|
Good morning,
Summarecon Agung –
Targets Cut Amid The Low Achievement
Although presales
have improved in 2Q17, we cut our target FY17F marketing sales to IDR2.7trn
following its downward presales target revision to IDR3.5trn along with the
disappointing results in 2Q17. Therefore, our FY17F-18F earnings are slashed
by 20% and 21% respectively, which lead to a lower new TP of IDR1,125 (from
IDR 1,422, 3% upside), implying a 60% discount to NAV. We remain cautious of
Summarecon because of its high gearing level and high interest costs.
However, we expect its performance to improve next year. Maintain NEUTRAL.
¨ Target
presales cut.
As at 1H17, Summarecon Agung (Summarecon) booked marketing sales of
IDR1,438bn (-16% YoY, +118% QoQ) or equivalent to 32% and 39% of the
company’s and our initial target. 1H17’s presales achievement was lower than
its 5-year historical average trend of 52% during the first semester.
Meanwhile, the latest 7M17 presales data came in at IDR1,540bn or 20% lower
compared to 7M16 and only accounted for 41% from our initial target.
We believe that management was aware of the
challenge and have revised down its FY17 target marketing sales to IDR3.5trn
from IDR4.5trn. After taking into account the company’s revision and its soft
presales in 7M17, we too revise our target FY17F-18F presales to IDR2,895bn
and IDR3,249bn respectively. Currently, management’s plan for 2H17F product
launches comprise of the following:
i. IDR900bn from two
launches in Serpong;
ii. IDR900bn from two
launches in Bandung;
iii. IDR200bn from a
shoplot launch in Karawang (Aug 2017);
iv. IDR500bn from two
launches in Bekasi.
¨ Weak
2Q17 results & earnings adjustment. 2Q17’s topline grew 18% QoQ mostly
driven by apartment and retail sales while house, commercial, and landplot
sales were slow. Higher apartment sales led to higher cost of goods sold
(COGS), and combined with the higher marketing expenses in opex, have
eventually eroded 2Q17’s bottomline into negative territory. As a result of
the cut to target presales, we lower our earnings assumptions by -20% and
-21% for FY17F-18F respectively with net margins falling to 2.6% this year
(-313.6bps).
¨ Maintain
NEUTRAL. We
remain cautious on Summarecon due to its high gearing and interest costs, as
well as soft presales during 7M17 that led to management lowering its
targets. However, we expect improvements to come in the next year with a 7%
topline CAGR growth for FY17F-19F. Our IDR1,125 TP implies a 60% discount to
RNAV.
¨ Risks
to our call
include the depleting prime landbank, deteriorating capital structure with
gearing on the rise, weaker presales, project delivery delays, regulation
changes affecting the sector, and better-than-expected demand. (Yualdo Tirtakencana)
Link
to report: Summarecon Agung : Targets Cut Amid The Low Achievement
Link
to daily report: Indonesia Morning Cuppa 110817
|
|
Sector Update:
|
|
Plantation – Stock/Usage
Ratios Back To Historical Average
Malaysia’s inventory
numbers rose to 1.78m tonnes in July, implying normalised stock/usage ratios
that are in line with historical averages. We believe inventory levels may
continue rising in the next few months, as production continues to ramp up
during the peak period. Even so, festive demand should also start coming
through soon. For the regional planters, we expect the bulk of companies to
record in-line results – although, for this quarter, we could see more
companies booking better-than-expected numbers. No change to our UNDERWEIGHT
sector rating.
¨ Malaysia’s CPO
production rose 20.7% MoM in July. YTD, production has climbed 14.9% YoY.
In August, production is likely to continue strengthening as we head towards
the peak period. For the whole of 2017, we expect Malaysia’s CPO output
growth to moderate to 10-12% YoY.
¨ Exports rose by a
slight 1.3% MoM in July, post the Aidil Fitri festive ramp-up
two months before. This brought YTD exports to a 6.3% increase YoY. In
YTD-July, exports to China rose 7.3% YoY while EU saw a 5.4% increase but
this was offset by a 21% YoY decline to India and 20.9% drop to the US.
¨ Inventory rose
16.8% MoM
to 1.784m tonnes in July due to the stronger output and weak exports.
Annualised stock/usage ratios for July are now at 9.5% (up from 8.2% in
June), which is in line with historical averages. This means that stock
levels are no longer in a shortage situation, as had been the case for the
last eleven months. We expect to see a continuation of rising inventory
levels, as production resumes its recovery during the peak seasonal period.
¨ 2Q17 results
preview.
Due to the strong recovery in FFB output, we expect five companies to report
stronger-than-expected results (Genting Plantations, Kuala Lumpur Kepong, IJM
Plantations, First Resources and Golden Agri). Meanwhile, we anticipate two
planters to book disappointing numbers, ie Felda Global Ventures and Ta Ann.
Eight
companies are estimated to post results that are in line with our
projections. A summary of our results preview is on Figure 2. While the
average FFB output grew 17.5% YoY in 2Q17, we expect this to moderate in 2H17
due to the higher base in 2H16.
¨ We maintain our
UNDERWEIGHT rating on the sector, on the back of a strong output recovery and
weak demand dynamics. Catalysts include a positive change to global demand
and any extreme weather occurrences that would have an impact on global
vegetable oil output. Our top BUY is Sime Darby (SIME MK, TP: MYR10.15) while
our top SELL is London Sumatra (Lonsum) (LSIP IJ, TP: IDR1,200). (Hoe Lee Leng, Hariyanto Wijaya, CFA, CPA, CMT)
Link to report: Stock/Usage Ratios Back To Historical Average
Automotive: Ground check on GIIAS auto show
Yesterday, we
visited GIIAS, Indonesia largest auto show. Mitsubishi with its new low-MPV Xpander
was stealing the show which was indicated by crowd in its booth.
Surprisingly, during our visit, Wuling booth - which just launched low-MPV Confero
- was not too crowded. Toyota launched med-MPV Voxy, while no new
model from Honda. We see Xpander could be serious competitor to
Astra"s Avanza.
Based on price
range, Wuling Confero is likely to compete with Toyota Calya.
While, Mitsubishi Xpander likely compete with Toyota Avanza. At
the moment, it is still not clear how long Astra auto division earning to be
under pressured, following Xpander and Confero launches.
However, we believe, in long term, Astra should be able to recover its
earnings - thanks to its strong after sales service, brand name, and dealers
network.
Astra share price
had declined by 17%, partly driven by anticipation of rising competition in
auto business. At current share price, Astra is trading below -1SD from its
average rolling average PE which is near its bottom. Maintain BUY with
IDR9,850 TP (24% upside), implies 17x FY18F P/E.
Yesterday, GIIAS was
open to limited invitation. Today, we will visit GIIAS again to check crowd
on booths when the auto show open to public. (Andrey
Wijaya)
|
|
Company Update:
|
|
Lautan Luas (LTLS
IJ, NR), Meeting takeaways
We visited Lautan
Luas, here are the key takeaways:
¨ Lautan Luas has
three business lines: chemical distribution, manufacturing and supported
services. Currently chemical distribution still dominates its revenue by more
than 56%, while manufacturing only contributes 36% of revenue. By the end of
this year, contribution from manufacturing is expected to improve to 45%,
while its distribution business will be stood at 45% to revenue.
¨ Manufacturing
business provides decent GPM at 20% - 25%, better than distribution margin of
12%-15%. On the other hand, supported services offers the highest GPM of
25%-30%.
¨ Currently, they own
fully utilized creamer factory with total capacity 21,600 tonnes pa with an
upcoming new factory with additional capacity of 40k tonnes pa. New creamer
factory will start to operate in 2H17 and its targeted to be fully utilized
in FY19.
¨ The company
conservatively targets IDR120bn (+100% YoY) NPAT in FY17F, with IDR7trn
(+8.7% YoY) revenue, supported by profit from associates (previously was
booking lost in FY16). In 1H17, LTLS had recorded IDR85bn (+157.9% YoY) net
profit and 3.5trn (+12.5% YoY) revenue.
¨ Lautan Luas sees a
better outlook in 2H17 as the new creamer factory will start the production
and they are benefited from recent enforcement on illegal import.
¨ In FY18F revenue is
expected to improved +15%YoY, with relatively stable GPM of 17-18%. Net
gearing would be lower to 1x (from current NDER of 1.3x). Hence, Lautan Luas
aims minimum of 20% net profit growth next year.
Lautan Luas has 30%
dividend payout policy, which translate to 4.8% assuming IDR120bn FY17F’s
NPAT. The stock is currently trading at 6.2x/4.9x FY17F/FY18F PE. (Dony Gunawan)
Megapolitan Developments (EMDE IJ, NR),
Analyst meeting notes
We were invited to Megapolitan analyst
meeting with the following key takeaways:
¨ The company has four
development areas that are mainly located within Greater Jakarta area:
1. Cinere, Depok (Main focus area)
2. Sentul, Bogor (2nd focus area)
3. Karawaci, Tangerang
4. Kuningan, Jakarta
¨ Company’s current
landbank is 350ha.
¨ The company has four
products, based on 2Q17 revenue breakdown;
1. landed house (19%),
2. apartment (18%),
3. commercial (29%),
4. rental (34%)
¨ Megapolitan
experienced 101% CAGR growth on net profit since 2011-2016 supported by 27%
CAGR growth on revenue during the same period. The company also managed to
maintain GPM at above 50% level since 2010, while net margin as of 1H17 stood
at 18.7%. Balance sheet is quite healthy with net gearing stood at 37%,
leaving plenty of room for future leverage, with 3.3x EBITDA/interest ratio.
¨ Going forward,
management will focus to target the mid-low segment with landed house price
in the range of IDR1.2-2bn/unit and apartment price in the range of
IDR300-600mn/unit.
¨ This year
Megapolitan targets IDR360bn of marketing sales with IDR174bn achieved during
1H17 (48% from target). Management is also targeting 15% topline growth for
FY18F.
¨ Upcoming projects
will include:
i. 2.3ha Graha Cinere Phase-4 landed house (2017)
ii. 3.9ha Cinere Terrace Suites apartment (2018)
iii. 2.1ha Cinere Terrace Walk Mall (2018)
iv. 7.3ha Cinere Parkview landed house (2018)
v. 0.2ha De Vonte shophouses (2019)
vi. 6.8ha Vivo Sentul mixed use (2018-2019)
vii. 1.2haTatya Asri Sentul landed house (2023)
Based on
managements’ estimate, Megapolitan’s current NAV per share stood at IDR1,753.
Using this assumption, the stock is currently trading at an attractive 85%
discount to its NAV. (Yualdo Tirtakencana)
Merdeka Copper and Gold (MDKA IJ, NR), Meeting
key takeaways
We visited Merdeka Copper and Gold, here
are the key takeaways:
¨ Currently Merdeka
Copper and Gold (Merdeka) has 36m tonnes reserves out of 90m tonnes
resources, which will be improved to 46m tonnes reserves by the end of this
year. Having said that, the company is eyeing 4m tonnes production pa and
potentially will be increased after prefeasibility study in September. On the
other hand, copper can be mined seven years after the production started.
¨ They just started
operation in march’17 and has fully operated in June’17. In 1H17 the company
has produced 25k onces gold and 6.4k ounces silver with cash cost of USD286/oz
Au or All-in Sustaining Cost (AISC) of USD505/oz Au, the most efficient among
peers in Indonesia with stripping ratio around 1.1x .
¨ Net gearing is
currently stood at 0.8x and MDKA expects to have net cash position by the end
of FY18.
¨ Merdeka estimates
its production to reach 110k ounces of gold in FY17 at an AISC of
USD550-USD650oz.
The company estimates its EBITDA of USD100m
in FY18F and minimum of USD70m-USD75m pretax cashflow pa. (Dony Gunawan)
|
|
Media Highlights:
|
|
Corporate
Illegal phones to be eradicated
Waskita Karya opens tender for Trans-Java
toll roads
Amman Mineral completes Macmahon
acquisition
Catur Sentosa to increase modern retail
contribution
Bank Bukopin targets a 20% pension credit
portion
|
|
Our
Recent Publication:
|
|
Results Review: Indosat – Underinvestment
Poses a Medium Term Risk
Link to report: Indosat
: Underinvestment Poses a Medium Term Risk
|
|
Sector Update: Financial Technology –
Embracing The Disruptor
Link to report: Financial Technology – Embracing
The Disruptor
|
|
Economics Update: Economic Growth Sustained
In 2Q17
Link to report: Economic
Growth Sustained In 2Q17
|
|
Results Review: Bank Rakyat Indonesia – More Room For
Improvement
Link to report: Bank
Rakyat Indonesia : More Room For Improvement
|
|
Company Update: Nippon Indosari Corpindo – Expecting
Sunshine After The Storm
|
|
Company Update: Aneka Gas Industri – Muted Volume
Growth Due To Lebaran Break
Link to report: Aneka
Gas Industri : Muted Volume Growth Due To Lebaran Break
|
|
Company Update: Wijaya Karya Persero – Stronger Year
Ahead
Link to report: Wijaya
Karya Persero : A Stronger Year Ahead
|
|
Company Update: Harum Energy – Strong Earnings To
Continue
Link to report: Harum
Energy : Strong Earnings To Continue
|
|
Results Review: Bumi Serpong Damai – Expect Its
Performance To Stay Level In 2H17
|
|
Results Review: XL Axiata – Upbeat On Better Data
Monetisation
|
|
Results Review: Unilever Indonesia – Solid Earnings
Growth Likely To Continue
Link to report: Unilever
Indonesia : Solid Earnings Growth Likely To Continue
|
Best regards,
Helmy Kristanto
Director
Head of Indonesia Research
PT RHB Sekuritas 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
