Alam Sutra Realty(ASRI IJ)

Transcription

1 Equity Research Company Update Wednesday, 12 Apr 2017 HOLD Maintain Last price (IDR) 346 Target Price (IDR) Rp380 Upside/Downside +9.8% Previous Target Price (IDR) Stock Statistics Sector Bloomberg Ticker Rp380 Property ASRI IJ No of Shrs (mn) 19,649 Mkt. Cap (IDR bn/usdmn) 6,798/508 Avg. daily T/O (IDR bn/usdmn) 11.8/0.9 Major shareholders Tangerang Fajar Industrial Estate 25.2% Manunggal Prime Development 18.7% Estimated free float (%) 48.1 EPS Consensus IDR 2017F 2018F Danareksa Consensus Danareksa/Cons 34.3% (15.6%) ASRI relative to JCI Index IDR/sha ASRI (LHS) Relative to JCI (RHS) % Alam Sutra Realty(ASRI IJ) Competitive threats We retain our HOLD recommendation on ASRI with an unchanged target price of IDR380. Despite the stock s huge discount to NAV (71.1% vs. 51.0%-71.1% for its peers), we believe this discount is warranted, noting the threat posed by CFLD. Our channel check reveals that CFLD has started to establish product knowledge for its landed residential project and that its selling prices are lower than ASRI s. This, we believe, may hamper ASRI s sales in Pasar Kemis going forward. Recorded IDR370bn marketing sales in 1Q17. In mid-march 2017, ASRI made a landed residential launch (Victoria extension), offering 43 units for sale. There are two types of unit: Cedar (with land area of 119sqm and building area of 133sqm) and Spruce (with land area of 140sqm and building area of 143sqm). The price per unit ranges from IDR bn/unit. With a take-up rate of around 50%, we forecast IDR50bn of marketing sales from the launch. Added to inventory sales, ASRI managed to record marketing sales of IDR370bn in 1Q17. This is equivalent to 7.4% of the company s full year marketing sales target and 12.4% of our full year marketing sales target. Awaiting market recovery prior to new launches. Over the near term, ASRI does not plan to make any new launches until 2H17 given the political uncertainties and weak demand for property. In the meantime, the company will focus on selling its inventory: both landed and high rise properties. Note that ASRI owns four high rise buildings (2 apartments and 2 offices) with take-up rates ranging from 20-60%. CFLD has started to establish product knowledge for its project. From the 70ha of land purchased from Alam Sutera, CFLD has started to establish product knowledge for its landed residential project named Lavon Swan City in Pasar Kemis. CFLD has started to make reservations ahead of its official launch in August Based on our channel check with a local broker, the number of units reserved has already reached 100, or equivalent to 25% of the total number available for sale. In its first cluster (Allura), CFLD will offer two types of unit with prices ranging from IDR750-1,000mn/unit Apr-16 May-16 Jun-16 Jul-16 Source : Bloomberg Antonia Febe Hartono Antonia.hartono@danareksa.com (62-21) ext.3504 Natalia Sutanto Aug-16 Sep-16 Oct-16 Natalia.sutanto@danareksa.com (62-21) ext Nov-16 Dec-16 Jan-17 Jan-17 Mar-17 Mar Maintain HOLD. We reiterate our HOLD recommendation on ASRI with an unchanged target price of IDR380 (SOTP based valuation with WACC of 12.1% and terminal growth of 4.0%). ASRI currently trades at a hefty 71.1% discount to NAV, considerably more than its peers 51.0%-71.1%. Nevertheless, we feel that this discount is warranted given the company s inherent risks, i.e. considerable inventory risk and the company s higher gearing ratio, as well as stiffer competition from the secondary market and CFLD. Key Financials Year to 31 Dec 2015A 2016A 2017F 2018F 2019F Revenue, (Rpbn) 2,784 2,716 3,755 3,416 5,330 EBITDA, (Rpbn) 1,706 1,177 1,553 1,333 2,321 EBITDA Growth, (%) (13.8) (31.0) 31.9 (14.1) 74.0 Net profit (Rpbn) ,129 1,026 1,888 EPS (Rp) EPS growth (%) (45.6) (14.7) (9.2) 84.1 BVPS, (Rp) DPS, (Rp) (6.5) (14.4) (13.0) PER (x) PBV (x) Dividend yield (%) (1.8) (4.1) (3.7) EV/EBITDA (x) See important disclosure at the back of this report 1

2 Exhibit 1. Allura Cluster at Lavon Swan City Lavon Swan City vs. Suvarna Sutera Compared to Daru the last landed residential cluster launched by Alam Sutera in 2015 CFLD s land prices are higher (CFLD: IDR4-5mn/sqm vs. ASRI: IDR3.8mn/sqm) despite comparable construction costs (CFLD: IDR mn/sqm vs. ASRI: IDR mn/sqm). Nevertheless, given the smaller size of the CFLD properties, the price tickets are also lower (CFLD: IDR750-1,000mn/unit vs. ASRI: IDR860-2,300mn/unit). While ASRI believes that the two companies are targeting different market segments, implying that CFLD is not directly competing with ASRI, we nonetheless believe that there will be some impact on ASRI, especially given the close proximity of the two projects. Compounded by the currently anemic demand for property, we believe that price will be a factor, thus meaning that CFLD properties will be more desirable. Source : Danareksa See important disclosure at the back of this report 2

3 Internally financed capex The company has earmarked IDR1tn for capex in This will be used to finance the acquisition of land bank at both Pasar Kemis and Alam Sutera. To finance the capex, the company does not expect to draw down additional loans. Given the completion of the four high rise projects coupled with the cash inflow from CFLD, ASRI expects to obtain net operating cash flow of IDR1tn this year. We revise up our marketing sales target to take into account more sales to CFLD We revise up this year s marketing sales target to IDR3.0tn from IDR2.6tn previously (implying a -12.0%yoy decline) to take into account more land sales to China Fortune Land Development (CFLD). Although the company initially agreed to deliver 30 ha of land in Pasar Kemis to CFLD, ASRI now expects to deliver 50ha of land this year. With an average price of IDR2mn/sqm, this results in potentially IDR400bn of additional marketing sales. Stripping out this transaction, we expect ASRI to only record marketing sales of IDR2.0tn (implying flattish yoy growth) as property demand is still sluggish. We revise our revenues assumption down to take into account longer revenues recognition We revise our 2017 revenues assumption down by 10.3% to take into account the longer revenues recognition of its landed residential property. This, in turn, leads to a 16.7%yoy lower 2017 net profits estimate. Exhibit 2. Forecast changes Previous New Changes in Rp bn Marketing sales 3,385 2,568 4,139 2,980 4, % -0.1% Revenue 2,716 4,197 2,973 3,755 3, % 14.9% Gross profit 1,465 2,286 1,599 1,880 1, % 4.1% Operating Profit 1,096 1,804 1,158 1,474 1, % 8.2% Net profit 509 1,360 1,016 1,129 1, % 1.0% Exhibit 3. Marketing sales of ASRI in Rp tn % % 1.9 0% % % F Ordinary business sell to CFLD Growth (RHS) Exhibit 4. Revenue of ASRI in Rp tn F Development Recurring Growth (RHS) 100% 80% 60% 40% 20% 0% -20% -40% See important disclosure at the back of this report 3

4 Exhibit 5. Income Statement Year to 31 Dec (Rpbn) 2015A 2016A 2017F 2018F 2019F Revenue 2,784 2,716 3,755 3,416 5,330 COGS (728) (1,251) (1,875) (1,752) (2,611) Gross profit 2,056 1,465 1,880 1,664 2,719 EBITDA 1,706 1,177 1,553 1,333 2,321 Oper. profit 1,628 1,096 1,474 1,253 2,246 Interest income Interest expense (159) (226) (289) (300) (298) Forex Gain/(Loss) (438) Income From Assoc. Co s Other Income (Expenses) (167) (358) (133) (140) (117) Pre-tax profit ,278 1,166 2,089 Income tax (217) (213) (146) (138) (195) Minority interest (88) (1) (3) (3) (5) Net profit ,129 1,026 1,888 Core Net Profit 1, ,026 1,888 Exhibit 6. Balance Sheet Year to 31 Dec (Rpbn) 2015A 2016A 2017F 2018F 2019F Cash & cash equivalent 638 1,189 1,959 2,864 6,028 Receivables Inventory 1,156 1,208 1,266 1,324 1,381 Other Curr. Asset Fixed assets - Net 1,097 1,149 1,296 1,443 1,596 Other non-curr.asset 14,914 15,955 16,370 16,669 16,847 Total asset 18,710 20,186 21,680 23,027 26,761 ST Debt Payables 1, ,139 Other Curr. Liabilities 2,387 2,480 2,734 2,844 4,348 Long Term Debt 7,291 7,511 7,614 7,496 7,573 Other LT. Liabilities 1,064 2,053 2,084 2,226 2,698 Total Liabilities 12,107 12,998 13,490 14,094 16,197 Shareholder'sFunds 6,454 7,083 8,085 8,828 10,460 Minority interests Total Equity & Liabilities 18,710 20,186 21,680 23,027 26,761 See important disclosure at the back of this report 4

5 Exhibit 7.Cash Flow Year to 31 Dec (Rpbn) 2015A 2016A 2017F 2018F 2019F Net income ,129 1,026 1,888 Depreciation and Amort Change in Working Capital 1,044 (411) ,639 OtherOper. Cash Flow (1,540) (148) 271 Operating Cash Flow 178 1,006 1,370 1,146 3,874 Capex (1,295) (787) (393) (289) (165) Others Inv. Cash Flow Investing Cash Flow (653) (733) (334) Net change in debt (248) New Capital (125) Dividend payment (135) 10 (127) (282) (256) Other Fin. Cash Flow (269) (307) (289) (300) (298) Financing Cash Flow (267) (305) (803) Net Change in Cash (242) ,164 Cash - begin of the year ,189 1,959 2,864 Cash - end of the year 638 1,189 1,959 2,864 6,028 Exhibit 8. Key Ratios Year to 31 Dec 2015A 2016A 2017F 2018F 2019F Growth (%) Sales (23.3) (2.4) 38.3 (9.0) 56.0 EBITDA (13.8) (31.0) 31.9 (14.1) 74.0 Operating profit (14.7) (32.6) 34.4 (15.0) 79.2 Net profit (45.6) (14.7) (9.2) 84.1 Profitability (%) Gross margin EBITDA margin Operating margin Net margin ROAA ROAE Leverage Net Gearing (x) Interest Coverage (%) See important disclosure at the back of this report 5

6 See important disclosure at the back of this report 6