Pakuwon Jati(PWON IJ)

Transcription

1 Equity Research Company Update Friday,10 November 2017 BUY Maintain Last price (IDR) 625 Target Price (IDR) 720 Upside/Downside +15.2% Previous Target Price (IDR) 700 Stock Statistics Sector Bloomberg Ticker Property PWON IJ No of Shrs (mn) 48,160 Mkt. Cap (IDR bn/usdmn) 30,822/2,281 Avg. daily T/O (IDR bn/usdmn) 21.0/1.6 Major shareholders Pakuwon Arthaniaga 56.1% Alexander Tedja 0.0% Estimated free float (%) 43.9 EPS Consensus(IDR) 2017F 2018F 2019F Danareksa Consensus Danareksa/Cons (2.0) PWON relative to JCI Index Pakuwon Jati(PWON IJ) The good performance continues We reiterate our BUY call on PWON with a higher target price of IDR720 as we: (i) roll over our valuation to 2018, and (ii) lower our risk-free rate assumption from 7.3% to 7.0% to take into account the recent decline in government bond yields. With solid marketing sales in 10M17 which will be supported by the La Vis launching, we believe PWON will achieve marketing sales of IDR2.4tn this year (+4.2%yoy). Going into 2018, we expect PWON to record higher marketing sales growth supported by new project launches. Solid marketing sales in October PWON recorded marketing sales of IDR200bn in October 2017, still supported by sales from its existing projects. As such, on a cumulative basis, PWON recorded marketing sales of IDR2.0tn, or reaching 85.1% of our full year marketing sales target of IDR2.4tn and 77.7% of the management s target of IDR tn. With the solid marketing sales in 10M17 and condominium launch in Pakuwon Mall Surabaya in November 2017 (La Vis was launched with prices starting from IDR2bn/unit or IDR30mn/sqm), we believe that PWON will achieve our marketing sales target. Strong retail portfolio with nothing to be worried about. Despite the recent trend of department and fashion store closures (Debenhams, Lotus, GAP), we remain optimistic on PWON s retail portfolio. We believe that most retail closures reflect limited visitor traffic, whereas PWON s mall portfolio traffic remains stable at 10,000-14,000 cars/day (depending on the mall: Gandaria City s average traffic is 10,000cars/day, with 13,000cars /day for Pakuwon Mall). With a lot of traffic, PWON enjoys a stable occupancy rate and the bargaining power to increase its rental area by 6%pa. We reiterate our BUY call with a higher target price. We reiterate our BUY call on PWON with a higher target price of IDR720 as we: ((i) roll over our valuation to 2018, (ii) lower our risk-free rate assumption from 7.3% to 7.0% to take into account the recent declines in government bond yields. We use SOTP based valuation, a WACC of 12.6%, Terminal Growth of 4.0%, and target discount to NAV of 40% to arrive at our target price. Although we remain cautious on the outlook for property demand next year, we believe PWON with its strong recurring income will be more resilient. PWON currently trades at a 48.0% discount to NAV, near to its historical +1SD of 49.4%. Source : Bloomberg Antonia Febe Hartono, CFA (62-21) ext.3504 antonia.hartono@danareksa.com Natalia Sutanto (62-21) ext.3508 natalia.sutanto@danareksa.com Key Financials Year to 31 Dec 2015A 2016A 2017F 2018F 2019F Revenue, (IDRbn) 4,625 4,841 5,726 6,609 6,790 EBITDA, (IDRbn) 2,558 2,593 2,984 3,337 3,422 EBITDA Growth, (%) Net profit (IDRbn) 1,262 1,671 1,913 2,373 2,585 EPS (IDR) EPS growth (%) (49.8) BVPS, (IDR) DPS, (IDR) PER (x) PBV (x) Dividend yield (%) EV/EBITDA (x) Source : PWON, Danareksa Estimates See important disclosure at the back of this report 1

2 Exhibit 1. REVENUE AND GROWTH Exhibit 2. NET PROFIT AND GROWTH Exhibit 3. MARGINS Exhibit 4. GEARING LEVEL Exhibit 5. PWON s historical discount to NAV 35.0% 40.0% 45.0% 50.0% -2SD -1SD Mean +1SD +2SD 55.0% Jun 2016 Sep 2016 Dec 2016 Mar 2017 Jun 2017 Sep 2017 Exhibit 6. Property sector s historical discount to NAV 45.0% 50.0% 55.0% 60.0% 65.0% -2SD -1SD Mean +1SD +2SD 70.0% Jun 2016 Sep 2016 Dec 2016 Mar 2017 Jun 2017 Sep 2017 Further improvements in the occupancy rate in Pakuwon Mall and Tunjungan Plaza. Since its commercial commencement in February 2017, the occupancy rate of Pakuwon Mall Extension has soared from 60% to 82%. With the recent opening of Uniqlo, as well as the expected opening of LC Waikiki and Tokyo Street in December 2017, the company expects to further increase its occupancy rate for Pakuwon Mall Extension to 90% by the end of the year. We believe this will raise further the blended average occupancy rate of Pakuwon Mall that currently stands at 94% to 96-97%. Meanwhile, for Tunjungan Plaza 6, which recently opened in September 2017, the company also claimed that the occupancy rate would increase from 65% currently to 80% by the end of the year, supported by two major tenants: H&M See important disclosure at the back of this report 2

3 and English First. We also expect the blended average occupancy rate for Tunjungan Plaza to be boosted from its current level of 96% to 97%. Strong development revenues recognition likely to continue in 4Q17. In 9M17, PWON recorded 53.7%yoy higher apartment and office revenues. This stellar performance was supported by revenues recognition from 2 tower apartments in the Kota Kasablanka project (Angelo and Bella). Going into 4Q17, the company expects the massive recognition from the apartment project to continue, particularly supported by Chianti tower in Kota Kasablanka. With the expectation of encouraging 4Q17 results, we revise up our revenues target by 10.1% to IDR5.7tn. Exhibit 7. Forecast changes Previous New Changes in IDR bn F 2018F 2017F 2018F 2017F 2018F Marketing sales 2,277 2,342 2,557 2,374 2, % 3.1% Revenue 4,856 5,200 6,137 5,726 6, % 7.7% Gross profit 2,724 2,927 3,326 3,186 3, % 7.2% Operating profit 2,296 2,410 2,771 2,676 3, % 9.2% Net profit 1,757 1,714 2,133 1,913 2, % 11.2% Source: Company, Danareksa Sekuritas See important disclosure at the back of this report 3

4 Exhibit 8. NAV calculation Land bank Location Stakes Total asset (Rp bn) 62,052 Net debts (Rp bn) 1,231 Advance from customer (Rp bn) 2,974 Net asset value (Rp bn) 57,848 Discount to NAV (% ) 40% Number of shares outstanding (bn shares) 48.2 Target price (Rp/share) 720 Source: Company, Danareksa Sekuritas Area (ha) Plot ratio Price per sqm (Rp mn/sqm) Method RNAV (Rp bn) Kota Kasablanka South Jakarta 100.0% % 32.7 NAV 835 Gandaria City South Jakarta 83.3% % 13.1 NAV 155 TB Simatupang South Jakarta 70.0% % 27.1 NAV 641 Pakuwon City East Surabaya, East Java 100.0% % 15.9 NAV 24,079 Outside Pakuwon City East Surabaya, East Java 100.0% % 14.2 NAV 1,982 Tunjungan City Central Surabaya, East Java 100.0% % 32.7 NAV 516 Supermall Pakuwon Indah West Surabaya, East Java 67.1% % 14.0 NAV 37 Grand Pakuwon Township West Surabaya, East Java 100.0% % 9.3 NAV 9,169 Outside Grand Pakuwon West Surabaya, East Java 100.0% % 7.2 NAV 325 Royal Plaza South Surabaya, East Java 75.0% % 22.4 NAV 227 Bekasi West Java 83.9% Cost 15 Daan Mogot West Jakarta 100.0% Cost 990 Total land bank Investment Property Kota Kasablanka South Jakarta 100% DCF 4,134.7 Gandaria City South Jakarta 83% DCF 3,778.4 Tunjungan City Central Surabaya, East Java 100% DCF 5,982.7 Supermall Pakuwon Indah West Surabaya, East Java 67% DCF 3,517.7 Royal Plaza South Surabaya, East Java 75% DCF Pakuwon Town Square East Surabaya, East Java 100% DCF Blok M Plaza South Jakarta 100% DCF Hotels DCF 1,419.0 Future - mixed used development Kota Kasablanka South Jakarta 100% DCF 1,813.1 Tunjungan Plaza Central Surabaya, East Java 100% DCF Pakuwon City East Surabaya, East Java 100% DCF Supermall Pakuwon Indah West Surabaya, East Java 67% DCF See important disclosure at the back of this report 4

5 Exhibit 9. Income Statement Year to 31 Dec (IDRbn) 2015A 2016A 2017F 2018F 2019F Revenue 4,625 4,841 5,726 6,609 6,790 COGS (1,957) (2,088) (2,539) (3,044) (3,116) Gross profit 2,669 2,754 3,186 3,565 3,673 EBITDA 2,558 2,593 2,984 3,337 3,422 Oper. profit 2,265 2,260 2,676 3,027 3,112 Interest income Interest expense (251) (342) (297) (278) (247) Forex Gain/(Loss) (277) Income From Assoc. Co s (3) (9) Other Income (Expenses) (169) (23) (144) (3) (6) Pre-tax profit 1,741 2,057 2,385 2,935 3,187 Income tax (341) (276) (347) (407) (432) Minority interest (139) (109) (125) (155) (169) Net profit 1,262 1,671 1,913 2,373 2,585 Core Net Profit 1,539 1,613 1,884 2,361 2,585 Exhibit 10. Balance Sheet Year to 31 Dec (IDRbn) 2015A 2016A 2017F 2018F 2019F Cash & cash equivalent 2,071 2,432 2,956 4,096 4,654 Receivables Inventory 2,254 2,860 3,435 3,981 4,500 Other Curr. Asset Fixed assets - Net 1,457 1,700 1,787 1,897 2,008 Other non-curr.asset 11,912 12,848 13,519 14,250 14,971 Total asset 18,778 20,674 22,907 25,633 27,632 ST Debt ,020 Payables Other Curr. Liabilities 959 1,034 1,090 1,259 1,293 Long Term Debt 4,396 4,479 5,044 4,581 3,866 Other LT. Liabilities 3,119 3,059 3,278 3,826 4,048 Total Liabilities 9,323 9,654 10,261 10,943 10,763 Shareholder'sFunds 7,219 8,684 10,310 12,355 14,533 Minority interests 2,236 2,336 2,336 2,336 2,336 Total Equity & Liabilities 18,778 20,674 22,907 25,633 27,632 See important disclosure at the back of this report 5

6 Exhibit 11.Cash Flow Year to 31 Dec (IDRbn) 2015A 2016A 2017F 2018F 2019F Net income 1,262 1,671 1,913 2,373 2,585 Depreciation and Amort Change in Working Capital (634) (294) (731) (440) (503) OtherOper. Cash Flow Operating Cash Flow 1,361 1,893 1,842 2,842 2,469 Capex (1,494) (2,154) (811) (971) (957) Others Inv. Cash Flow (590) 745 (174) (53) 85 Investing Cash Flow (2,084) (1,409) (985) (1,024) (872) Net change in debt (123) (449) New Capital Dividend payment (216) (216) (286) (328) (407) Other Fin. Cash Flow (796) (238) (257) (227) (183) Financing Cash Flow (15) (122) (334) (678) (1,039) Net Change in Cash (738) , Cash - begin of the year 2,809 2,071 2,432 2,956 4,096 Cash - end of the year 2,071 2,432 2,956 4,096 4,654 Exhibit 12. Key Ratios Year to 31 Dec 2015A 2016A 2017F 2018F 2019F Growth (%) Sales EBITDA Operating profit 19.9 (0.2) Net profit (49.8) Profitability (%) Gross margin EBITDA margin Operating margin Net margin ROAA ROAE Leverage Net Gearing (x) Interest Coverage (x) Source : PWON, Danareksa Estimates See important disclosure at the back of this report 6