Lippo’s Matahari Department Shares Face Exodus as Sell Ratings Pile Up

(Bloomberg) -- Shares of PT Matahari Department Store tumbled to a six-year low as sell recommendations continued to pile up after a drop in net income prompted the company to slash its dividend earlier this week.

Of the 29 analyst ratings compiled by Bloomberg on Lippo Group’s retailing unit, a record high of seven recommend selling the stock. In the latest cut, Maybank Kim Eng analyst Janni Asman downgraded the company to sell from buy, chopping its target price by more than half to 4,400 rupiah on expectations for flat earnings growth. The stock fell 16 percent today to 3,600 rupiah, rounding off a 39 percent plunge this week.

Matahari Department’s rout comes in the wake of a selloff of Lippo Group companies’ securities last year after Indonesian investigators named group executives in a bribery case related to a property developed by Lippo Karawaci near Jakarta. The group, founded by tycoon Mochtar Riady, is offering for sale the U.S. Bank Tower in downtown Los Angeles, known for its cameos in Hollywood movies and a sky-high outdoor glass slide, amid investor concern the group is facing a liquidity crunch.

CGS-CIMB analyst Kevie Aditya kept her reduce recommendation on Matahari, but trimmed the target price by 10 percent. The company has been traded at “attractive valuation” after the recent drop in its share price, according to Aditya.

“We expect profitability to remain lackluster,” Aditya wrote in a March 5 report. “We also note that there may be a potential management change in the middle of 2019 that may put existing strategies at stake.”

To contact the reporter on this story: Harry Suhartono in Jakarta at hsuhartono@bloomberg.net

To contact the editors responsible for this story: Divya Balji at dbalji1@bloomberg.net, Naoto Hosoda, Teo Chian Wei

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