JAKARTA – PT Erajaya Swasembada Tbk (ERAA) is facing market demand challenges for low-priced smartphones and gadgets, amidst a limited supply of flagship products.

This was highlighted by PT Ina Sekuritas Indonesia in its research report. According to Ina Sekuritas, ERAA has also been under pressure due to the ban on iPhone 16 sales in Indonesia.

Despite these challenges, ERAA reported a 14% year-on-year (yoy) increase in revenue, reaching IDR 48.6 trillion in the first nine months (9M) of 2024. This growth was driven by a surge in sales volume, which rose by 15.1% to 8.47 million units.

“The robust sales volume growth and strong market penetration have helped sustain ERAA’s business performance, amid high consumer interest in affordable products and limited flagship options,” said Ina Sekuritas in its report.

As of August 2024, ERAA dominated 55% of the handset market share in Indonesia, compared to 49% in 2023.

Moreover, ERAA’s net profit margin increased to 1.63% in 9M 2024, up from 1.2% in the same period the previous year.

Given its solid performance and market leadership, Ina Sekuritas has issued a BUY recommendation for ERAA shares, with a target price of IDR 440 per share. “This valuation is based on a projected P/E ratio of 4.70x for Full Year (FY) 2025, 2.5x lower than ERAA’s 5-year average P/E ratio,” Ina Sekuritas explained. (KR)

Read full report here.