Courts Asia

Courts Asia: Will be officially opening its ‘Big-Box’ Megastore in Bekasi, Indonesia on 18th Oct ‘14. The Megastore, has 130,000 sf of retail space, houses 12,000 product offerings from 200 brands and has been soft opened since 4th Oct ’14. Going forward, Courts has plans for three additional stores to be opened in Jakarta by FY15, with aims to bring its unique Big-Box and category concepts to more residents in Indonesia. In addition, the rollout of its multi-channel capabilities to expand its online presence into Indonesia is also currently in the pipeline. With its share price currently fluctuating near its 52-week low of $0.44, following its dismal 1QFY15 results, which was weighed by slower sales in Singapore and higher rental and marketing costs, investors will be keeping their eyes closely on the group’s latest entry into Indonesia, which could provide it with a fresh avenue for growth and enable it to leverage on the domestic consumption story of Asean’s largest economy. Separately, Maybank-KE believes that Courts’ attempts to revive demand in its key markets will further dampen its earnings in the short term, while its migration to a new ERP system may also bite into its margins in the next few quarters Courts Asia currently trades at an undemanding 9.8x forward P/E versus Asean peers of 20-30x. Maybank-KE rates Courts at Hold with a TP of $0.52.