RHB Indonesia Morning Cuppa - 14 February 2018 (Bumi Serpong Damai, Today's News)

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Company Update

Bumi Serpong Damai

Still Attractive With Cheap Valuations

Bumi Serpong’s management finally confirmed its FY18F marketing sales, ie flat at IDR7.2trn. As such, we trim our presales assumptions and adjust our revenue recognition methods to factor in its actual FY17 marketing sales and other upcoming projects. We still like the company for its solid balance sheet, large landbank, and cheap valuation. Maintain BUY, with a SOP-based TP of IDR2,210 (from IDR2,650, 24% upside) that also implies a 56% discount to RNAV. Note that its current market cap reflects only 82% of its largest project, BSD City.

Analyst: Yualdo Tirtakencana Yudoprawiro (6221) 2970 7062

Link to report: Bumi Serpong Damai : Still Attractive With Cheap Valuations

Morning Cuppa Full Report: Indonesia Morning Cuppa 140218

Today’s News

Indonesia delays Jakarta-Bandung High-Speed Railway project

Kalbe’s FY17 revenue and earning

Government may set domestic coal prices for domestic coal-fired power plants

PT PP targets new contracts at IDR49trn in FY18

Delta Dunia Makmur targets overburden production to increase 10% YoY

Bank Tabungan Negara net income grew 16% YoY in FY17

Garuda Indonesia targets USD54m from non-ticket business

Bank Tabungan Pensiunan Nasional records IDR1.22trn in net profit for FY17

Top BUYs
		TP	Upside	Catalysts
		(IDR)	(%)	Catalysts
Astra International		9,500	13	Given the robust of the All New Toyota Rush and Daihatsu Terios sales orders, Astra has raised its monthly sales target. Its lowering of Daihatsu Terios’ selling price while positioning Toyota Rush at a higher class are seen as a good strategy to reclaim market share. We also see the company’s coal mining unit benefiting from higher coal prices. We raise its earnings estimates, and SOP-based TP to IDR9,500 (from IDR9,200, 13% upside), implying 16-15x FY18F-19F P/Es. Key risk is the intense competition in the auto industry. SAIC-GM Wuling just launched its 1.8-litre MPV – Wuling Cortez – with an attractive selling price. Maintain BUY.
BSD City		2,650	44	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.
Bukit Asam		4,100	20	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.
Indofood Sukses Makmur		10,300	28	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.
	Ramayana Lestari	1,550	34	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.