Hold. Summarecon Agung Tbk (SMRA) Awaits Still Recovery in Property Industry. NH Korindo Sekuritas Indonesia. Dec 2019 TP (IDR) 670.

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1 Tbk (SMRA) Awaits Still Recovery in Property Industry 1H18 s Profit Growth Backed by 2Q18 s Performance Although 1H18 s revenue slightly declined by 0.7% y-y to IDR2.67 trillion, 1H18 s net profit significantly grew by 60.6% y-y to IDR78 billion. This bottom line growth was driven by 2Q18 financial performance. In 2Q18, SMRA succeeded to post net profit of IDR37 billion, in a stark contrast to net loss of IDR23 billion 2Q17 and bolstered by the decline of 12.5% in COGS. However, we overview that the lower COGS was attributable to the irregularity in 2Q17 s high COGS, particularly in the apartment property segment. Trend in Rising Recurring Income On the other side, SMRA determines to boost the growth in the recurring income segment. The segment grew by 9.0% y-y to IDR711 billion backed by the malls and retails business line. In Kelapa Gading Mall, SMRA remains to carry on changes such as re-setting composition and tenant locations, organizing bazaar, urging tenants to renovate their stores. We project that the strategy is effective for increasing the recurring income amid the flat performance of property development. Low Marketing Sales Until August SMRA s strategy to launch Srimaya Residence, a middle to low residential cluster in Bekasi, was attributable to raising marketing sales. Besides, until the end of 2018, the marketing sales are likely boosted by the launch of an extra new projects in 2H18. Nevertheless, considering the low marketing sales of IDR1.8 trillion or 46.9% of target, we project that 2018 s target is likely not yet to accomplish. Target Price of IDR670 We use an estimated discount to RNAV of 83.1x (1.5 SD above the last 2-year average) as the basis of valuation method. Now, SMRA s stocks are traded at Summarecon Agung Tbk Summary (IDR bn) E 2019F 2020F Revenues 5,641 5,784 5,979 6,263 Revenues growth 4.5% 2.5% 3.4% 4.8% EBITDA 1,679 1,909 1,893 1,974 Net Profit EPS (IDR) EPS growth 16.2% 24.5% -12.8% -2.4% BVPS (IDR) EBITDA margin 29.8% 33.0% 31.7% 31.5% NPM 6.4% 7.8% 6.6% 6.1% ROE 4.4% 5.3% 4.4% 4.2% ROA 1.7% 2.0% 1.7% 1.6% ROIC 8.6% 8.9% 9.0% 9.2% P/E 37.7x 19.0x 21.8x 22.4x P/BV 1.6x 1.0x 1.0x 0.9x EV/EBITDA 11.5x 7.8x 7.8x 7.5x DPS (IDR) Dividend yield 0.5% 1.1% 1.1% 1.1% Source: Company Data, Bloomberg, NHKS Research Please consider the rating criteria & important disclaimer Company Report Oct 16, 2018 Hold Dec 2019 TP (IDR) 670 Consensus Price (IDR) 948 TP to Consensus Price -29.3% vs. Last Price +12.6% Shares data Last Price (IDR) 595 Price date as of Oct 12, wk range (Hi/Lo) 1,205 / 555 Free float (%) 59.3 Outstanding sh.(mn) 14,427 Market Cap (IDR bn) 8,584 Market Cap 565 Avg. Trd Vol - 3M (mn) 14,75 Avg. Trd Val - 3M (bn) 10,0 Foreign Ownership 99.9% Property Real Estate Owner & Developer Bloomberg Reuters Share Price Performance SMRA IJ SMRA.JK YTD 1M 3M 12M Abs. Ret % -8.5% -26.5% -42.5% Rel. Ret % -7.7% -24.0% -39.3% Michael Tjahjadi , ext:114 michael@nhsec.co.id NH Korindo Sekuritas Indonesia

2 Performance Highlights SMRA Quarterly Revenue (IDR bn) 1Q16-2Q18 SMRA Quarterly Marketing Sales (IDR bn) 1Q16-3Q18 Margin Ratios 1Q17-2Q18 SMRA Quarterly Net Profit 1Q16-2Q18 Marketing Sales Breakdown May Aug 2018 Revenue Breakdown 2Q18 Page 22

3 2Q18 review (IDR bn) 2Q18 2Q17 3Q17 4Q17 1Q18 3Q18E Actual Estimate y-y q-q surprise Revenue 1,455 1,309 1,647 1,199 1,468 1, % 22.5% 6.8% 1,387 Gross Profit % 31.0% 22.7% 657 Gross Margin 40.0% 43.4% 51.2% 44.9% 48.0% 41.7% 8.0% 3.1% 6.2% 47.4% EBIT % 17.9% 42.5% 365 EBIT Margin 16.6% 22.6% 30.6% 24.3% 23.4% 17.5% 6.8% -0.9% 5.9% 26.3% EBITDA % 13.5% 32.5% 442 EBITDA Margin 21.8% 28.5% 37.2% 30.7% 28.4% 22.9% 6.6% -2.2% 5.5% 31.9% Net Profit N/A -12.7% 6.1% 114 Net Margin -1.6% 5.4% 14.7% 3.5% 2.5% 2.5% 4.1% -1.0% 0.0% 8.2% Source: Bloomberg, NHKS research Earnings revision (IDR bn) 2018E 2019F 2020F Revenue -Revised 5,784 5,979 6,263 -Previous 5,769 6,204 6,067 -Change 0.3% -3.6% 3.2% Gross Profit -Revised 2,836 2,866 2,985 -Previous 2,652 2,840 2,673 -Change 6.9% 0.9% 11.7% Gross Margin -Revised 49.0% 47.9% 47.7% -Previous 46.0% 45.8% 44.1% EBIT -Revised 1,574 1,569 1,639 -Previous 1,402 1,491 1,358 -Change 12.3% 5.2% 20.6% EBIT Margin -Revised 27.2% 26.2% 26.2% -Previous 24.3% 24.0% 22.4% EBITDA -Revised 1,909 1,893 1,974 -Previous 1,733 1,831 1,709 -Change 10.2% 3.4% 15.5% EBITDA Margin -Revised 33.0% 31.7% 31.5% -Previous 30.0% 29.5% 28.2% Net Profit -Revised Previous Change -2.5% -22.5% 9.0% Net Margin -Revised 7.8% 6.6% 6.1% -Previous 8.0% 8.2% 5.8% Page 33

4 A Glance at SMRA SMRA prominent with its integrated townships is one of real-estate developers in Indonesia. Starting to operate in 1975 by developing land of 10 hectares in Kelapa Gading, Jakarta, now, it has portfolios covering the development of integrated townships in Kelapa Gading, Serpong, Bekasi, Bandung, and Karawang. In 2018, it also expands its business to Makassar through the project of Summarecon Mutiara Makassar. Another to the real-estate development segment, the investment and real-estate management segment, and the recreational and hospitality segment contribute to SMRA s revenues. It also develops the hospitality segment in Bali through the Movenpick Resort & Spa and Samasta Lifestyle Village. Indonesia s Property Development Industry di ASEAN Indonesia is a country with much the largest land and the most populous nation in ASEAN. Such qualities recognize Indonesia as the preferred location for the property development business. Indonesia s property developers have a lot larger number of landbank than that of its ASEAN s peers; BKSL and BSDE respectively have the landbank of 14,666 hectares and 3,966 hectares, for instance. Like Philippines, Indonesia property development is the most competitive amongst its peers in ASEAN. Both of the property developers post better gross margins yet lower total asset than do their peers. ASEAN Property Developer Company Market Cap Asset Revenue Net Profit Net Profit Growth Net Margin ROE P/E P/BV Indonesia BSDE 1,254 3, % 35.9% 13.8% 5.7x 0.7x CTRA 984 2, % 11.4% 5.6% 20.5x 1.1x PWON 1,395 1, % 34.2% 20.5% 10.1x 1.9x SMRA 565 1, % 7.0% 6.1% 21.8x 1.3x Singapore Capitaland Ltd 9,389 45,972 4,053 1, % 27.8% 8.26% 8.7x 0.7x Malaysia SP Setia Bhd 2,038 6, % 27.2% 10.42% 7.7x 0.7x IOI Properties Group Bhd 1,789 8, % 28.1% 4.29% 9.5x 0.4x Thailand Land & Houses PUB Co Ltd 3,904 3,362 1, % 31.2% 22.08% 11.6x 2.5x WHA Corp PCL 1,856 2, % 32.2% 14.50% 19.0x 2.4x Philippines Megaworld Corp 2,461 6, % 29.6% 9.22% 9.8x 0.9x Source: Bloomberg Page 44

5 Multiple Valuation Forward P/E band Last 3 years Discount to NAV band Last 2 years Rating and Target Price Update Target Price Revision Date Rating Target Price Last Price Consensus vs Last Price vs Consensus 04/30/2018 Hold 960 (Dec 2018) 905 1, % -20.2% 05/31/2018 Hold 1,050 (Dec 2018) 985 1, % -7.9% 10/12/2018 Hold 670 (Dec 2019) % -29.3%, Bloomberg Analyst Coverage Rating Closing and Target Price Source: Bloomberg NH Korindo Sekuritas Indonesia (NHKS) stock ratings 1. Period: End of year target price 2. Rating system based on a stock s absolute return from the date of publication Buy : Greater than +15% Hold : -15% to +15% Sell : Less than -15% Page 55

6 Summary of Financials DISCLAIMER This report and any electronic access hereto are restricted and intended only for the clients and related entity of PT NH Korindo Sekuritas Indonesia. This report is only for information and recipient use. It is not reproduced, copied, or made available for others. Under no circumstances is it considered as a selling offer or solicitation of securities buying. Any recommendation contained herein may not suitable for all investors. Although the information here is obtained from reliable sources, it accuracy and completeness cannot be guaranteed. PT NH Korindo Sekuritas Indonesia, its affiliated companies, respective employees, and agents disclaim any responsibility and liability for claims, proceedings, action, losses, expenses, damages, or costs filed against or suffered by any person as a result of acting pursuant to the contents hereof. Neither is PT NH Korindo Sekuritas Indonesia, its affiliated companies, employees, nor agents liable for errors, omissions, misstatements, negligence, inaccuracy arising herefrom. All rights reserved by PT NH Korindo Securities Indonesia Page 66