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RHB Indonesia - Delta Dunia - Key takeaways from meeting with CFO (Delta Dunia, Bumi Serpong Damai) Unknown Senin, 16 Oktober 2017




Good morning,

Delta Dunia – Key takeaways from meeting with CFO

We met Delta Dunia’s (DOID IJ, Buy, IDR1,500) Chief Financial Officer to discuss the outlook of Delta Dunia. Followings are key takeaways from the meeting:

¨ Achieving targeted FY17F overburden removal and coal production are quite challenging. Delta Dunia target to reach FY17 overburden removal of between 360 and 400 m BCM and coal production of between 45 and 50m tonnes. The realisation until 8M17 are 228m BCM of overburden removal (average run rate in the last two months is 31m BCM per month) and 27.4m tonnes of coal (average run rate in the last two months is 3.6m tonnes per month). There is a possibility that the realisation of FY17 volume below targets.
¨ Confidence in reaching FY17F target EBITDA. Although there is possibility that Delta Dunia does not achieve targeted volume, its CFO is confidence in reaching its FY17 targeted EBITDA range between USD270 and 320 m as Delta Dunia should enjoy the highest mining contracting rate (third tier) throughout 2017 as coal price is likely sustain above >USD75/tonne throughout 2017.
¨ Ramping up mining contracting volume of Pada Idi project. In August 2017, Bukit Makmur got mining contracting contract to do green field project for Pada Idi, which would do 200m BCM and 15m tonnes of coal throughout the contract. In FY18F, Bukit Makmur would ramping up mining contracting volume of Pada Idi project to 24m BCM (vs 2m BCM in 4Q17F) and coal production to 3m tonnes (vs 0 m tonnes of coal in 4Q17F)
¨ FY18F mining volume should keep grow at double digit growth. Management thinks that Bukit Makmur’s FY18 mining contracting volume should grow at double digit due to the combination from new client Pada Idi and most of its clients plan to ramp-up overburden removal and coal production.
¨ Maintain Buy with TP:IDR1,500. Our TP:IDR1,500 impying FY18 P/E of 8.8x and FY18 EV/EBITDA of 4.8x. (Hariyanto Wijaya, CFA, CPA, CMT)

Link to daily report: Indonesia Morning Cuppa 161017

Company Update:

Bumi Serpong Damai – 9M17 marketing sales
Bumi Serpong Damai (BSDE IJ) announced 9M17 marketing sales at IDR4.8trn (+17% YoY). This accounts for 57%/66% from our/company’s full year target, still below its 5-yr historical average of 73% during Jan-Sep. However, management remains confident that IDR7,225bn of marketing sales can be achieved by the end of this year.

Management only mentioned 1 upcoming housing cluster launch that is the Savia cluster with target presales of ~IDR300bn. Meanwhile, the company currently has a PRICELOCK program until end of this year where the initial 15% downpayment may be paid up to 24x installment and the remaining payment of the 85% will only start on 2020. Management expects to book around IDR1trn from this program (similar to last year’s Price Amnesty Program achievement of ~IDR1.4trn). The company also plans to sell more commercial landplot with a target of ~IDR1trn.

Based on the given information, we estimate that marketing sales may reach around IDR7.1trn. Therefore, we need to revisit our assumptions to better reflect current condition. (Yualdo Tirtakencana)
Media Highlights:

Corporate

Gas margin set at 7%
Motorcycle exports at 124,232 units in 3Q17
Ciputra Development has booked IDR5.25trn marketing sales in 9M17
Ace Hardware booked 11% SSSG in 9M17
Antam has realized 13% of rights issuance proceeds
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Best regards,

Andrey Wijaya
Senior Vice President
Research Analyst – Auto, Consumer, Cement
PT RHB Sekuritas Indonesia

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