CTRA Will Be Brighter in Second Half 20181005 NHKS Company Report (English)

Ciputra Development Tbk (CTRA)

  Will Be Brighter in Second Half Company Report | Oct 5, 2018 Likely Outperformance in 2H18

  Although CTRA’s 1H18 revenue was flat compared to 1H17 revenue (-0.8%

Buy

  y-y), its 2H18 revenue likely climbs significantly. Positive catalysts for 2H18 revenue are

  3 projects whose constructions are virtually at the final stages and Dec 2019 TP (IDR) 1,050

revenue of past-few-year projects recognized in 2H18. Consensus Price (IDR) 1,339

  TP to Consensus Price -21.6%

  We estimate that the positive sentiments successfully cushioned 2Q18 lackluster vs. Last Price +33.8% financial performance. Its revenue and net profit declined by 7.0% y-y to IDR1.45 trillion and 58.6% y-y to IDR51 billion, respectively. The hike in COGS and

  Shares data

  financial cost weighed bottom line margin. Last Price (IDR) 785

  Price date as of Oct 4, 2018

  Another to lackluster financial performance, ahead of the political year, property

  52 wk range (Hi/Lo) 1,380 / 735

  consumers seem to be more prudent to spend large amounts of funds, but

  Free float (%)

  53.0 Outstanding sh.(mn) 18,560 CTRA’s consumers mostly end-user make it resilient to bear the risk. Market Cap (IDR bn) 14,570 Market Cap (USD mn) 958

  1H18 Rosier Marketing Sales Avg. Trd Vol - 3M (mn)

  11.58 CTRA is still capable of posting the hike of 12.5% y-y to IDR3.3 trillion in Avg. Trd Val - 3M (bn)

  10.1

  marketing sales amid stagnant backdrop of the property sector. The hike was

  Foreign Ownership 25.9%

  backed by

  the launch of 11 new projects during 1H18, with Java’s projects

  contributing 74% to marketing sales. The accomplishment was equal to 43% of the target. Overseeing the trend of CTRA’s second half marketing sales Property

  Real Estate Owner & Developer

  constantly higher within the last 4 years, we project that CTRA is capable of

  Bloomberg CTRA IJ outpacing its 2018 target. Reuters CTRA.JK

  Target Price of IDR1,525

  We use an estimated discount to RNAV of 72.3x (1SD higher than the last 3-year

  Share Price Performance

  average) as the basis for the valuation method. Now, CTRA’s stocks are traded at a 2018F discount to RNAV of 80%.

  Ciputra Development Tbk | Summary (IDR bn) 2017 2018E 2019F 2020F

  Revenues 6,443 7,536 6,592 6,919

  Revenues growth 17.0% 5.0%

• -4.4% -12.5%

  EBITDA 1,725 2,550 2,146 2,303 Net Profit 894 1,213 869 950 EPS (IDR)

  48 65 47 51

  EPS growth 35.7% 9.2%

• -20.4% -28.4%

  YTD

  1M

  3M

  12M

  BVPS (IDR) 832 895 943 996

  Abs. Ret. -33.8% -3.1% -18.7% -33.8%

  EBITDA margin 26.8% 33.8% 32.5% 33.3%

  Rel. Ret. -24.3% -0.6% -19.1% -31.3%

  NPM 13.9% 16.1% 13.2% 13.7% ROE 6.0% 7.6% 5.1% 5.3% ROA 2.9% 3.7% 2.5% 2.7% ROIC 5.5% 7.3% 5.6% 5.8% P/E 24.6x 12.0x 16.8x 15.3x P/BV 1.4x 0.9x 0.8x 0.8x

Michael Tjahjadi

  EV/EBITDA 15.3x 7.5x 8.9x 8.0x

• 62 21 797 6202, ext:114

  DPS (IDR)

  9.5 9.5 9.5 6.8

  michael@nhsec.co.id Dividend yield 0.8% 1.2% 1.2% 0.9%

  Source: Company Data, Bloomberg, NHKS Research Please consider the rating criteria & important disclaimer NH Korindo Sekuritas Indonesia

  Ciputra Development www.nhsec.co.id

  Source: Company, NHKS Research CTRA 1H Marketing Sales (IDR bn) | 1H15-1H18

  Source: Company, NHKS Research CTRA Quarterly Revenue (IDR bn) | 1Q16 - 2Q18

  Revenue by Segment | 1Q16 - 2Q18 Source: Company, NHKS Research

  CTRA Quarterly Net Profit (IDR bn) | 1Q16 - 2Q18 Source: Company, NHKS Research

  Performance Highlights Margin Ratios | 1Q17 - 2Q18

  Source: Company, NHKS Research CTRA Revenue Breakdown | 2Q18

  Source: Company, NHKS Research

  Ciputra Development www.nhsec.co.id

  2Q18 review (IDR bn)

  2Q18

  2Q17

  3Q17

  4Q17

  1Q18

  3Q18E Actual Estimate y-y q-q surprise

  Sales 1,555 1,522 2,094 1,358 1,447 1,624 -7.0% 6.6% -10.9% 2,261 Gross Profit 799 678 938 629 697 818 -12.9% 10.7% -14.9% 1,069

  Gross Margin 51.4% 44.5% 44.8% 46.3% 48.1% 50.4% 47.3%

• -3.3% 1.8% -2.3%

  EBIT 292 403 607 327 270 320 -7.4% -17.3% -15.6% 789

  EBIT Margin 18.8% 26.4% 29.0% 24.1% 18.7% 19.7% -0.1% -5.4% -1.0% 34.9%

  EBITDA 323 363 685 359 346 396 7.1% -3.6% -12.6% 860

  EBITDA Margin 20.8% 23.9% 32.7% 26.5% 23.9% 24.4% 3.1% -2.5% -0.5% 38.0%

Net Profit 123 227 328 125 51 138 -58.6% -59.3% -63.1% 464

  Net Margin 7.9% 14.9% 15.7% 9.2% 3.5% 8.5% -4.4% -5.7% -5.0% 20.5% Source: Bloomberg, NHKS research Earnings revision (IDR bn) 2018E 2019F 2020F

  7,536 6,592 6,919

• Revised Sales
>Previous 7,719 7,317 7> -Change -2.4% -9.9% -9.4%

  3,634 3,250 3,430

• Revised Gross Profit
• Previous 3,731 3,545 3,776
• Change -2.6% -8.3% -9.2%
• Revised 48.2% 49.3% 49.6% Gross Margin

  48.3% 48.5% 49.5%

• Previous EBIT -Revised 2,299 1,844 1> -Previous 2,323 2,085 2
• Change -1.0% -11.6% -13.2%

  30.5% 28.0% 28.2%

  EBIT Margin -Revised

• Previous 30.1% 28.5% 29.5% EBITDA -Revised 2,550 2,146 2> -Previous 2,574 2,409 2
• Change -0.9% -10.9% -11.4%

  33.8% 32.5% 33.3%

  EBITDA Margin -Revised

• Previous 33.3% 32.9% 34.1%
• Revised

  Net Profit 1,213 869 950

• -Previous 1,290 1,215 1,345
• -Change -5.9% -28.5% -29.4%
• Revised 16.1% 13.2% 13.7% Net Margin

  16.7% 16.6% 17.6%

• Previous

  Source: NHKS research

• 30.45%

  Capitaland Ltd 9,981 45,972 4,053 1,125

  Megaworld Corp 2,430 6,212 893 264 13.54% 29.6% 9.22% 9.7x 0.9x

  Philippines

  Land & Houses PUB Co Ltd 4,015 3,362 1,086 338 17.03% 31.2% 22.08% 11.9x 2.6x WHA Corp PCL 1,927 2,260 315 102 -5.74% 32.2% 14.50% 19.7x 2.5x

  Thailand

  28.1% 4.29% 11.3x 0.5x

  IOI Properties Group Bhd 2,137 8,110 686 192

  SP Setia Bhd 2,399 6,826 953 259 7.56% 27.2% 10.42% 9.0x 0.8x

  Malaysia

  27.8% 8.26% 9.3x 0.7x

  Singapore

  11.4% 5.6% 19.9x 1.1x PWON 1,565 1,719 452 155 25.44% 34.2% 20.5% 11.3x 2.1x SMRA 546 1,594 414 29 12.67% 7.0% 6.1% 21.1x 1.3x

  54

  BSDE 1,310 3,382 681 244 11.22% 35.9% 13.8% 6.0x 0.8x CTRA 958 2,333 472

• 8.58%

  Source: Bloomberg Company Market Cap (USD mn) Asset (USD mn) Revenue LTM (USD mn) Net Profit LTM (USD mn) Net Profit Growth LTM Net Margin ROE LTM P/E LTM P/BV Indonesia

  Indonesia — a country with the largest area of land banks and the most populous nation in ASEAN — proves a boon to the real estate development business. Indonesian real estate developers have larger amount of land banks than its ASEAN’s peers land banks. For instance, BKSL and BSDE have the land banks of 14,666 hectares and 3,966 hectares, respectively. Indonesia and Philippines’ real estate sectors are the most competitive amongst their peers in ASEAN. The property developers in those two countries post better gross margins yet lower total asset than their peers do.

  Indonesia Real Estate Development Sector in ASEAN

  CTRA is one of Indonesian-based real–estate developers with the most diversified project portfolios such as residences, apartments, shopping malls, golf courses, hotels, hospitals, and offices. It embarked on its business in 1981 by developing CitraGarden City Jakarta. Now, it has successfully developed 75 projects situated in 33 cities across Indonesia. Despite its projects mostly targeted for middle–income individuals, two of its projects, namely Citra Maja Raya and Ciputra World respectively are targeted for low–income individuals and high–income individuals. Of note, it has direct–ownership land banks of 1,500 hectares and joint–operation–scheme land banks of 5,063 hectares.

  ASEAN Property Developer

  Ciputra Development www.nhsec.co.id

  A Glance at CTRA

• 14.90%

  Ciputra Development www.nhsec.co.id

  Multiple Valuation Forward P/E band | Last 3 years Discount to NAV band | Last 3 years Source: NHKS research Source: NHKS research Rating and Target Price Update Target Price Revision Date Rating Target Price Last Price Consensus vs Last Price vs Consensus

  04/25/2018 Buy 1,370 (Dec 2018) 1,155 1,449 +18.6% +5.4% 07/05/2018 Buy 1,130 (Dec 2018) 945 1,423 +19.6% -20.6%

• 21.6% 10/04/2018 Buy 1,050 (Dec 2019) 785 1,339 +33.8%

  Source: NHKS research, Bloomberg Analyst Coverage Rating Closing and Target Price Source: Bloomberg

  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%

   Hold : -15% to +15%  Sell : Less than -15%

  Ciputra Development www.nhsec.co.id

  Summary of Financials

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