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Indonesia: the importance of home

Rebecca Lewis, Partner and Co-CEO

Household visits have also been key to our research in Indonesia over the past three years and these continue to reinforce the sacred nature of ‘home’ to consumers. We expect Indonesia’s per capita spending on home improvement to rise significantly from USD27 today – a level materially lower than regional peers Malaysia (USD79) and Thailand (USD142). 

Culturally there is high importance placed on being a “good host” and providing a gathering place to celebrate religious festivals.

Source:  Arisaig Partners

Aspirasi Hidup (ACES) is the dominant Indonesian home improvement player in Indonesia. It only listed entity within the Kawan Lama Group, which means “trusted old friend” in Bahasa. It certainly feels like this given how long we have known the management team: Partners Rebecca and Gordon were covering this stock for the Founders in the early 2010s.

ACES offers everything a middle-class Indonesian might need with a staggering inventory of 50,000 SKUs across 90 categories: 70% of these items are private label products. This “everything under one roof” value proposition, second only to its focus on quality, has helped ACES become the number one player.

Importantly, the management team has initiated a pivotal shift in targeting demographics, moving from Boomers and Gen X to Millennials and Gen Z. This strategic pivot is underscored by a demographic shift where we estimate that over 50% of Aspirasi Hidup’s customers are now under 40 years old, compared to just 20% a year ago.

A SSSG of 8% in 2023 and 10% so far in 2024 bears out that this proposition continues to resonate and with only a 6% market share today we expect ACES to drive consolidation of this fragmented market over time.

The halving of ACES pre-pandemic PE to 13x given international outflows from Indonesia certainly feels to us like a golden opportunity. Importantly, we have had access to the next generation of the founding family and gained confidence that our alignment of values will transcend the generational transition.

Data Sources & Photographs: ACES Annual Reports & Arisaig Partners

Clients can review the full research report on Aspirasi Hidup on our Client Portal. If you would like further information on access please contact investorrelations@arisaig.com.

 

Disclaimer:

This material is being furnished for general informational and/or promotional purposes to professional investors only. The views expressed are those of Arisaig Partners and should not be considered as advice or a recommendation to buy, sell or hold a particular investment. They reflect opinion and should not be taken as statements of fact, nor should any reliance be placed on them when making investment decisions. This material does not constitute independent research and is not subject to the protections afforded to independent research.

The statements and views expressed herein are subject to change and may not express current views. Arisaig Partners makes no representation or warranty, express or implied, regarding the accuracy of the assumptions, future financial performance or events. Emerging markets are generally more sensitive to economic and political conditions than developed markets and may be more volatile and less liquid than other investments.

All information is sourced from Arisaig Partners and is current unless otherwise stated. Issued by Arisaig Partners (Asia) Pte. Ltd. Not for public use or distribution. Arisaig Partners (Asia) Pte. Ltd is licensed and regulated by the Monetary Authority of Singapore.

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