Company Coverage
Erajaya Swasembada (ERAA IJ): Growth Normalises While Diversification Progresses
BUY (Maintained)
Current price:
Target price:
Upside:
Rp350
Rp450
+28.6%
Analyst
Analyst
Highlights
- Growth normalises after a strong 1Q26. ERAA's 5M26 SSSG moderated to +7.2% as seasonal tailwinds faded and the company lapped a high base from the iPhone 16 and 17 launches, with management guiding for more normalised growth through the remainder of 2026.
- Portfolio expansion continues. Erablue remained a standout performer, while lifestyle expansion and XPENG continue to support long-term growth despite requiring further scale.
- Maintain BUY with a lower target price of Rp450. Target price is based on 5.9x PE multiple (-0.5SD from three-year average).
Analysis
- Growth is expected to normalise through the remainder of 2026 following an exceptionally strong 1Q26. Erajaya Swasembada (ERAA) reported 5M26 same-store sales growth (SSSG) of +7.2% yoy, moderating from +11.7% in 4M26, while Sinar Eka Selaras (ERAL) posted +10.8% versus +12.5% in 4M26. Performance after April remained below 1Q26 levels as the benefits from Chinese New Year and Ramadan faded. More importantly, the group is facing an unusually high comparison base created by the launches of the iPhone 16 in Apr 25 and iPhone 17 in Oct 25, which drove exceptionally strong demand throughout 2025. As these seasonal and product launch tailwinds fade, management expects SSSG to remain at more normalised levels for the remainder of 2026 while still tracking within its mid- to high single-digit full-year guidance.
- Near-term headwinds persist, although premium demand remains resilient. Management noted that demand for premium smartphone brands, particularly Apple and Samsung, continues to hold up well, while the mid-range segment remains softer amid weaker consumer spending. At the same time, global supply constraints affecting select iPhone 17 and MacBook models have limited product availability despite healthy demand, while a weaker rupiah has increased iPhone selling prices by around 8% as inventory costs are based on an exchange rate of approximately Rp17,500/USD. Although these factors could moderate near-term sales growth, management expects the impact to be temporary and continues to guide for resilient operating performance supported by premium products and ongoing store expansion.
Highlights
- Growth normalises after a strong 1Q26. ERAA's 5M26 SSSG moderated to +7.2% as seasonal tailwinds faded and the company lapped a high base from the iPhone 16 and 17 launches, with management guiding for more normalised growth through the remainder of 2026.
- Portfolio expansion continues. Erablue remained a standout performer, while lifestyle expansion and XPENG continue to support long-term growth despite requiring further scale.
- Maintain BUY with a lower target price of Rp450. Target price is based on 5.9x PE multiple (-0.5SD from three-year average).
Analysis
- Growth is expected to normalise through the remainder of 2026 following an exceptionally strong 1Q26. Erajaya Swasembada (ERAA) reported 5M26 same-store sales growth (SSSG) of +7.2% yoy, moderating from +11.7% in 4M26, while Sinar Eka Selaras (ERAL) posted +10.8% versus +12.5% in 4M26. Performance after April remained below 1Q26 levels as the benefits from Chinese New Year and Ramadan faded. More importantly, the group is facing an unusually high comparison base created by the launches of the iPhone 16 in Apr 25 and iPhone 17 in Oct 25, which drove exceptionally strong demand throughout 2025. As these seasonal and product launch tailwinds fade, management expects SSSG to remain at more normalised levels for the remainder of 2026 while still tracking within its mid- to high single-digit full-year guidance.
- Near-term headwinds persist, although premium demand remains resilient. Management noted that demand for premium smartphone brands, particularly Apple and Samsung, continues to hold up well, while the mid-range segment remains softer amid weaker consumer spending. At the same time, global supply constraints affecting select iPhone 17 and MacBook models have limited product availability despite healthy demand, while a weaker rupiah has increased iPhone selling prices by around 8% as inventory costs are based on an exchange rate of approximately Rp17,500/USD. Although these factors could moderate near-term sales growth, management expects the impact to be temporary and continues to guide for resilient operating performance supported by premium products and ongoing store expansion.
BUY (Maintained)
Current price:
Target price:
Upside:
Rp350
Rp450
+28.6%
Analyst
Analyst
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