RHB Indonesia - Modernland Realty - Company Visit Note (Modernland Realty, Pakuwon Jati) Unknown Senin, 06 Maret 2017




Good morning,
Modernland Realty (MDLN IJ, NR), Company Visit Note

We visited Modernland to get the latest update about the company’s performance and strategy. Per December 2016 marketing sales was booked at IDR4.5trn or 9% above the company’s target with residential sales contributed 88%, industrial 9%, and hospitality & others 2%. Most of residential sales were from Jakarta Garden City (JGC) or 87% from total and the company sold 24.9 ha of industrial land in Cikande with ASP around IDR1.7mn per sqm.


♦ JGC will still be the focus of the company’s marketing sales with 144 ha of remaining land bank in the area. JGC is located in East Jakarta and 15 minutes from Kelapa Gading. The residential development targets mid to high segments with price range of IDR1.5bn – 2.5bn per unit. JGC will have another toll road access that will connect to the inner ring road via Tanjung Priok expected to operate in 2Q17, which will be another point of attraction for potential buyers. AEON mall is also expected to operate in 4Q17 post topping off in January 2017. AEON mall is currently planned to have a total of 135,000 sqm of operation area.
♦ Modernland also has 2 industrial land areas at Cikande, West Java and Bekasi, East Java. Cikande is an on-going development with 210 ha of land bank and 3,175 ha of licensed area. This industrial area is about 55 km from Jakarta accessible through Jakarta-Merak Toll road and 55 km from Bojonegara seaport. Unlike most industrial estate, majority of of tenant profiles in Cikande are food processing companies (39%) such as Charoen Phokpand (CPIN IJ, BUY, TP: IDR3,700), Cargill, and Nippon Indosari (ROTI IJ, BUY, TP: IDR1,870). Meanwhile the company has 981 ha of industrial land bank in Bekasi that has not been developed yet.
♦ In 2017 marketing sales target is at IDR4.3trn, 2% increase from last year’s target. Residential sales is expected to reach IDR3trn and industrial is expected at IDR1.3 trn with target of 60-65 ha of land sale. Capex is also allocated at IDR1trn, depending on the company’s cash flow, which will be used for land acquisition in Cikande and JGC. Currently the counter is trading at 5.5x FY17F consensus P/E implying 48% discount from its consensus NAV. (Yualdo Tirtakencana)

Link to Daily report: Indonesia Morning Cuppa 060317

Company Update:

Pakuwon Jati (PWON IJ, NR), Company Visit Note
We visited Pakuwon to get the latest update regarding its performance and strategy.
FY16 highlights:
♦ FY16 marketing sales was booked at IDR2.3trn, 3% above its target but 26% lower than FY15 achievement.
♦ Condominium contributed 69%, residential 24%, and office 7%.
♦ Recurring revenue as of 9M16 was 52% and expected to remain in 50% level going forward.
♦ Pakuwon has issued 7 years bonds of USD250mn in February 2017 with 5% coupon non-callable the first 4 years that was used to refinance USD200mn bonds due in 2019.
♦ Pakuwon currently has 457 ha of landbank where 94% are located in Surabaya.
What to expect:
♦ Pakuwon’s strategy is developing existing inventories rather than developing new ones. The development will also be more towards high rise and malls, where mostly will be focused in Surabaya.
♦ This year, company targets marketing sales of IDR2.7trn that will come from further developments of existing inventories. Thus, there will be no new major launch this year except for an office tower launch in Kota Kasablanka, Jakarta.
♦ Pakuwon has IDR250bn of backlog that will be recognized in 1Q17 and will be part of 2017 marketing sales. This 1Q17, management expects marketing sales to reach IDR600bn.
♦ Currently consensus NAV/share for the counter is at IDR228 and the stock is traded at 13.2x FY17F consensus PE. (Yualdo Tirtakencana)

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Best regards,

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

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