STOCKS NEWS INDONESIA-CIMB raises Ace Hardware target price

Fri Sep 28, 2012 12:36am EDT

CIMB Equity Research raised its target price on shares of PT Ace Hardware Indonesia Tbk, Indonesian appliance retailer, to 7,700 rupiah from 6,700 rupiah and kept its 'outperform' rating, citing the company's aggressive growth plan for the next year.

"Ace is likely to roll over its aggressive growth plan to 2013, which means that above-average growth is here to stay, supporting its valuations. Space expansion should remain high over the next 12-18 months given the buoyant economic outlook," Erwan Teguh, head of research at CIMB Equity, wrote in a note on Friday.

"We continue to rate it an Outperform for its high growth prospects. We trim full-year 2012-13 earnings for a tardy turnaround for the toy business and slower same store sales growth but raise full-year 2014 for steady gross margin," Teguh said.

The stock was up 3.23 percent at 6,400 rupiah while the broader index was up 0.44 percent.

1109 (0409 GMT)

(Reporting by Andjarsari Paramaditha in Jakarta; Editing by Jijo Jacob)

**************************************************************** 11:25 28Sep12 -STOCKS NEWS INDONESIA-CLSA sees robust rise in retail, office market rent Retail rent in Indonesia is rising after many years due to rampant retailer expansions, while office space availability is still tight amid high demand, CLSA Asia Pacific Markets said.

"We are seeing a shift of power in retail market from tenants to mall operators. After many years, rent finally increased, with major retailer Mitra Adiperkasa succumbing to higher rent hike. It is unlikely to reverse as demand is strong, supply is dwindling, buoyed by supporting demographics," CLSA analyst Sarina Lesmina said in a note on Friday.

Mitra Adiperkasa reported higher-than-expected increase in rent renewal for the next five years, 20-30 percent increase compared with 15-20 percent increase before. CLSA termed this a surprise as the luxury retailer occupies up to 30 percent of major malls in Indonesia.

Office space shortage is also acute, with strong foreign direct investment (FDI) inflows and business expansion as demand drivers, which might put further pressure on rental growth, the brokerage said.

However, the challenge will occur in 2014 when 447,900 sqm of space is projected to be available. Hence, rental rate growth is expected to moderate in 2014, unless absorption remains high due to strong FDI inflows, Lesmina added.

CLSA said PT Pakuwon Jati and PT Agung Podomoro have the highest portion of recurring income from operating malls at 95 percent, while PT Summarecon Agung and PT Alam Sutera is also adding retail space in suburban areas.

At 10.39 a.m (0339 GMT), the Jakarta Property Index was up 1.16 percent, while the broader Jakarta Composite Index was higher 0.44 percent.

1041 (0341 GMT) (Reporting by Andjarsari Paramaditha; Editing by Jijo Jacob)

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