Good morning,
Bumi Serpong Damai –
Expect Its Performance To Stay Level In 2H17
BSD’s 1H17 earnings
came in above our and consensus expectations. Most of the revenue growth came
from land sales, of which 50% were made to its JV with Mitsubishi. We expect
the company to maintain its performance in 2H17. Currently, the counter is
trading at 13.3x FY17F P/E and at a 67% discount to its NAV. Maintain BUY,
with an unchanged TP of IDR2,650 (51% upside). The key risks to our call are
weak presales, delays in project delivery and changes in government
regulations affecting the real estate sector.
¨ Above expectations. Bumi Serpong
Damai’s (BSD) 1H17 revenue of IDR4,213bn (+47% YoY) came in above forecasts,
at 60% of our full-year projection and 55% of the consensus estimate.
Revenue
growth was driven by residential (+39% YoY) and land plot sales (+128% YoY).
This, combined with opex efficiency, resulted in earnings of IDR2,010bn
(+145% YoY).
For
2Q17, earnings of IDR1,277bn (+74% QoQ) was on the back of a 40% QoQ revenue
growth that mostly stemmed from land sales. Land sales accounted for 58% of
total revenue, including a IDR683bn land sale to a Mitsubishi joint venture
(JV) firm. Earnings growth was also helped by lower COGS for the quarter,
which in turn came from residential revenue decreasing 63% QoQ.
With
the overall improvement in numbers, GPM for 2Q17 widened to 78% (+1,091bps
QoQ), causing its net margin to rise 1,013bps QoQ to 51.9%.
¨ Balance sheet
remains healthy.
BSD managed to maintain a healthy balance sheet, with a gross D/E ratio of
32.4% and net gearing at 12%. This provides it with ample muscle to leverage
on for the future.
¨ 2H17 project
pipeline.
BSD’s YTD presales of IDR2,519bn were at only 35% and 33% of its and our
estimates respectively. Nonetheless, management’s target and confidence are
intact, with plans to close large commercial land plot sales worth IDR1.5trn
in 2H17, as well as other new project launches. The next project launch will
be the Aksara sub-cluster, which is inside the Vanya Park cluster. This
launch, slated in August, is targeted to garner proceeds of c.IDR200bn. The
project will be launched in two phases. The houses will range from 60 sqm to
120 sqm per unit, with prices ranging IDR1.29-2.6bn a piece.
¨ We maintain our BUY
call
on the back of a 25% CAGR net profit growth forecasted for FY16-19, as well
as expectations of an improvement in the real estate sector from this year
onwards. Currently, the counter is trading at 13.3x 2017F P/E and a 67%
discount to RNAV. BSD remains our top sector pick.
¨ Risks to our call are weak presales,
project delivery delays and changes to government regulations affecting the
sector. (Yualdo Tirtakencana)
Link
to daily report: Indonesia Morning Cuppa 010817
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Results Review:
|
XL Axiata (EXCL IJ,
BUY, TP: IDR3,700), Upbeat On Better Data Monetisation
XL posted a strong
QoQ revenue, EBITDA and net profit growth of 7.6%, 12.3% and 107.8%
respectively due to a surge in mobile data revenue and mild ARPU improvement.
We remain upbeat on its growth momentum due to the sector’s growing emphasis
on data price repair. We also see positive signs from the company’s earlier
data centric transformation that led to an improved data monetisation, better
subscriber quality and ultimately, higher profitability. We maintain our BUY
recommendation and DCF-based TP of IDR3,700 (13% upside).
¨ Better data
monetisation.
XL Axiata’s (XL) quarterly results were in line with ours/consensus’
expectations. We attribute the good quarterly performance to the improved
data monetisation and healthy subscriber growth (net adds of 2.5m in 2Q17).
The highlight is the high data revenue growth at 19.4% QoQ and 77.1% YoY, on
the back of QoQ and YoY data traffic growth of 29.6 and 172% respectively.
This led to a higher EBITDA margin of 36.6% (1Q17: 35.1%).
This
in turn translated into a stronger bottomline, which grew 107.8% QoQ and
75.7% YoY. Blended ARPU increased slightly to IDR34,000 (1Q17:IDR33,000) on
the back of a further 8% erosion of data yields (1Q17:IDR11,200/GB),
2Q17:IDR10,300/GB). We believe this is a good sign, as subscribers (subs)
have been reloading more frequently and upsizing their data packages on
higher data usages.
¨ Stronger market
positioning should sustain revenue growth rate. Given the similar
data traffic growth profile, XL’s mobile internet revenue growth has outpaced
the market leader. We attributed this to XL’s highest smartphone penetration
rate of 67% and stronger market positioning that led to improved subscriber
quality (XL targeted the savvy white-collar workers, most of whom are 4G
phone users that want a good data price and decent network quality).
The
company may have carved out a niche in the market that has led to stronger
data pricing power. The company should be able to maintain ARPU and
eventually increase it over the immediate to medium term given the sector’s
growing urgency on data price repair.
¨ Questions on
results call mostly on ex-Java market. Most questions were on the dynamics of the
ex-Java market penetration and entry costs. Management did not share a clear
breakdown for ex-Java. However, it guided similar marketing expenses of
7-7.5% over full year revenue and maintained its high single digit revenue
target, high 30s-level EBITDA margin and capex
guidance of IDR7trn for FY17F.
¨ Reiterate BUY. Our IDR3,700 TP
implies a 5.5x FY18F EV/EBITDA. Coming from a low base of FY16, we expect XL
to better monetise its 4G network, regaining some market share with the
rollout of U900 and a better marketing campaign. Main downside risks
are the resurgence of an irrational pricing behaviour of the market and
higher-than-expected entry costs into the ex-Java market. (Norman Choong, CFA, Jeffrey Tan)
Link
to report: XL Axiata : Upbeat On Better Data Monetisation
Unilever Indonesia
(UNVR IJ, Neutral, TP: IDR48,500), Solid Earnings Growth Likely To Continue
Unilever booked
solid earnings growth for 1H17, driven by its food & refreshment
segment’s wider EBIT margin. Its results are in line with our expectations.
2Q17 earnings declined QoQ, driven by higher G&A expenses stemming from
the extra 1-month salary given to workers as Lebaran allowance. We
think the company’s earnings growth is likely to accelerate in the following
quarters, driven by lower opex. However, we keep our NEUTRAL call, due to its
rich valuation. Our unchanged DCF-based TP of IDR48,500 (1% downside) implies
52x FY17F P/E.
¨ Solid 1H17
earnings.
Unilever’s 1H17 earnings of IDR3.6trn (+9.9% YoY) are in line, and account
for 50% of our and consensus full-year estimates.
2Q17
earnings declined to IDR1.7trn (-15.2% QoQ). We believe this was driven by
higher G&A expenses that stemmed from the extra 1-month salary for its
workers’ Lebaran allowance. Additionally, 2Q17 sales dipped 3.9% QoQ,
likely due to the shorter working days during the quarter. Looking ahead, the
company’s quarterly earnings are likely to recover in the following quarters.
¨ Food &
refreshment segment boosted earnings. Unilever’s food & refreshment segment
booked slightly higher sales of IDR3.6trn (+2% QoQ), despite 2Q17 having
shorter working days and the rising competition in ice cream products. This
was attributed to its effective marketing strategies.
In
addition, its food & refreshment unit’s EBIT margin (before unallocated
expenses) stayed at 19.9% in 2Q17 (1Q17: 20.8%). We think this was likely
driven by a decline in input costs. Its food & refreshment segment’s 2Q17
EBIT margin was much higher than 2Q16’s 10.9%.
¨ Likely to maintain
solid earnings.
We believe Unilever is likely to maintain its robust performance in the
following quarters, driven by its strong product innovation and solid
marketing strategy. In addition, G&A expenses are likely to decline, in
the absence of the Lebaran allowance which was paid in June.
¨ Still NEUTRAL. Despite having a
promising earnings growth outlook, Unilever is currently trading at rich
valuation levels, ie 52x/47x FY17F/FY18F P/Es. As such, we reiterate our
NEUTRAL call on the stock. Our unchanged DCF-based TP of IDR48,500 also
reflects 52x FY17F P/E.
Key
downside risks to our call include the difficulty in passing on cost
increases to customers. A slowdown in consumption and weak consumer sentiment
has led consumers to become more selective. Upside risks to our call include
huge government spending which is usually heavier in 2H. Faster-than-expected
government spending would have a multiplier impact on consumer income, which
would then boost consumer spending on Unilever products. (Andrey Wijaya)
Link to report: Unilever Indonesia : Solid Earnings Growth Likely To Continue
Alam Sutera (ASRI
IJ, BUY, TP: IDR540), Positive Surprise Following a Weak 1Q17
Alam Sutera posted
strong results in 1H17, where revenue accounted for 53% and 50% of our and
consensus estimates respectively. Net profit achievement was at 80% and 79%
of our and consensus expectations respectively. Most of the growth was driven
by the accounting recognition from last year’s marketing sale to CFLD. We
conservatively maintain our assumptions, BUY call and IDR540 TP (68% upside),
which implies a 50% discount to NAV.
¨ Strong results give
positive surprises.
Alam Sutera Realty’s (Alam Sutera) 1H17 revenue grew 31% YoY. This was mostly
driven by land lot (kavling) revenue that rose 56% YoY. This was as
40-50% of last year’s presale to China Fortune Land Development Co Ltd (CFLD)
has been recognised in the company’s accounting revenue. However, YoY revenue
from the houses, hospitality and tourism sectors declined by 10%, 2% and 10%
respectively. Overall, net profit grew 31% YoY to IDR710bn, ie above our
expectation.
In
2Q17, revenue was up 40% QoQ on the back of land lot sales (Figure 4), while
revenue from the houses business tumbled by 82% QoQ – Alam Sutera only
managed to sell 25 units (1Q17: 271 units sold). However, the decline in
house revenue in turn caused lower COGS and, combined with opex efficiency,
led to a net profit of IDR534bn (+203% QoQ).
¨ Margins to
normalise.
Supported by the high achievement in land lot sales, 2Q17 gross margin
increased to 79% (+2,970bps QoQ). This caused net margin to widen to 54%
(+2,923bps QoQ). However, management has acknowledged such high GPM – driven
by high land lot revenue – may not be sustainable in the coming quarters. It
guided for overall GPM at ~50-60%, in line with our assumptions.
¨ 2H17 pipelines. Alam Sutera’s YTD
presales of IDR895bn were only at 24% and 18% of our and the company’s
targets respectively. Nonetheless, management is maintaining its aim, with
several plans to achieve its target. These include:
i. IDR1trn in land lot
sales to CFLD as part of a 5-year agreement;
ii. IDR2trn in new
project launches (ie Pasar Kemis and the Alam Sutera township);
iii. IDR2trn for The
Tower office tower project in Jakarta;
iv. IDR500bn in
commercial land/The Prominence Office Tower.
¨ Valuation
remains attractive.
Currently the stock is trading at 7.1x FY17F P/E and a 72% discount to NAV or
1.4SD below its average trading mean (Figure 6). We maintain our BUY call and
IDR540 TP (68% upside). This implies a 50% discount to RNAV on the back of
CAGR earnings growth of 27% in FY16-19F. Risks to our call include weak
presales, project delivery delays, and changes to government regulations that
affect the sector. (Yualdo Tirtakencana)
Link to report: Alam Sutera : Positive Surprise Following a Weak 1Q17
Intiland Development
(DILD IJ, Neutral, TP: IDR400), All Priced In
We lower Intiland’s
FY17F-18F earnings despite its high industrial estate achievements. We are
more conservative on its residential and high-rise presales, and declining
historical presales, which leads to lower revenue recognition. Downgrade to
NEUTRAL (from Buy) and IDR400 TP (from IDR675, 1% downside). As it is now
trading at 15.6x FY17F P/E – a 14% premium to mean P/E and 58% discount to
NAV – it is fairly valued and warrants this call, in our view. Risks to our
call are weaker presales, project delivery delays, and higher-than-expected
future presales.
¨ 1H17 driven by
industrial estates. Intiland Development (Intiland) booked a 1H17 net
profit of IDR188bn (+25% YoY, +754% QoQ), accounting for 53% and 34% of our
and consensus’ initial estimates respectively. Revenue growth for this period
(+19% YoY, +136% QoQ) was mostly driven by higher recognition from the
industrial estate segment, which sold 28.3ha of industrial land in total (for
c.IDR531bn) and contributed 51% of revenue. This was fully recognised into
accounting revenue by Intiland in the first semester.
High
achievements from the industrial segment lifted 2Q17 GPM to 44% (2Q16: 42%),
which brought a net margin of 18% for this quarter (2Q16: 9%). Industrials
estate buyers in 1H17 included a household furniture firm (2.7ha), an animal
feed firm (1.2ha), PT Toyota Astra Motor (20.3ha), and an ice cream
manufacturer (4.1ha). Meanwhile, YTD presales stood at IDR1.1trn, which accounts
for 47% of our initial target of IDR2.35trn.
¨ 2H17 projects
pipeline.
Intiland is set to finally launch the long-awaited Kebon Melati project
(slated for 26 Aug) with target proceeds of IDR520bn. This project features
two apartment towers with an estimated 470 units available for sale. However,
the company plans to launch Tower 1 in 2H17, with the possibility of
extending the offer for Tower 2 depending on market demand. Other projects in
the pipeline include IDR227bn from the Darmo Harapan project and IDR70bn from
the Quantum cluster in Serenia Hills.
¨ Forecast revision. Although both
presale and financial results were in line with our initial forecasts, we
lower our FY17F-18F presales to IDR1,958bn and IDR2,460bn respectively. Based
on our channel checks, there would be less or no contributions from the
industrial segment in 2H17, while 1H17 residential and high-rise presales
achievements were soft. Going forward, it would be challenging to replicate
such high industrial presales, unless Intiland manages to approach several
anchor tenants of a similar calibre to Toyota Astra Motor. Taking these into
account, we conservatively estimate for lower FY17F (-17%) and FY18F (-31%)
revenue. This leads us to lower our net income assumptions by 24% (FY17) and 66%
(FY18) respectively. We also expect GPM to normalise ~45% due to lower
industrial achievements in the future.
¨ Downgrade to
NEUTRAL (from Buy), with a IDR400 TP (from IDR675) that implies a 58%
discount to RNAV. It is trading at a 14% premium to its 5-year average P/E of
13.6x and 58% discount to NAV, which looks fairly valued for now. Risks to
our call are weaker presales, project delivery delays, and
higher-than-expected future presales. This report marks the transfer of
coverage to Yualdo Tirtakencana Yudoprawiro. (Yualdo
Tirtakencana)
Link to report: Intiland Development : All Priced In
Semen Indonesia’s
1H17 earning down 44% YoY, below expectation
Semen Indonesia’s
1H17 earning came in at IDR1trn (-44% YoY), below expectation, made up merely
28% and 30% of our and consensus full-year estimates.
QoQ basis, 2Q17
earning declined to IDR346bn (-54% QoQ), which partly driven by lower sales
volume (-4% QoQ), as well as higher operational expenses. Notably, Semen
Indonesia raised 2Q17 ASP to IDR937,000/tonnes (+3% QoQ) to pass on higher
production costs. Notably. 2Q17 GPM maintained at 30.3% (1Q17: 30.4%).
However, opex per unit increased to IDR177,000/tonne (+19% QoQ) which we
believe, mainly driven by expenses for the Lebaran allowance.
We see that sales growth to
accelerate in 2H17, in line higher government infrastructure projects. We
reiterate Neutral with DCF-based TP of IDR9,800 (3% downside), implies FY17F
P/E of 15x. (Andrey Wijaya)
Indocement’s 1H17
earning declined 63% YoY, below expectation
Indocement’s 1H17
earnings fell to IDR902bn (-63% YoY), below expectation, achieved merely 29%
and 28% of our and consensus full-year estimates.
QoQ basis, 2Q17
earnings declined to IDR411bn (-17% QoQ) which was driven by lower sales volume
(-3% QoQ), lower ASP (-3% QoQ), and higher operational cost/tonne (+7% QoQ).
These caused 2Q17 EBIT margin narrowed to 12.3% (1Q17: 14.8%).
We reiterate Sell
with DCF-based TP of IDR12,800 (38% downside), implying 15x FY17F P/E. (Andrey Wijaya)
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Economics Update:
|
June M2 Growth
Continues Uptrend, Loan Growth Moderates
Indonesia’s money
supply (M2) growth edged up to 11.4% YoY in June (May: +11.1%) due to a
pick-up in net domestic claims. Going forward, we expect broad money supply
to grow at a faster pace of 11% in 2017 (2016: +10%), underpinned by stronger
economic growth.
Private credit
moderated. Total loan growth eased in June, due to weaker growth in working
capital and investment loans. Going forward, we expect demand for private
credit to pick up to 12% in 2017 (2016: +7.8%), aided by:
i. A more accommodative
policy environment following monetary policy easing in 2016;
ii. Stronger projected
economic growth.
Meanwhile,
consumption credit rose in June due to AidilFitri festivities, despite lower
consumer confidence during the month.
Deposit growth,
however, eased, as savings and demand deposits recorded slower increases in
June.
The key policy rate
is likely to be maintained. We expect Bank Indonesia (BI) to maintain its key
policy rate at 4.75%, as inflation is likely to remain manageable.
IDR strengthened
against the USD. The domestic currency strengthened against its US counterpart.
This was after strengthening in May, as capital inflows returned after
Standard & Poor’s (S&P) upgraded Indonesia’s credit rating. Hence, we
expect the IDR to remain strong and trade towards 13,300/USD by end-2017. (Rizki Fajar)
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Media Highlights:
|
Corporate
Nielsen Indonesia
sees weak Ramadhan retail sales
Golden Mines Energy
allocates IDR200bn to increase its capacity
Totalindo Eka
Persada booked IDR440bn new contract
CIMB Niaga’s profit
increases 87.5% in IH17
Bumi Teknokultura
Unggul plans 8-for-1 stock split
|
Our
Recent Publication:
|
Results Review: Pembangunan Perumahan Persero –
Positive Outlook Ahead
Link to report: Pembangunan
Perumahan Persero : Positive Outlook Ahead
|
Results Review: Bukit Asam – More Realistic Guidance
Link to report: Bukit
Asam : More Realistic Guidance
|
Results Review: Japfa Comfeed Indonesia – Margin
Erosion Faster Than Expected
|
Results Review: Indofood CBP – Expecting Better
Quarters Ahead
|
Results Review: Indofood Sukses Makmur –
Earnings Growth To Accelerate In The Quarters Ahead
|
Results Review: Astra International – Heavy
Equipment Boosts Earnings
Link to report: Astra International
– Heavy Equipment Boosts Earnings
|
Results Review: Adhi Karya Persero – Ready
To Sail
Link to report: Adhi Karya Persero –
Ready To Sail
|
Results Review: Astra Agro Lestari –
Downtrend In CPO Price Pushes Share Prices Down
|
Results Review: United Tractors – Strong
Mining Heavy Equipment Sales To Continue
|
Results Review: Acset Indonusa Tbk –
Targeting a Bigger Piece Of The Pie
|
Best regards,
Helmy Kristanto
Director
Head of Indonesia Research
PT RHB Sekuritas Indonesia
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