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Every Turn, Alfamart

Last weekend, I decided to spend some time in Bandung. Throughout the journey, one thing was a constant companion: Alfamart. This convenience store seemed to be everywhere, from highways and rest areas to the winding roads characteristic of Bandung.

It's no surprise that Alfamart is so dominant, with around 22,000 stores across Indonesia. Its constant presence makes traveling more comfortable, as if there's a "guardian" of our needs at every turn.

Source: Company

In 1Q24, AMRT achieved a record-breaking revenue of IDR 29.3 tn, marking a 12.1% yoy growth and an 8.9% qoq increase. This is the highest revenue in the company's history.

Source: Bloomberg

Despite facing boycott issues against several brands sold at AMRT, the company remained unaffected and continued to exhibit significant growth.

This resilience is attributed to AMRT's product diversification strategy. By offering a wide range of products from various consumer goods companies, customers can easily find alternative products at Alfamart.

According to AMRT, the purchasing power of low-income consumers remains strong, which supports the company's revenue growth. 

The Consumer Confidence Index in Indonesia has reached its highest level this year, excluding the month of April due to the Lebaran holiday. This reflects improved consumer confidence in the country's economic conditions.

Consumer Confidence Index

Source: Tradingeconomics

Additionally, AMRT's online sales have shown significant growth. In 2020, online sales contributed less than 1% to total revenue, but now they account for 6%.

Currently, 3,100 stores offer delivery services with their own employees as couriers, covering a delivery radius of about 2-3 km.

Alfagift, AMRT's loyalty program, has also seen rapid growth over the past five years, with membership reaching 14 mn.

Source: Company

AMRT has also established 300 stores offering EV battery replacement services. While growth in this sector is still slow, AMRT believes it has great future potential.

From these impressive revenues, AMRT recorded a profit of IDR 890 bn, up 12.18% yoy, despite a slight quarterly decline due to increased operational costs.

Source: Company

They also maintained their efficiency, making the 1Q24 their highest-performing first quarter in the past decade. This achievement reflects their ability to streamline processes and optimize resources, contributing to their impressive performance despite external challenges.

Source: Bloomberg

For this year, AMRT is targeting annual revenue growth of 10%-11%, with SSSG of 4%-6%.

In 1Q24, SSSG was mainly driven by volume growth since most FMCG companies did not significantly raise their selling prices. 

In fact, some companies, like Unilever, reported a -4.9% yoy decrease in unit prices for their domestic sales.

AMRT also plans to add 1,500 new stores and 5 new distribution centers this year.

With this positive outlook, we believe that AMRT presents a good investment opportunity.


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