|
Good morning,
Property: Real
Estate - Towards a More Positive 2017
The majority of
companies we spoke with have expressed more positive views for 2017, as
evident in the 34% YoY growth in targeted aggregate marketing sales to
IDR31.6trn. This supports our OVERWEIGHT view on the sector for 2017, where
the companies’ aggregate presales target is in line with our presales target
of IDR31.7trn. Indonesian developers under our coverage booked an aggregate
15% YoY decline in marketing sales in 2016, due to weaker macroeconomic
conditions and uncertainties prior to the implementation of the tax amnesty
programme.
¨ Political
factors may impact presales in 1H17. The current nationwide governers’
elections may lead to soft presales in 1H17 in our view, as developers are
unlikely to launch large projects due to political uncertainty (assuming two
rounds of elections). We may see more project launches starting early 2H17
after the end of the elections. Other factors that may delay property
launches include the Government’s plan to tax idle land, although this is
still in discussions and we believe the companies’ confidence levels remain
intact despite this issue.
¨ 2016
performance review.
We believe that the drop in 2016 marketing sales was due to several factors
such as weakening macroeconomic conditions (4Q16 GDP at 4.9% vs 5.2% in
2Q16), the Government’s aggressive taxation drive, concerns on IDR stability,
and uncertainty prior to the execution of the tax amnesty programme during
1H16.
¨ Catalysts
in place, ready for realisation. Throughout 2016, several positive drivers
were launched in the sector including:
i. Foreigners being
allowed to purchase property under “rights to use” title;
ii. Relaxation of
loan-to-value (LTV) threshold;
iii. “Off-plan”
properties being allowed for second mortgages;
iv. Reduction in final
sales tax to 2.5%;
v. Lower mortgage
rates due to the declining Bank Indonesia (BI) rate.
We believe that the impact from these
catalysts were not fully translated into 2016 presales due to several events
and the realisation of aforementioned risks. Nevertheless, we see limited
downside given that the sector underperformed JCI by 8.5% as at the end of
Dec 2016, reflecting investors’ concerns over the sector. Going forward we
believe these uncertainties should clear with the above positive catalysts in
place.
¨ Increasing
demand for mortgages. Based on data points (Figure 3) we see a shift in
payment method from cash instalments to mortgages, as a result of the
declining BI rate in 2016, as well as relaxation of the LTV threshold. We
expect this trend to continue as mortgage rates are getting more competitive
in the single-digit range (Figure 4). We are still of the view that BI would
cut rates by another 25bps going forward.
¨ Attractive
valuations.
The sector is currently trading at a 64% discount to RNAV, around -1.6SD from
its past 3-year mean of 56%. We continue to favour companies with healthy
balance sheets and sufficient landbank, as landed houses remain the most
popular type of property to buy. Our Top Pick is Bumi Serpong Damai, which
currently trades at a 64% discount to its RNAV, and is supported by a huge
landbank totalling 4,092ha, a low net gearing level of 0.1x, and FY17F
earnings growth of 20% YoY. (Yualdo
Tirtakencana Yudoprawiro)
Link
to Report: Towards a More Positive 2017
Link to Daily report: Indonesia Morning Cuppa - 220217 |
|
Results
Review:
|
|
Bank
Tabungan Pensiunan Nasional (BTPN IJ, BUY, TP: IDR3,400), To
Continue High-Yield Loans Focus
We expect BTPN to continue focusing
on high-yield loan segments with a gradually lower proportion from its
initial pension loans focus. The commercial and productive poor loans
segments would be the key engine growth for this year, in our view. This is
due to the saturated pension loans market. Based on our model, with a
combination of bigger contributions coming from commercial loans and higher
CASA deposits, NIMs ought to reach 11.5% (FY16: 11.8%). Thus, we maintain our
BUY call and GGM-derived IDR3,400 TP (31% upside) on BTPN.
¨ Sustainable
NIMs outlook. We
expect more sustainable NIMs going forward for Bank Tabungan Pensiunan
Nasional (BTPN). This would come from a combination of lower asset yields and
substantial reduction in its blended cost of funds (CoF). Loans growth would
be supported by loans to the informal small and medium enterprise (iSME)
(average ticket size: IDR3.9bn) and productive poor segments. Meanwhile, on
the funding side, the bank’s BTPN Wow! and Jenius offerings are
likely to remain the main growth engines in support of higher CASA deposits.
As a result of all this, we expect NIMs of 11.5% due to a lower asset yield
of 17.4% with 6.4% blended CoF this year.
¨ Decent asset
quality.
BTPN’s Dec 2016 NPL ratio stood at a manageable 0.8%. It is also likely to
remain manageable going forward, given the bank’s prudent risk management
profile. Yet, we conservatively assume a higher NPL ratio of 3.2% on the
micro lending segment. This is despite its lower contribution to total loan
mixture. At the same time, we also opine that NPLs on the productive poor
segment are also likely to see an uptick. This is because some of BTPN’s
borrowers would be upgraded to higher ticket sizes. As such, we project for
the bank’s gross NPL ratio to reach 0.9% by end-2017.
¨ Maintain
BUY.
We maintain our BUY call and GGM-derived IDR3,400 TP on this counter. Our key
assumptions are cost of equity (CoE) of 10.9%, ROE of 11.8% and long-term
growth of 3%.
Our TP is based on 2017F P/BV of 1.12x,
which is below BTPN’s 8-year average of 1.9x. Short-term risks to our
forecasts include direct competition with the Government’s credit for
business programme (KUR) and tight liquidity within the system that are
likely to hurt its blended CoF. (Eka
Savitri)
Pembangunan Perumahan Persero (PTPP IJ, BUY, TP:
IDR5,300), Time To Harvest
Reiterate our BUY call on PTPP with a
higher TP of IDR5,300 (from IDR5,100, 51% upside) based on an unchanged 22x
FY17F P/E. We upgrade our new contracts estimate this year to IDR40trn, from
IDR38trn, which translates to more than IDR90trn worth of projects in the
pipeline. With a higher contribution from its EPC segment, we estimate a
higher GM at 15.3%. We also expect a stronger earnings growth of 45.9% YoY.
Currently, the stock is trading at 14.5x FY17F P/E. Although cheaper than
Adhi Karya, it has a stronger balance sheet and is not dependent on just a
single project.
¨ Bigger
orderbook.
Pembangunan Perumahan Persero (PTPP) won IDR32.6trn (+20.6% YoY) worth of new
contracts last year, slightly higher with our estimate and they were mainly
dominated by building projects. This year, we expect the company to obtain
IDR40trn new contracts with a higher contribution from its subsidiaries and
EPC segment.
¨ Robust
growth and higher margin. We conservatively estimate its net profit to grow to
IDR1.5trn in FY17, slightly lower than company’s guidance of IDR1.6trn. It is
supported by a stronger revenue growth of +51.7%YoY and higher contribution
from its EPC segment. This segment’s revenue is likely to contribute around
24% of total revenue, an improvement from 14.4% in FY16. Since the EPC
segment has better profitability than construction, we expect a higher gross
margin of 15.3%.
¨ High capex as engine
growth.
The company is likely to allocate up to IDR21trn capex this year, which would
be mainly injected into its subsidiaries in order to get a higher
contribution from them. Thus, PTPP would obtain an additional loan of
IDR6trn. Having said that, we estimate its debt equity ratio (DER) and net
debt to equity ratio (NDER) to stand at 1.1x and 0.8x respectively in FY17.
¨ Remain bullish on
the stock.
We reiterate our BUY call with a higher IDR5,300 TP, based on 22x FY17F P/E,
offering a 51.4% upside to the current TP. Currently, PTPP is trading at
14.5x FY17F P/E. Although cheaper than Adhi Karya Persero (Adhi Karya) (ADHI
IJ, NEUTRAL, TP: IDR2,100) it has a stronger balance sheet, robust growth and
is of less risk since it is not dependent on just a single project. (Dony Gunawan)
Link to report:Pembangunan Perumahan Persero : Time To Harvest
Semen Indonesia (SMGR IJ, Neutral,
TP: IDR9,800), Changing Focus To Improve Margins
In
January, Semen Indonesia slightly raised its ASP to partly pass on higher
energy costs to customers. To boost earnings, we note that it is now focusing
more on growing profitablity than increasing market share. The company’s 4Q16
earnings came in above our expectations, driven by a gain on taxes from asset
revaluations, as well as higher other income. We remain NEUTRAL on the stock,
with a DCF-based TP of of IDR9,800 (7% upside) that also implies a FY17F P/E
of 12x.
¨ Higher
ASP in January.
On a MoM basis, Semen Indonesia slightly raised its domestic cement ASP to
IDR763,000/tonne in January (+0.3% MoM, Dec 2016: IDR761,000/tonne). We
believe this was done mainly to maintain its EBIT margin on the back of
pressure from higher energy costs. We expect energy costs – which accounted
for c.24% of FY16 COGM – to further increase after its coal purchase
contracts are renewed, and in line with the trend of higher international
coal prices. The majority of its coal is purchased under 3- or 6-month
contracts.
¨ 4Q16 earnings are
better than expected. Semen Indonesia’s 4Q16 earnings jumped to IDR1.6trn
(+65% QoQ, +20% YoY), which came in higher than our expectations. The
performance was driven by gains on taxes from asset revaluation, as well as
higher other income from its waste treatment business. Its operational EBIT
margin declined to 15.6% in 4Q16 (from 19.8% in 3Q16), which we believe was
driven by both lower ASPs and higher expenses. Its domestic cement ASP
declined to IDR766,000/tonne in 4Q16 (-3% QoQ).
¨ Still NEUTRAL. Our DCF-based TP of
IDR9,800 implies FY17F P/E of 12x. Although Semen Indonesia is trading at low
P/Es, ie at close to -2SD from its average forward rolling P/E mean, we do
not think it is an attractive option given the strong headwinds in the
industry. Risks to our call are detailed on page 3. (Andrey Wijaya)
Link to report:Semen Indonesia : Changing Focus To Improve Margins
|
|
Media
Highlights:
|
|
Corporates
Jasa Marga aims 2% YoY increase in
transaction volume
Bumi Serpong Damai to boost sales of
commercial segment
Intiland prepares capex of IDR2trn this
year
Garuda Indonesia to build USD41m facility
Pakuwon to launch two office building
projects
Telecommunication companies focus on
network infrastructure
|
|
Our
Recent Publication:
|
|
Company Update:
Waskita Karya - Continued Solid
Performance Expected In 2017
Link to report: Waskita Karya : Continued Solid Performance Expected In 2017 |
|
Results Review: Adhi
Karya Persero - Looking Towards a Better
Year
Link to report: Adhi Karya Persero : Looking Towards a Better Year |
|
Company Update: Astra
International - Expect Astra’s Financial
Services Unit To Recover
Link to report: Astra International : Expect Astra’s Financial Services Unit To Recover |
|
Results Review: Bank
Tabungan Negara: More Good Years Ahead
Link to report: Bank Tabungan Negara : More Good Years Ahead |
|
Economic Update: CAD
Improves In 4Q, BOP Surplus Continues
Link to report: CAD Improves In 4Q, BOP Surplus Continues |
|
Sector Update:
Regional Plantation - Last Round Of El Nino
Impact for Malaysia
Link to report: Last Round Of El Nino Impact for Malaysia |
|
Sector News Flash:
Regional Oil & Gas - One Of The Deepest Cuts
In The History Of OPEC
Link to report: One Of The Deepest Cuts In The History Of OPEC |
|
Sector News Flash:
Regional Oil & Gas - Production Cut Rollover a
Possibility
Link to report: Regional Oil & Gas: Production Cut Rollover a Possibility |
Best regards,
Helmy Kristanto
Director
Head of Indonesia
Research
PT. RHB Securities
Indonesia
Disclaimer: This message is intended only for the use of the individual or entity to whom it is addressed and may contain information that is confidential and privileged. If you, the reader of this message, are not the intended recipient, you should not disseminate, distribute or copy this communication. If you have received this communication by mistake, please notify us immediately by return email and delete the original message. This message is transmitted on the condition that the recipient accepts the inherent risks in electronic data transmission and agrees to release RHB group and RHB Securities from any claim which the recipient may have as a result of any unauthorized duplication, reading or interference with the contents herein. The contents herein are made in the personal capacity of the above-named author and nothing herein shall be construed as professional advice or opinion rendered by RHB group and RHB Securities or on its behalf.
