RHB Indonesia Morning Cuppa - 18 August 2016 - (Ciputra Development) Unknown Kamis, 18 Agustus 2016




Good morning,

Ciputra Development: Better Outlook Ahead

Ciputra booked presales in July worth IDR429bn, bringing YTD presales to IDR3.4trn, or 37% of our and the firm’s targets. We expect a better outlook for the sector going forward, driven by the passing of the tax amnesty bill and lower final property sales tax. Coupled with Ciputra’s well-anticipated new projects pipeline, we believe the FY16 presales target of IDR9.3trn is achievable. Our TP is raised to IDR1,920 (from IDR1,540, 16% upside) as we roll over our valuation base year to FY17, with a lower discount to NAV of 40% (from 50%). Maintain BUY.

¨ 7M16 presales met 37% of target. Ciputra Development (Ciputra), which booked presales totalling IDR429bn in July, has shown that its products are still well received by the market. Hence, the company advised that it will start launching new projects aggressively from September, as it expects people to shift their focus to spending from the tax amnesty. July’s success was on the successful launch at its BizHome in Tangerang, which generated sales of IDR340bn (93% out of 1,000 houses were sold at the pre-launch). Ciputra’s upcoming new launches include projects in Samarinda, Cileungsi, Fatmawati, Kemayoran, Medan, Surabaya (Northwest Park 2), shophouses in Makassar, and apartments in Ciputra World 2. Nonetheless, we keep our presales forecast unchanged and believe that the IDR9.3trn FY16 presales target is achievable.
¨ Tax amnesty and merger plan still on! Ciputra is currently undergoing the tax amnesty process and looking to transfer PT Ciputra Surya Tbk’s (CS) (CTRS IJ, BUY, TP: IDR4,866) assets under its subsidiary. CS’ management advised that the estimated penalty will be ~IDR10-20bn, with the process likely to be finalised by end-September in order to enjoy the lowest penalty rate of 2%. As for merger plans, management is still discussing the formulation and evaluation to obtain fair valuations between the three publicly-listed units. In order for the merger to happen, at least 75% of Ciputra’s shareholders must be present at the EGM and give their approval before it can proceed. No estimated valuations on the merger have been disclosed by management, but we believe the merger will unlock greater value for CS’ shareholders. CS currently trades at a 71% discount to its NAV, 8.8x FY17F P/E, and ROE of 22% (Figure 2).
¨ Lower final tax. Effective September, final tax on home sales will be cut to 2.5%, from 5%. For purchases of homes smaller than 36 sq m, the rate will be only 1% and 0% for transfer of land and/or buildings to the Government. With 83% of revenue coming from development properties and a time-lag of 1.5 years between the booking of presales and revenue recognition, the lower final tax is only expected to affect FY18 earnings. As such, Ciputra’s FY18F net margins should expand by 200bps to 19% from our initial forecast of 17%.
¨ Maintain BUY. We roll over our valuation base to FY17, applying a lower discount to NAV of 40% to derive our new TP of IDR1,920. Key risks to our forecasts include weak presales and delays in construction projects. (Lydia Suwandi)

Link to report: Ciputra Development : Better Outlook Ahead
Link to Daily report: RHB Indonesia Morning Cuppa - 180816





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Astra booked lower July 4W and 2W wholesales, which were down 26% MoM and 47% MoM, respectively, in line with our expectation on the back of shorter working days during the Lebaran (which came in July). In addition, in preparation of the new model launch, Astra has temporary reduce the supply of 2W to the distributor level, to clear-out the inventory for the older model.

For 4W, Astra gained market shares – increased to 59% in July (from 52% in June) – driven by the successful launch of its new 7-seaters LCGC Toyota Calya and Daihatsu Sigra. Combined Calya and Sigra wholesales reached 5,314 units (3,300 units for Calya and 2,014 units for Sigra) accounted for c.14% of Astra total sales in July.

For 2W, Astra’s market shares declined to 67% in July (from 73% in June), driven by clear-out inventory of Honda Beat, Astra top-selling motorcycles. Astra lowered Honda Beat inventory on distributor level since the company is launching new Honda Beat model in August.

In our view, July vehicles wholesales indicated that Astra sales recovery is likely to continue in 2H16. On YoY basis, Astra’s 4W 7M16 wholesales increased by 8% YoY, while that of 2W slightly declined by 2% YoY. Astra gained market shares both 4W and 2W market. Maintain BUY, with a SOP-based TP of IDR9,000 (15% upside) implying 18x FY17F P/E. (Andrey Wijaya)

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Best regards,

Helmy Kristanto
Director
Head of Indonesia Research
PT. RHB Securities Indonesia
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