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Good morning,
Ciputra Development
– Toning Down Our Forecasts
We believe the
sector would pick up starting this year, following the recent cut in
benchmark rate. However, we are toning down our previously over-optimistic
marketing sales expectations for Ciputra, to better reflect its YTD
achievement. As a result, our earnings forecasts have been reduced by 35% and
42% for 2017F-2018F respectively, and we roll over our valuation to 2018F to
derive our new TP of IDR1,250 (from IDR1,900, 4% upside), which implies 64%
discount to RNAV. Downgrade to NEUTRAL (from Buy).
¨ Reality check. Our previous
assumptions for Ciputra Development’s (Ciputra) presales was following the
Government’s decision to lay out several stimulus packages for the sector,
including the latest benchmark rate cut of 25bps. However, the company’s marketing
sales achievement up to 8M17 only made up 38% of our full-year expectations
(vs its target of 45%). This presales achievement was also below its 5-year
historical average of 60% for the Jan-Aug period (Figure 1). In addition, the
company is lagging in its financial performance as 1H17’s revenue and
earnings were only 28% and 25% of our initial full-year projections for
revenue and earnings respectively.
¨ Cutting
assumptions. As
Ciputra’s performance did not improve from the previous quarter, we are lowering
our marketing sales target for 2017F-2018F to IDR6.28trn (-38%) and IDR6.4trn
(-42%) respectively. As a result, our 2017F-2018F earnings have been reduced
by 35% and 42% respectively.
¨ SGD150m MTN
issuance. On
20 Sep, Ciputra issued a 5-year SGD150m medium-term note (MTN) at 4.85%. This
would be used to refinance its SGD65m MTN due in Feb 2018. The remaining
amount would likely be used to settle several bank loans. Post issuance, we
estimate its blended cost of debt to be around 9.6%. The company’s balance
sheet remains healthy, in our view, where we estimate net gearing to remain
below 40% post MTN issuance, with interest coverage to be more than 2x by
year-end.
¨ Upcoming launches. Ciputra’s new
landed housing cluster project was launched in Surabaya mid-September, with
the company booking IDR1.1trn worth of marketing sales on the first day of
launch. There are three high rise projects in the pipeline that are targeted
for launching by the end of the year – Newton 2 (Ciputra World Jakarta 2 Extension
with ~400 units and targeted proceeds of IDR400-450bn), The Suites Apartment
(CWJ 2 with ~12 service apartment units and targeted proceeds of IDR400bn),
and Citra Plaza Batam (Batam with targeted proceeds of IDR200-300bn).
¨ Downgrade
to NEUTRAL on
lower earnings and presales projections. Our SOP-based TP suggests a 64%
discount to our RNAV of IDR3,493/share (vs management’s internal RNAV
estimate of IDR3,600/share). Ciputra is currently trading at a 66% discount
to our RNAV (in line with the sector average RNAV discount). Risks to our
call include lower marketing sales achievement, regulatory changes, economic
slowdown, and higher-than-expected marketing sales achievement. (Yualdo Tirtakencana)
Link to report: Ciputra Development : Toning Down Our Forecasts
Link to daily
report: Indonesia Morning Cuppa 061017
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Company Update:
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Summarecon
Agung (SMRA
IJ, Neutral, TP: IDR1,125), 9M17 Marketing Sales Are In Line With Estimates
Summarecon’s
marketing sales came up to IDR1,991bn in 9M17 (-10% YoY), in line with and at
74% of our full-year projection (our 5-year historical average: 75%). We
remain cautious on its prospects, due to its high gearing level, interest
costs as well as soft presales during 9M17. However, we expect its
performance to improve in 2018, with a 7% topline CAGR estimated for FY17-19.
Our unchanged IDR1,125 TP (3% upside) is derived by applying a 60% discount
to RNAV. Maintain NEUTRAL.
¨ September presales
are still weak.
Summarecon Agung’s (Summarecon) presales in Septemper were soft, amounting to
IDR147bn (-52% MoM, -27% YoY). The largest contribution to the company’s
presales came from its Serpong project (41%). This was followed by projects
in Bandung (18.5%), Karawang (17.8%), Bekasi (13.7%) and Kelapa Gading (9%).
¨ Upcoming launch. On 28 Oct, the
company is set to launch its next project in Serpong, featuring two
residential sub-clusters named Verdi and Vivaldi. Both sub-clusters are
located within the Symphonia cluster. Summarecon expects to book IDR300bn of
presales from these two launches. (Yualdo
Tirtakencana)
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Media Highlights:
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Corporate
Consumer Confidence
rises September
Nielsen sees YTD
retail sales only grew by 2.5% YoY
Foreign ownership in
property to be relaxed
Alam Sutera to
develop Pasar Kemis
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Our
Recent Publication:
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Regional Thematic: Halal – An Earnings
Boost Strategy
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Economics Update: September Inflation
Remains Moderate
Link to report: September
Inflation Remains Moderate
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Company Update: Nippon Indosari Corpindo –
Details On Rights Issuance
Link to report: Nippon
Indosari Corpindo : Details On Rights Issuance
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Sector Update: Coal Mining - Energy
Minister Does Not Agree With Cost-Plus Margin
Link to report: Energy
Minister Does Not Agree With Cost-Plus Margin
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Company update: Tower Bersama Infrastructure – Not
Our Preferred Exposure In The Sector
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Corporate News Flash: United Tractors –
Mining Equipment Sales To Stay Robust
Link to report: United
Tractors : Mining Equipment Sales To Stay Robust
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Economics Update: BI Cuts Key Policy Rate
Further In September
Link to report: BI
Cuts Key Policy Rate Further In September
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Economics Outlook: Stronger Growth in 2018
But Capped By Spending Constraint
Link to report: Stronger
Growth in 2018 But Capped By Spending Constraint
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Corporate News Flash: Astra International –
Vehicle Sales Rise MoM In August
Link to report: Astra
International : Vehicle Sales Rise MoM In August
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Sector News Flash: Telecommunications –
Spectrum Auction In October
Link to report: Spectrum
Auction In October
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Best regards,
Andrey Wijaya
Senior Vice President
Research Analyst – Auto, Consumer, Cement
PT RHB Sekuritas Indonesia
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