Company Report | Nov 01, 2018
3Q18: Pacing to Higher Gears
Buy
Dec 2019 TP (IDR)
600
Consensus Price (IDR) 663 TP to Consensus Price -9.6%
vs. Last Price +25.5%
Shares data
Last Price (IDR) 478
Price date as of Oct 31, 2018 52 wk range (Hi/Lo) 715 / 438
Pakuwon Jati Tbk | Summary (IDR bn)
2017 2018E 2019F 2020F
Source: Company Data, Bloomberg, NHKS Research
YTD 1M 3M 12M
Abs. Ret. -30.2% -7.2% -7.2% -25.3%
Rel. Ret. -22.0% -4.8% -5.4% -21.9%
Top and Bottom Line Growth of Much Higher Than 20%
3Q18’s top and bottom line growth outstripped 3Q17’s growth of much higher
than 20% y-y. 3Q18’s revenue and net profit buoyed by 28.3% y-y to IDR1.85
trillion and 24.9% y-y to IDR651 billion, respectively. The growth in revenue
was on the back of increment of 76.0% y-y in sales posted by the condominium
and office segment. Revenue deriving from Jakarta areas increased by 1.6% compared to 1H18’s revenue on the back of existing project of Kota Kasablanka
complex. Besides, the overall margins, from January to September 2018, were
higher than the same period of 2017.
Recurring Income Segment Gearing to Higher Pace
In 3Q18, 3 contributors to the recurring income segment, namely rental &
maintenance services, hotel revenues, and other business revenues, recorded
their all-time high. PWON’s performance was the most attractive among its
peers amid the stagnant backdrop of the property industry. In 2019, it will
increase its hotel room capacities to 42% by constructing two hotels in Pakuwon Mall’s complex. Additionally, its recurring income is likely to be boosted
by the IV phase of the under-construction project of Pakuwon Mall.
Until September, it absorbed the capex of IDR390 billion spending on the acquisition of the land of 8.7 hectares, nearby ongoing projects.
Target Price of IDR600
We use an estimate of a discount to RNAV of 63.7% (0.5 SD higher than the last
3-year average) as the basis for the valuation method. Now, PWON’s stocks are
traded at a discount to a 2018F RNAV of 71.9%.
Source: Company, NHKS Research
PWON Quarterly Marketing Sales (IDR bn) | 3Q16 - 3Q18
Source: Company, NHKS Research
PWON Quarterly Revenues (IDR bn) | 3Q16 - 3Q18
PWON Revenue by Geography | 3Q16 - 3Q18
Source: Company, NHKS Research
Margin Ratios | 3Q17 - 3Q18
Source: Company, NHKS Research
Performance Highlights
PWON Revenue Breakdown | 3Q16 - 3Q18
Source: Company, NHKS Research
PWON Revenue Breakdown | 3Q18
ASEAN Property Developer
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 40.4% and 59.6%. 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 revenues deriving from property sale. Another to developing 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 most populous country in ASEAN. These qualities recognize Indonesia as the preferred location for the real estate development business. Indonesian estate developers have a larger number of landbank than their ASEAN’s peers do; for instance, BKSL and BSDE have the landbank of 14,666 hectares and 3,966 hectares, respectively.
Indonesia and the Philippines–based real estate sectors are the most competitive developers amongst their peers in ASEAN. The property developers in those two countries mark better gross margins yet lower total asset than their peers do.
Multiple Valuation
Forward P/E band | Last 3 yearsSource: NHKS research
Discount to NAV band | Last 3 years
Source: NHKS research
Rating and Target Price Update
Target Price RevisionDate Rating Target Price Last Price Consensus vs Last Price vs Consensus
03/28/2018 Buy 700 (Dec 2018) 605 734 +15.7% -4.9%
05/23/2018 Buy 625 (Dec 2018) 496 725 +26.0% -13.8%
08/03/2018 Buy 625 (Dec 2018) 535 705 +16.8% -11.4%
10/31/2018 Buy 600 (Dec 2019) 478 663 +25.5% -9.6%
Source: NHKS research, Bloomberg
Closing and Target Price
Source: NHKS research
Analyst Coverage Rating
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
Summary of Financials
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