* 2011* 2012E 2013F 2014F

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1 TRIM COMPANY FOCUS Feb 12, 2013 Bekasi Fajar Industrial Estate Capturing opportunity Bekasi Fajar own MM2100 industrial estate with total licensed area. This estate was formed by JV with Marubeni corp., a Japanese company that specialized in construction and real estate. BUY - Rp920 Initiate Coverage Share Price Rp700 Sector Property Target Price Rp920 (31.4%) Prev. TP Rp920 Stock Data Reuters Code BEST.JK Bloomberg Code BEST.IJ Issued Shares (m) 9,366 Mkt Cap (Rpbn) 6,556 Average Daily T/O (m) Wk range Rp780 / Rp170 Major Shareholders: PT Argo Manunggal Land Dev. 66.5% Daiwa House Industry 10.6% Public 22.9% Consensus EPS 12E 13F Consensus (Rp) TRIM VS Cons (%) 0.45 (0.78) Visibility on significant growth opportunities ahead Strategically located in the neighborhood of Semarang and possessing developed infrastructures, we expect the company s acquisition plan in Central Java this year would be a positive catalyst given lower acquisition cost and ideal location (about 15 minutes from Tanjung Mas Seaport). We believe relatively low minimum wage rate of Rp1.2mn/mo (40% lower compared to Bodetabek area of Rp2mn/mo) shall as well support the region to be the best alternative industrial area outside Jabodetabek. Moreover, we deem industrial land and rent values remain on the uptrend this year, rising on average by 10% and 5%, respectively. Surpassing peers while maintaining thick margin Bekasi Fajar recorded 103 ha marketing sales in 2012 (3% higher of its target) which boosted up its revenues by Rp1.45tr (+53.3% YoY). This amount will fully translate to FY13 accounting sales, contributing 97% to our FY13E revenues of Rp1.5tr. up +55% YoY. To note, there is an impending negotiation to sell 104 ha of land bank which represents 94% of 2013 marketing sales target. Hence, we are comfortable with to our FY13E marketing sales of Rp1.7tr (+17.2% YoY), partially due to increase in MM2100 ASP to USD 168 psm (+10% YoY). Escalating marketing sales, combined with lower increase in development costs (+12% YoY) should enhance FY13E net margin to 57% (+16% YoY). Furthermore, we expect the company s FY13 earnings growth of 113% YoY will surpass our property counters average by 46%, accompanied by net margin of 57%, also above its peers by 17%. Innovative business expansion boosting sales up furthermore On top of land sales, Bekasi Fajar s expansion is in line with development of budget hotel business and its 10 ha Standard Factory Building (SFB) in MM2100 industrial area. BEST in cooperation with Daiwa House Industry have set up a JV company (BEST will hold majority stake) to build up the logistic centers and factories in which the fi ne points will be disclosed next month. Attractive valuation at 30% discount to NAV Based on our NAV estimate of Rp1,310/share, we set our 2013 TP for BEST at Rp920/sh (30% discount to NAV, 31.4% upside). BEST s valuation implies a modest premium to the industry which we believe is justifi ed due to 1) expected ROA of 30% in 2013 (vs. 13% of local and regional peers avg), 2) lower 2013 P/E compared to its peers (BEST :8x vs. Local and regional peers avg. at 9x) and 3) In our view, P/E of industrial property companies in Malaysia and Thailand are driven by higher development of infrastructure compared to Indonesia (% paved road Indonesia: 58.3%, Malaysia: 88.2%, Thailand: 97.5%); hence, we believe Indonesian property companies valuations still lag their regional peers. We put a BUY recommendation on BEST as our top pick. Forecast & Rating Stock Price Year end 31 Dec 2010* 2011* 2012E 2013F 2014F /10/2012 6/10/2012 8/10/2012 Volume 10/10/2012 Price 12/10/ ,000, ,000, ,000, ,000, ,000,000 50,000,000 - Net Profi t (Rpbn) EPS (Rp) EPS Growth (%) DPS (Rp) BVPS (Rp) P/E (x) Div Yield (%) *) before IPO Muhamad Makky Melvina Dandytra Wildasari makky.dandytra@trimegah.com melvina.wildasari@trimegah.com

2 We pedict FY13 and FY14 growths to continue increasing.. Marketing sales, F 24,000 20,000 18,480 20,328 16,000 15,759 (USD) 12,000 8,000 10,282 4,000 1,240 4, E 2014F Source : TRIM Research MM2100 ASP, F..due to sustainable increase in ASP growth (USD psm) E 2014F Source : Companies, TRIM Research Stabilized profit margins, showing positive trends in earnings Profit margins, FE 2014F GPM OPM NPM F E Source : TRIM Research (%) 2

3 BEST has the highest expected FY13 ROA, one of the reasons we put BEST as our top pick BEST vs. local and regional peers, FY13E ROA 35% 30% 25% 20% 15% 10% 5% 0% 30% Bekasi Fajar 12% Surya Semesta Source : Bloomberg, TRIM Research 8% Jababeka 18% Lippo Cikarang 17% 6% 8% 2% UOA Ticon Amata Mah Sing Expected FY13 NPM and net income growth We predict FY13 NPM to remain high, despite the fact that 125% growth is maintained 113% 100% NPM Net Income Growth 75% 50% 25% 57% 64% 57% 64% 36% 27% 12% 0% BEST KIJA SSIA LPCK Source : Bloomberg, TRIM Research MM2100 has the most strategic location with closest proximity to CBD, Seaport and Airport Kawasan industri MM2100 Source : Company, TRIM Research 3

4 Lower 2013 P/E estimate compared to its local and regional peers BEST vs. local and regional peers, 2013 P/E estimate Company Ticker Country Market Cap (Rptr) P/E (x) Bekasi Fajar BEST.IJ Indonesia Peers average P/E 9.1 Jababeka KIJA.IJ Indonesia Surya Semesta SSIA.IJ Indonesia Lippo Cikarang LPCK.IJ Indonesia UOA Development UOAD.MK Malaysia Mah Sing MSGB.MK Malaysia Amata AMATA.TB Thailand Ticon TICON.TB Thailand Source : Bloomberg, TRIM Research 4

5 Income Statement (Rpbn) Revenue ,475 1,728 % growth Gross Profi t ,155 Opr Profi t ,078 EBITDA ,081 % growth (18.1) Net Int Inc/(Exp) (22) (29) (28) (27) (27) Gain/(loss) Forex Other Inc/(Exp) Pre-tax Profi t ,065 Tax (14) (22) (46) (69) (81) Minority Int Extra. Items Net Profi t % growth Balance Sheet (Rpbn) Cash and Deposits ,202 2,133 Inventory 859 1,450 1,638 1,871 2,002 Other Current Assets Undevelopment Land Net Fixed Assets Investment Properties Other Noncurrent Assets Total Assets 1,187 1,644 2,295 3,257 4,330 ST Debt Other Current Liabilities LT Debt Other LT Liabs Minority Interest Total Liabilities ,010 1,138 1,228 Shareholder's Equity ,285 2,118 3,102 Net Debt/(Cash) (247) (951) (1,882) Net Working capital 853 1,460 2,065 3,007 4,066 Cash Flow (Rpbn) Net Profi t Depr/Amort Others Chg in Opr Ass&Liab (115) CF's from Oprs (8) Capex (4) 195 (3) (0) 0 Others CF's from Investing 50 (334) (594) (189) (232) Net Change in Debt (13) Others CF's from Financing (20) (7) (17) (1) - Net Cash Flow 22 (11) Cash at BoY Cash at EoY ,202 Free Cashfl ow 42 (4) Key Ratio Analysis Profitability Gross Margins (%) Op Margins (%) EBITDA Margins (%) Net Margins (%) ROE (%) ROA (%) Stability Current Ratio (x) Net Debt/Equity (x) (0.2) (0.4) (0.6) Int Coverage (x) Efficiency A/P days A/R days Inventory Days 3,290 1,876 1,280 1,392 1,276 Interim Result (Rpbn) Capital History 3Q 11 4Q 11 1Q 12 2Q 12 3Q 12 Date Sales Gross Profi t Operating Profi t Net Profi t Gross Margins (%) Opr Margins (%) Net Margins (%) Apr-12 Rp170 5

6 PT Trimegah Securities Tbk 18th Fl, Artha Graha Building Jl. Jend. Sudirman Kav Jakarta 12190, INDONESIA Tel : (6221) Fax : (6221) DISCLAIMER This report has been prepared by PT Trimegah Securities Tbk on behalf of itself and its affi liated companies and is provided for information purposes only. Under no circumstances is it to be used or considered as an offer to sell, or a solicitation of any offer to buy. This report has been produced independently and the forecasts, opinions and expectations contained herein are entirely those of Trimegah Securities. While all reasonable care has been taken to ensure that information contained herein is not untrue or misleading at the time of publication, Trimegah Securities makes no representation as to its accuracy or completeness and it should not be relied upon as such. This report is provided solely for the information of clients of Trimegah Securities who are expected to make their own investment decisions without reliance on this report. Neither Trimegah Securities nor any offi cer or employee of Trimegah Securities accept any liability whatsoever for any direct or consequential loss arising from any use of this report or its contents. Trimegah Securities and/or persons connected with it may have acted upon or used the information herein contained, or the research or analysis on which it is based, before publication. Trimegah Securities may in future participate in an offering of the company s equity securities.