Good morning,
Real Estate – Upbeat
Outlook For Ciputra And Bekasi Fajar
Following our 1 Nov
report, 9M17 Results Summary, we summarise the
results for Ciputra and Bekasi Fajar in this note. Both companies booked
solid numbers throughout 9M17 and beat our estimates. Maintain OVERWEIGHT on
the sector, as we expect marketing sales to improve going forward, with
limited downside risks. The sector is trading at a 67% discount to NAV. Key
risks include an economic slowdown, lacklustre marketing sales, changes in
regulations impacting their performance and lower-than-expected marketing
sales.
¨ Ciputra’s 3Q17
performance beat our estimates. Ciputra Development (Ciputra) booked 9M17
earnings of IDR566bn (-8% YoY, +84% QoQ). This accounted for 78% of our
estimate, and beat its 4-year historical average of 65%. Note that its
earnings only made up 53% of the consensus estimate.
In
3Q17, its net margin eroded by 978bps YoY to 15%. This was because its
topline was flat, while overall costs rose 4% YoY. This, in turn, was mostly
incurred by its office, but reflected the company’s sales growth (Figure 2).
Its opex increased 33% YoY, mainly due to a hike in salary expenses.
Its
balance sheet remains healthy, with total interest-bearing debt standing at
IDR8.23trn post its SGD150m medium-term notes issuance in September. We also
estimate its net gearing at 30% (FY16: 25%). Maintain NEUTRAL, with a TP of
IDR1,250.
¨ Bekasi Fajar’s
solid performance beat expectations. In 9M17, Bekasi Fajar raked in IDR283bn in
net income (-4% YoY, +25% QoQ). This represented 69%/72% of our/consensus
estimates respectively, and was above its historical average of 65%.
During
3Q17, revenue declined 11% QoQ from 2Q17 due to lower accounting recognition
from land sales – although this was 27% higher YoY. Its EBIT margin narrowed
866bps YoY to 52%, due to higher overall costs stemming from the higher cost
of land and higher opex (from an increase in marketing expenses and wages).
Nonetheless, the company’s 3Q17 net margin improved by 905bps YoY to 52%, as
a result of an increase in other income stemming from gains arising from the
divestment of its warehouse JV.
Its
balance sheet also remain healthy, with total interest-bearing debt at
IDR1.5trn and a net gearing level of 33% (FY16: 37%).
The
company did not book land marketing sales in 3Q17. Thus, its 9M17 marketing
sales remained at 22.3ha, representing 66% of our full-year estimate.
Management has mentioned that the company managed to sell 7.3ha in October.
This brings its YTD marketing sales to 29.6ha, or 87% of our target and
74-99% of the company’s target of 30-40ha. Maintain BUY, with a TP of IDR490.
(Yualdo Tirtakencana)
Link to report: Upbeat Outlook For Ciputra And Bekasi Fajar
Link to daily
report: Indonesia Morning Cuppa 021117
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Sector Update:
|
Real Estate – 9M17 Results Summary
During 9M17, most developers booked good
performances – Bumi Serpong, Summarecon, and Alam Sutera’s results exceeded
our expectations, while Intiland and Surya Semesta’s results were below our
expectations. Maintain OVERWEIGHT on the sector, as we expect better
marketing sales going forward with limited downside risks. The sector is
trading at a 67% discount to NAV. Key risks include economic slowdown,
lacklustre marketing sales, changes in regulations, and lower-than-expected
marketing sales. Our sector Top Pick is Bumi Serpong.
¨ Bumi Serpong Damai
(BSD) (BSDE IJ) – 9M17 results exceeded expectations. BSD’s 9M17
earnings of IDR2,302bn (+99% YoY, -77% QoQ) were above our expectations and
accounted for 91%/90% of our/consensus estimates (above its 5-yr historical
average of 76%). The earnings growth was supported by +36% YoY growth in
revenue, mostly driven by landed residential sales (+22% YoY, +27% QoQ ) and
land plot sales (+101% YoY, -67% QoQ), where IDR858bn was booked as revenue
in 3Q17 with the 19ha land sold to the JV with Mitsubishi Corporation. Gross
margin declined 112bps YoY to 73% due to higher cost on houses, land, and
shophouses. Net gearing remained stable at 14.5% in 9M17 post USD70m bond
issuance in 2Q17. Maintain BUY.
¨ Alam Sutera (ASRI IJ)
– Strong 9M17 from good revenue recognition. Alam Sutera booked
9M17 net income of IDR1,116bn (+69% YoY, -24% QoQ), which exceeded our
expectations and represented 126%/128% of our/consensus estimates. Earnings
growth was driven by higher revenue (+66% YoY, +51% QoQ) mostly contributed
by revenue of houses & shophouses and apartments. Overall margins, as a
result, improved with gross margin +210bps YoY to 58%, and net margin +59bps
YoY to 35%. 9M17 net gearing stood at 80% (vs 94% in FY16). Maintain BUY.
¨ Summarecon Agung
(Summarecon) (SMRA IJ) – Lower non-controlling interest lifted earnings. 9M17 earnings of
IDR119bn (+107% YoY, -406% QoQ) were above our estimates and accounted for
75%/35% of our/consensus estimates. Earnings were mostly lifted by lower
portion of profit to non-controlling interests after tax because of lower
revenue recognition from joint operations in the M-Town project. As a result,
net margin climbed 140bps YoY to 3%. Debt remained a concern with 9M17 total
interest-bearing debt currently at IDR7.5trn and net gearing at 93%, up from
86% in FY16. Maintain NEUTRAL.
¨ Intiland
Development (Intiland) (DILD IJ) – 9M17 results were below expectations. Weak 9M17 earnings
of IDR168bn (-18% YoY, -112% QoQ) were below our expectations and accounted
for only 62%/55% of our/consensus estimates (vs 4-yr historical average of
66%). Its topline booked flat growth of +4% YoY (-59% QoQ) due to lower
revenue recognition from landed residential and high rise projects, meanwhile
overall cost increased, further eroded by higher interest expenses from
additional working capital loan. As a result, the company booked a net loss
in 3Q17. Maintain NEUTRAL.
¨ Surya Semesta (SSIA
IJ) – Weak performance. Surya Semesta booked 9M17 net profit of IDR2,047bn
(+1,635% YoY) including IDR1.7trn of proceeds from its toll road divestment.
We estimate its 9M17 core profit at IDR74bn (-76% YoY, -140% QoQ), accounting
for only 57% of our estimates (below its historical average of 76%). The
company only managed to book 2.1ha of land marketing sales in 9M17 or 0.3ha
in 3Q17, which accounted for only 21% of our full year target. We will
revisit our assumptions to better reflect the current conditions. (Yualdo Tirtakencana)
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Results Review:
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Astra International
(ASII IJ, BUY, TP: IDR9,200), Boosted 3Q17 Earnings In All Major Units
Astra’s 9M17
earnings came in line with expectations, driven by improved 3Q17 earnings in
all major units, such as auto, agribusiness, and heavy equipment. Its auto
distribution unit’s margin turned positive, while its agribusiness segment
benefitted from higher CPO prices. We expect the heavy equipment division to
continue booking strong sales ahead. Maintain BUY and IDR9,200 SOP TP (15%
upside), implying 17x FY18F P/E. The main risk to our call would be weakened
consumer spending, which may lead to slower auto sales growth.
¨ Better 9M17
earnings.
Astra International’s (Astra) 9M17 earnings came in at IDR14.2trn (+26% YoY),
thanks to strong earnings growth in all major units. The heavy equipment unit
benefitted from higher coal heavy equipment sales volume and mining
contracting units. For agribusiness, it benefitted from higher CPO prices.
Meanwhile, Bank Permata’s earnings returned to the positive YoY.
¨ 3Q17 earnings increased to
IDR4.8trn (+13% QoQ), driven by a return to a positive auto distribution EBIT
margin, which increased to 0.9% (2Q17: -0.5%), thanks to its lower
operational costs.
¨ Auto earnings
likely to improve.
Despite rising competition from competitors’ new model launches, segmental
3Q17 earnings still rose 24% QoQ to IDR2.4trn, thanks to lower operational
costs. In August, Mitsubishi launched the Xpander and Wuling
introduced its Confero. As such, Astra’s share in the 4-wheel (4W)
vehicle market slipped to 54% in 3Q17 (from 55% in 2Q17). We note that the
lifetimes of Toyota and Daihatsu models are around 7-8 years. The latest
Toyota Avanza model was launched in 2011, hence it is already near to
its end of lifecycle. We believe that Astra should gain back its market share
once its new models launch.
For
2-wheel (2W) vehicles, Astra continued to record better-than-industry
performance, with its market share rising to 75% in 3Q17 (2Q17: 72%). We
expect Astra to maintain its dominant position in the domestic motorcycle
market.
¨ Financial earnings
likely to remain solid. Earnings from its financial division booked a solid
performance. Bank Permata lowered its NPLs, with gross NPLs declining to 4.7%
at end-September (vs 6.4% at end-March, and 8.8% as at end-Dec 2016). This
indicates better quality of its loan portfolio, as the bank adopted more
prudent lending policies.
¨ Maintain BUY and SOP-based
IDR9,200 TP, implying 17x FY18F P/E. The key risk to our call would be the
downtrend in agribusiness earnings, since we expect CPO prices to decline.
However, higher earnings from the heavy equipment, auto, and financial
divisions should be more than enough to offset this. Furthermore, the
agribusiness segment accounts for only 8% of Astra’s consolidated earnings. (Andrey Wijaya)
Link to report: Astra International : Boosted 3Q17 Earnings In All Major
Units
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Economics Update:
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October Inflation Remains Moderate
Headline inflation moderated to 3.6% YoY in
October (+3.7% in September). This was attributed mainly to slower increases
in the price of raw food, administered prices as well as the costs of housing
& utilities. Further out, we estimate headline inflation to inch lower to
3.8% in 2018, from +4% estimated for this year. This is on account of:
1. Government’s commitment to keep energy
prices stable;
2. A manageable volatile food prices.
¨ Key
policy rate to be maintained. As inflation is expected to
ease and coupled with imminent of further US Federal Reserve rate hikes, we
expect Bank Indonesia (BI) to keep its interest rates stable.
¨ The
easing food prices together with lower utilities and transport, communication
& financial services costs were the biggest contributors to an
ease in inflation in October. This was due to the Government’s effort to
control basic food prices and distribution, and keep energy prices stable in
2H.
¨ Clothing
prices increased, however, offset part of the lower prices. This
was due mainly to price inflation in men clothing.
¨ The
core consumer price index (CPI), however, edged up a tad higher to 3.1% YoY
in October, from +3% in the previous month, on weakening currency and
stronger domestic demand. (Rizki Fajar)
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Media Highlights:
|
Corporate
Bank Indonesia revises loan growth target
Customs revenue at 67.1% from target in
10M17
Jakarta provincial minimum wage to go up by
8.71% in 2018
Puradelta sustains the growth performance
Kobexindo Tractor’s revenue grows 41%.
|
Our
Recent Publication:
|
Economics Update: September Loan And M2
Growth Pick Up
Link to report: September
Loan And M2 Growth Pick Up
|
Results Review: Adaro Energy – Stronger
Balance Sheet
Link to report: Adaro
Energy : Stronger Balance Sheet
|
Results Review: Nippon Indosari Corpindo –
Below Expectations Despite 3Q17 Earnings Jump
|
Company Update: Summarecon Agung – Strong
Demand For Symphonia
Link to report: Summarecon
Agung : Strong Demand For Symphonia
|
Results Review: Perusahaan Gas Negara – Some
Improvements, But Outlook Still Uncertain
|
Results Review: Delta Dunia Makmur – Mining
Contracting Volume Growth To Continue
|
Economics Update: 2018 State Budget:
Encouraging Investment And Infrastructure For Growth And Equality
|
Economics Update: BI Pauses In October
After Easing August-September
Link to report: BI
Pauses In October After Easing August-September
|
Company Update: Bekasi Fajar – Waiting On
Guidance For 9M17
Link to report: Bekasi
Fajar : Waiting On Guidance For 9M17
|
Company Update: Arwana Citramulia – Revenue
Remains Robust Despite Elevated Costs
|
Best regards,
Andrey Wijaya
Senior Vice President
Research Analyst – Auto, Consumer, Cement
PT RHB Sekuritas Indonesia
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