Store Tbk (LPPF) will certainly benefit because there will be a surge in purchases. Thus, it will improve the performance of these two issuers, ”explained Robert.

Apart from the moment of Eid and vaccinations, positive catalysts for this sector also came from the improvement in commodity prices crude palm oil (CPO) recently. Vanessa said, the increase in CPO prices will also increase purchasing power, especially retailers outside Java. Moreover, non-tier I areas are close to commodity plantations and mining areas.

Both Vanessa and Robert said that sentiment that could potentially be a negative catalyst for the retail sector was that the vaccination process was slow or not as expected. This has the potential to re-trigger the high daily cases of Covid-19 which could lead to the reintroduction of social restrictions.

Robert himself has made recommendations for this hold retail sector issuers. However, he made recommendations buy for shares of PT Erajaya Swasembada Tbk (ERAA) with a target price of IDR 2,850 per share. This is in line with ERAA which was positively affected by the IMEI policy and the increasing demand for gadgets during the pandemic.

“For RHB Sekuritas, top pick we are PT Mitra Adi Perkasa Tbk (MAP). The consideration is that the MAPI segmentation is a more resilient upper middle class. In addition, more vaccines will be distributed in big cities where most of MAPI’s outlets and revenue come from big cities, “explained Vanessa.

Vanessa makes recommendations buy MAPI shares with a target price of IDR 1,000 per share.