RHB Indonesia - Real Estate - Presales Improved In 2Q17 With Confidence Intact (Real Estate, Waskita Karya) Unknown Senin, 17 Juli 2017




Good morning,

Real Estate – Presales Improved In 2Q17 With Confidence Intact

1H17 developers’ aggregate presales numbers fell by 35% YoY but improved by 27% QoQ to an aggregate of IDR4.9trn, which accounts to an overall of 33%/37% from aggregate companies’/our FY17F target respectively. Most of the companies booked marketing sales improvements in 2Q17 with Intiland and Summarecon posting the strongest QoQ presales growth of 224% and 119% respectively. Each company maintained its presales target supported by new project launches in 2H17F. As such, we also keep our OVERWEIGHT call on the sector. We believe the new launches would further support presales during 2H17F, coupled with lower mortgage rates, lower LTV, and a lower final tax. We also consider the downside is limited due to the sector’s recent -6.89% underperformance relative to the JCI. Currently, the sector is trading at an attractive 57% discount to NAV. Bumi Serpong remains our Top Pick. Key risks to our call includes an economic slowdown, declining purchasing power, changes in government regulations, and a weak marketing sales achievement during 2H17F.


¨ Bumi Serpong Damai (Bumi Sepong) (BSDE IJ, BUY, TP: IDR2,650): Target intact with large land plot sales in 2H17
Bumi Sepong posted flat 1H17 presales of IDR2,519bn (-1% YoY and -42% QoQ) which translates into a 35%/33% of company’s/our FY17F target. The low achievement in 2Q17 happened because i) the company only launched one project in June, the Mozia “Avezza” (57% take-up rate) which contributed IDR126bn and ii) due to the IDR840bn booking of JV land plot sales that significantly boosted 1Q17 presales number. Management’s target remained intact, with plans of large commercial land plot sales worth IDR1.5trn expected to be closed in 2H17 as well as other new project launches. The closest project launch is Aksara sub-cluster with target proceeds of c.IDR200bn which would be launched in two phases.
¨ Ciputra Development (Ciputra) (CTRA IJ, BUY, TP: IDR1,900): Several new project launches in 2H17
Ciputra also posted a rather weak 1H17 in marketing sales at IDR2,945bn (-1% YoY) while presales improved by 42% QoQ to IDR1,727bn at 2Q17. Overall the 1H17 achievement was 35%/43% from company’s/our FY17F target. Several new launches have been planned for the entire 2017 and several were already launched in 1H17 such as Citraland Cibubur (target proceeds IDR300bn, 43% take up rate), CitralandTalasa Makassar (target proceeds IDR400bn, 56% take-up rate) and The Sadana Bali (target proceeds IDR20bn, 321% take-up rate). Other new projects in the pipeline for 2H17F include Ciputra World Newton 2 Apartments (target proceeds IDR450bn), a mixed-use development in Batam (JV with target proceeds of IDR300bn), and The Suites apartments – CWJ 2 (target proceeds c.IDR67bn). Based on these new projects in the pipeline as well as existing projects to boost the 2H17F presales, the company has no plans to change its target.
¨ Summarecon Agung (Summarecon) (SMRA IJ, Neutral, TP: IDR1,422): Quarterly improvements seen and new projects to support target
During 1H17, Summarecon posted IDR1,438bn of marketing sales (-16% YoY) that accounted for 32%/39% of management’s/our FY17F target presales. Meanwhile, presales during 2Q17 improved at a significant 118% QoQ driven by several new projects such as the commercial projects in Bandung & Serpong, residentials in Karawang, Bekasi, Serpong, and office projects in Serpong & Kelapa Gading. Management has also indicated plans of new launches with total target proceeds of IDR2.5trn, spread over four locations in 2H17F with the nearest launch in August at Karawang, for 85 shoplot units, with target proceeds of IDR200bn.
¨ AlamSutera (ASRI IJ, BUY, TP: IDR540): Indication of slow 1H17 presales while relying on a tower sale in 2H17
The management of Alam Sutera gave an indication that the 1H17 presales would come at IDR850bn - 900bn (approximately -7% YoY and +43% QoQ), which would account for approximately 18%/24% from management’s/our FY17F presales target. Although 1H17 achievement seems low, the currently management has no intention of making any changes to its target due to the following plans for 2H17: i) IDR1trn of marketing sale as part of initial agreement with CFLD, ii) commercial land sale with target proceeds of IDR500bn, and iii) a whole tower sale targeted at IDR2trn. Currently, the top level management is in negotiation process with three potential buyers and expect the deal to be closed in 2H17. We think that Alam Sutera may choose to revise down its presales target if the tower deal won’t close towards the end of 3Q17F. Until then, the 2017F presales target remained at IDR5trn.
¨ Intiland Development (Intiland) (DILD IJ, BUY, TP: IDR675): Indicated improving its 2Q17 presales due to industrial estate
Intiland managements indicated 1H17 presales to come in at IDR1trn (0% YoY) but improved in 2Q17 with 114% QoQ growth, accounting for 43%/49% of management’s/our FY17F presales target. Management also indicated that the quarterly improvement was driven by Ngoro industrial estate presales of IDR481bn (+862% QoQ), exceeding the FY17 industrial target of IDR185bn. Projects that would be launched in 2H17 include: Kebon Melati, Spazio Tower, 1Park Avenue tower four, and Regatta phase two. (Yualdo Tirtakencana)
Link to report: Presales Improved In 2Q17 With Confidence Intact
Link to daily report: Indonesia Morning Cuppa 170717


Results Review:

Waskita Karya (WSKT IJ, BUY, TP: IDR4,000), Strong 1H17 results
Waskita Karya reported IDR1.28trn (+118.7% YoY) in 1H17, 51.7% and 54.5% to our and consensus estimates, above last year’s seasonality of 35.3% in 1H16. Meanwhile, revenue reached IDR15.5trn (+92.3% YoY), 41.9%/43.1% to our/consensus estimates, improved from last year’s seasonality. In quarterly basis, its net profit stood at IDR875bn (+91% YoY, +115% QoQ) in 2Q17, supported by stronger than expected gross margin of 19.7% (vs 14.5% in 1Q17). We maintain our BUY recommendation on the stock with an unchanged TP of IDR4,000. (Dony Gunawan)

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Best regards,

Helmy Kristanto
Director
Head of Indonesia Research
PT RHB Sekuritas Indonesia

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