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Indonesia Morning Cuppa
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Top Story
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London Sumatra (LSIP IJ, Neutral, TP:
IDR1,400)
Additional earnings from selling idle
landbank
¨ Selling idle
landbank of 125ha in Cikupa, Tangerang. London Sumatra (LSIP IJ, Neutral,
TP: IDR1,400) and Indofood CBP (ICBP IJ, BUY, TP: IDR9,700) have entered a
Sales Purchase Agreement on an idle landbank of 125ha located in Bojong and
Budimulya villages, Cikupa, Tangerang with agreed selling price of IDR300,000
per m2. The landbank sales is expected to be completed by 31
December 2018.
¨ Reasonable selling
price.
We think the selling price on the idle landbank is reasonable. Based on our
observation on selling prices in Cikupa, the price of landbank ranges from
IDR150,000 until IDR4mn per m2. According to Licensed and
Registered Public Appraisers (KJPP), the fair value of the idle landbank is
around IDR317,000 per m2.
¨ Positive for London
Sumatra.
The idle landbank has existed in London Sumatra’s balance sheet since before
Indofood group acquired London Sumatra in 2007. We think the landbank sales
transaction should be positive for London Sumatra, due to: 1) additional cash
inflow around IDR375bn in 2018. 2) Industrial estates companies’ EBITDA
margin ranging from 20% to 70%. If we use profit margin assumption on selling
landbank around 20%, there should be a gain on idle landbank sales of around
IDR75bn in FY18 earnings (vs our current FY18 earnings estimate of IDR795bn).
3) higher dividend yield as we estimate London Sumatra would keep maintaining
its dividend payout ratio of 40%.
¨ Maintain FY18F
earnings forecast at the moment. We still have not factored in the sale of
the idle landbank in our FY18 earnings estimate until we get further details
from the company.
Analyst:
Hariyanto Wijaya, CFA, CFP, CA, CPA, CFTe, CMT (6221) 2970 7061
Morning Cuppa Full Report: Indonesia Morning Cuppa 291217
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Bank
Indonesia predicts 5.1% economic growth in 4Q17
Textile
exports surpasses 2017 target
Ministry
of Housing and Public Works targets 93% realization
Amman
Mineral Industri to receive environment permit
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TP
|
Upside
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Catalysts
|
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(IDR)
|
(%)
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|||
|
Astra International
|
9,200
|
16
|
Management
said that Astra International (Astra) is likely to launch a new Toyota Rush
model in the near term. We see this is a good catalyst to boost Astra’s
market share. In addition, the company is to double its coking coal
production to boost coal mining earnings. For its property business, Astra
has started selling property in the South Jakarta (TB Simatupang) and East
Jakarta areas. The company also sees traffic at the Cikopo-Palimanan toll
road increasing significantly once the Java toll road is fully connected.
This is likely to be in 2019.
|
|
|
BSD City
|
2,650
|
54
|
Expectations of
higher marketing sales due to lower interest rates, which ought to
incentivise mortgage users. BSD City has the largest proportion of mortgage
users vis-à-vis other developers. There is also better monetisation from its
large landbank.
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|
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Bukit Asam
|
17,400
|
59
|
Bukit Asam is the
cheapest coal counter in our coal universe. We think earnings growth should
be the catalyst for its share price. We believe investors’ concerns about a
potential cost-plus margins formula in determining coal selling prices to
domestic power plants should fade. This is based on our checks with several
competent sources. The formula is only valid for coal sales to new mine mouth
power plants. It is not for existing/under construction mine mouth power
facilities.
|
|
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Indofood Sukses Makmur
|
10,300
|
25
|
We expect higher
domestic consumer spending in 2018. This would be thanks to the Government
stimulus initiatives for low-end consumers. Indofood Sukses Makmur, as one of
the largest food & beverage (F&B) players, should benefit from this
situation. F&B accounted for around 62% of its total 9M17 EBIT. Higher
flour prices may also boost Bogasari Flour Mills’ earnings, which accounted
for around 14% of the company’s EBIT.
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|
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Ramayana Lestari
|
1,550
|
76
|
Consumer spending
recovery – especially from the lower income segment in 2018 – is likely to
benefit Ramayana Lestari after a flat performance in 2017. This is due to
increased subsidies by the Government that have been allocated in the 2018
budget via the Ministry of Social Affairs. In addition, President Joko
Widodo’s (Jokowi) work-for-cash programme is likely to help raise consumer
spending.
|
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Recent Stories
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|
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Growth in 2018 As Election Years Approach
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|
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|
RHB Guide to Investment Ratings
Buy: Share price may
exceed 10% over the next 12 months
Trading
Buy:
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remains uncertain
Neutral: Share price may fall
within the range of +/- 10% over the next 12 months
Take
Profit:
Target price has been attained. Look to accumulate at lower levels
Sell: Share price may fall
by more than 10% over the next 12 months
Not
Rated:
Stock is not within regular research coverage
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