Company Overview
Champ Resto Indonesia TBK, trading under the Bloomberg ticker ENAK IJ, is a leading F&B chain in Indonesia. The company operates six distinctive cuisine brands –
Gokana, Raa Cha, BMK, Platinum, Chopstix, and Monsieur Spoon – that cater to a wide range of consumer tastes. With 2,166.7 million shares issued and a market capitalization of Rp2,307.5 billion (approximately US\$149.8 million), Champ Resto Indonesia stands as a significant player in the Consumer Discretionary sector.
The company’s outlet expansion strategy is robust, with a current base of 331 outlets as of 2024 and plans to add around 37 new net outlets in 2025 across 10 cities, primarily in Java. This strategy is expected to drive a 16% year-on-year increase in revenue for 2025.
Investment Recommendation and Price Target
UOB Kay Hian maintains a BUY rating on Champ Resto Indonesia. The current share price of Rp585, in conjunction with a revised target price of Rp740, offers an upside of approximately +28.2%. Although the previous target price was set at Rp1,300, the adjustment reflects a more conservative forecast for 4Q24 performance in the wake of a high base effect in 4Q23.
The strategy analyses underline that revenue growth of 16% in 2025, coupled with gradual margin expansion – with the gross profit margin (GPM) forecast to improve from 62% in 2023 to 64% in 2024 – and an expected NPAT growth of 36% year-on-year in 2025, provide strong justification for the current recommendation.
Business Strategy and Brand Expansion
Champ Resto Indonesia’s expansion strategy is centered around its three key restaurant brands – Gokana (Japanese food), Raa Cha Suki & BBQ (Raa Cha), and Platinum (international cuisine). As of 9M24, these brands have driven the majority of the revenue, with Raa Cha contributing 35%, Gokana 30%, and Monsieur Spoon 27%. The remaining approximately 9% is derived from other brands.
The targeted expansion into 10 cities on Java Island and the addition of 37 new outlets in 2025 are expected to solidify and boost the revenue base, ensuring a continuous demand for the popular F&B offerings.
Financial Performance
Key Financials at a Glance
The report provides detailed historical figures and forecasts that illustrate the company’s financial trajectory:
- Net Turnover (in Rpb): From Rp1,265 in 2022 to a forecast of Rp1,787 in 2025 and Rp2,019 in 2026.
- EBITDA: Improving from Rp244 in 2022 to an expected Rp450 in 2025, supported by operating efficiencies.
- Operating Profit: A gradual increase from Rp70 in 2022 to Rp132 in 2025.
- Net Profit (Reported/Actual): Fluctuating from Rp62 in 2022 to projected figures of Rp76 in 2025 and Rp100 in 2026.
- EPS (Rp): Rising from 28.8 in 2022 to an estimated 35.1 in 2025.
- Valuation Multiples: The price-to-earnings (PE) ratio has seen variation – from 37.0x in 2022 to a forecast of 30.3x in 2025 – and the price-to-book (P/B) ratio is anticipated to decline gradually from 8.7x in 2023 to 6.3x in 2025.
- Return Metrics: The ROE is projected to improve from 12.7% in 2023 to 21.7% in 2025, while the net margin estimates rise from 2.2% in 2023 to 4.3% in 2025.
Detailed Quarterly and 9M Results
The report reviews the 3Q24 and 9M24 performance:
- Revenue (Rpb): Decreased from Rp334 in 3Q23 to Rp358 in 3Q24, down 12.6% quarter-on-quarter but showing a 7.0% increase year-on-year. For the 9M period, revenue increased by 12.8% from Rp1,033 to Rp1,165.
- Gross Profit: Fell from Rp202 in 3Q23 to Rp227 in 3Q24, a decrease of 14.1% quarter-on-quarter yet a healthy 12.3% increase on a year-on-year basis. The 9M gross profit grew by 15.9% from Rp644 to Rp746.
- Operating and Net Profit: 3Q24 saw an operating loss with a -121.4% change compared to the previous quarter, while net profit swung significantly from a profit of Rp18 in 3Q23 to a loss of Rp14 in 3Q24. Over the nine-month period, net profit increased by 36% from Rp15 to Rp20.
- Margins: Gross margins improved from 60.4% to 64.5% in 3Q24 and from 62.3% up to 64.1% on a year-on-year basis. Despite fluctuations in operating margins, the report underscores a notable improvement in net profit margins in the 9M period.
Earnings Revisions and Associated Risks
The forecast has been adjusted in response to a lower-than-expected 9M24 performance, compounded by weaker consumer purchasing power and the high base effect observed in 4Q23. Key risks identified include:
- Intense Competition: Increasing competition in the F&B sector might impact market share.
- Rising Raw Material and Other Costs: Inflationary pressures could negatively influence margins.
- Consumer Purchasing Power: A cautious outlook on consumer spending amid economic uncertainties.
- Changing Consumer Behaviors: Shifts in dining habits and preference trends may require strategic adjustments.
These factors led to a more conservative view for the 4Q24 performance, where revenue growth only managed an 8% year-on-year increase despite a seasonal upturn during Christmas and New Year’s days.
Valuation and Recommendation
The valuation metrics used by UOB Kay Hian reflect a cautious yet optimistic outlook. The target price is derived based on a 44.3x PE ratio applied to the forecasted 2025 EPS. With ENAK currently trading at 35x 2025F PE (below the -1.25SD threshold of 42x), the revised target price of Rp740, despite being lower than the previous target of Rp1,300, remains attractive for investors.
The detailed multiples and margin improvement forecast underpin a strong forward view, with an anticipated NPAT growth of 36% in 2025 primarily driven by outlet expansion and slight margin expansion from improved cost efficiencies under new management.
Profit & Loss, Balance Sheet, and Cash Flow Analysis
The report provides a comprehensive breakdown of financials:
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Profit & Loss: The net turnover is projected to grow from Rp1,512 in 2023 to Rp1,787 in 2025. EBITDA is expected to rise steadily from Rp294 in 2023 to Rp450 in 2025, while operating profit increases from Rp73 in 2023 to Rp132 in 2025.
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Balance Sheet: Total assets remain strong at around Rp1,100 billion with improvements in equity, rising
