NH Korindo Sekuritas Indonesia
development revenue; accordingly, the
ratio between the development
revenue and recurring income respectively reached 48% : 52%
near to the
target of 50% : 50%
Continuously Robust Growth in Marketing Sales
Its strategic property projects
strengthen its development revenue amid
the low purchasing power of middle to high income classes. The sales also
underpinned by
the picking up average selling price of condominium
particularly situated in CBD areas in Jakarta and Surabaya. Although the
posted marketing sales of IDR2.5 trillion failed to hit the marketing sales
target of IDR2.7 trillion set in the early 2017,
the marketing sales remained
to grow by 10% y
-
y
.
Strengthening Recurring Income
Another to boost the condominium and office sales, PWON beefs up its
shopping mall portfolios: Pakuwon Mall phase II & III, and Tunjungan Plaza
phase IV with a view to strengthening its recurring income. Furthermore,
it
is committed to maintaining its shopping malls occupation level topping
90%;
indeed, the current average rent tariffs on its hotels and offices are
higher than 2016’s average rent tariffs.
Target Price of IDR700
We use an estimate of the discount to RNAV of 56.0% (1 SD lower than the
last 3
-
year average) as the basis of our valuation method. This target price
implies a 2018E P/E of 16.3x (vs 12.4x at the present time).
A Glance at PWON
PWON is one of real estate developers focusing on shopping malls, condominiums,
offices, and superblocks. Its projects are in two biggest metropolitan cities in Indonesia:
Jakarta and Surabaya, each of which has respective revenue ratio of 48.4% and 51.6%.
Those projects are situated in strategic locations and target middle to high class incomes.
Having a number of superblocks portfolios: Kota Kasablanka and Gandaria City in Jakarta;
Tunjungan City and Pakuwon Mall in Surabaya, PWON succeeds to balance the ratio
between recurring income and development revenue. Another to develop a number of
new projects, PWON penetrates a self
-
contained city segment through Pakuwon City and
Grand Pakuwon in Surabaya.
Indonesia’s Real Estate Development Industry in ASEAN
Indonesia is a country with the largest area of land and the biggest population in ASEAN.
Such qualities recognize Indonesia as the preferred location for the real estate
development business. Indonesia’s real estate developers have a larger number of
landbank than its ASEAN’s peers do; for instance, BKSL and BSDE respectively have the
landbank of 14,666 hectares and 3,966 hectares.
Indonesia and the Philippines’ real estate sector are the most competitive amongst their
peers in ASEAN. The property developers in those two countries post better gross
IOI Properties Group Bhd
2,278
7,823
38.36%
44%
32%
-
27.7%
4.7%
10.8x
3.7%
Thailand
Land & Houses PUB Co Ltd
4,070
3,362
16.76%
34%
30%
21.4%
21.6%
12.1x
6.6%
WHA Corp Ltd
1,823
2,260
-
46.72%
47%
39%
12.7%
14.0%
17.9x
5.1%
Philippines
Source: Company, Bloomberg, NHKS research
Source: Company, Bloomberg, NHKS research
Source: Company, Bloomberg, NHKS research
Annual Revenue
| 2014
-
2017
Operational Performance
Quarterly Revenue (IDR bn)
| 1Q15
-
4Q17
Marketing Sales (IDR bn)
| 1Q15
-
4Q17
Source: Company, NHKS research
Revenue Breakdown
| 4Q17
Land Bank
Location
Area (ha)
Kota Kasablanka
South Jakarta
6.4
Gandaria City
South Jakarta
1.9
Simatupang
South Jakarta
4.5
Daan Mogot
West Jakarta
11.0
Bekasi
Greater Jakarta
3.2
Tunjungan City
Central Surabaya
3.2
Pakuwon City Township
East Surabaya
212.9
Outside Pakuwon City
East Surabaya
21.5
Grand Pakuwon Towship
West Surabaya
157.9
Pakuwon Mall
West Surabaya
3.9
Royal Plaza
West Surabaya
1.8
Outside Grand Pakuwon
West Surabaya
6.9
Total Area
435.1
Land Bank Portofolio
| 4Q17
Multiple Valuation
Forward P/E band
| Last 3 years
Discount to NAV band
| Last 3 years
Rating and target price
Date
Rating
Target Price
Last Price
Consensus
vs Last Price
vs Consensus
03/28/2018
Buy
700
605
734
+15.7%
-
4.6%
Closing and Target Price
Source: NHKS research
Analyst Coverage Rating
Source: Bloomberg
Source: NHKS research
Source: NHKS research
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%
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. In IDR bn 2016/12A 2017/12A 2018/12E 2019/12E EBITDA/As s ets 13.0% 14.4% 15.2% 15.7% Revenue 4,841 5,718 6,515 7,356 Ca s h Di vi dend (IDR bn) 217 217 217 217 EBITDA Margin 53.0% 55.5% 57.5% 57.7% Current Ra ti o 133% 172% 181% 182% Interes t Expens es (202) (294) (304) (272) Qui ck Ra ti o 57% 78% 89% 89% In IDR bn 2016/12A 2017/12A 2018/12E 2019/12E 2016/12A 2017/12A 2018/12E 2019/12E Ca s h 2,432 3,406 4,312 4,863 Pri ce /Ea rni ngs 16.3x 15.6x 12.4x 12.4x
