Refer to Important disclosures in the last page of this report

  N ^{o v -1 7 N o v -1 7 D e c -1 7 J a n -1 8 J a n -1 8 F e b -1 8 M a r- 1 8 M a r- 1 8 A p r- 1 8 M a y -1 8 M a y -1 8 J u n -1 8 J u l- 1 8 A u g -1 8 A u g -1 8 S e p -1 8 O c t- 1 8 O c t- 1 8} SMRA-Rebase JCI Index-Rebase

  70.1

  1.1

  19.1 PBV (x)

  19.4

  22.2

  24.7

  29.0

  67.7 PER (x)

  81.1

  1.0

  77.9

  66.0

  1.4 Net Gearing (%)

  14.5

  11.3

  17.5

  32 EPS Growth (%) (64.0)

  1.1

  1.0

  28

  11.3

  90 100 110 120 130

  80

  70

  60

  50

  E q u it y | I n d o n e s ia | P ro p e rt y

  11.2 Source: SMRA, IndoPremier Share Price Closing as of : 02-November-2018

  12.7

  1.0 Dividend Yield (%)

  12.5

  10.9

  1.0 EV/EBITDA (x)

  0.9

  0.8

  0.8

  0.8

  32

  25

  Stock Data

  6M

  27.9

  Latest EPS (Rp)

  Estimate Change; Vs. Consensus 2018 2019

  Semarop Agung 33.5% Sinarmegah Jayasentosa 6.6% Public 24.9%

  Major Shareholders

  Absolute (%) -19.5 -28.7 -38.9 Relative to JCI (%) -16.3 -31.0 -36.7 52w high/low (Rp) 1,205 - 555

  12M

  3M

  0.0

  0.7 Price Performance

  24.9 Avg. 6m dailyT/O (US$ m)

  Sharesoutstanding (m) 14,426 Marketcap. (US$ m) 598 Free float (%)

  Upside/downside (%) +12.9

  Shareprice (Rp) Rp620

  Prior TP (Rp) Rp700

  Target price (Rp) Rp700

  32.0 Vs. Prior EPS (%)

  0.0 Vs. Consensus (%)

  21

  Maintain Hold with TP of Rp700. Given in-line 9M18 result and relatively weak marketing sales numbers, we maintain our conservative revenue growth forecast of 3.6% in FY18F (Guidance: 10%). As we maintain our earnings forecast for FY18F/FY19F, we maintain our Hold ratings for SMRA with TP of Rp700/share, representing target FY18F P/E of 25.4x. Potential upside to our call might come from better than expected marketing sales due to big land plot sales.

  1.1 Net Profit (RpBn) 308 362 403 462 468 EPS (Rp)

  7.4

  1.3

  Revenue (RpBn) 5,398 5,641 5,846 6,119 6,554 EBITDA (RpBn) 1,310 1,234 1,250 1,343 1,357 EBITDA Growth (%) (18.9) (5.8)

  Year To 31 Dec 2016A 2017A 2018F 2019F 2020F

  02 November 2018 Results Note BUY (Unchanged)

  Summarecon Agung (SMRA IJ)

  IJ; Rp1,165; Buy) and PT Margautama Nusantara to form a consortium to develop Bandung Inner Urban Toll Road (BIUTR). The elevated toll road is expected to create better access to its existing township, Summarecon Bandung. The toll road will have the length of 25.2km from Pasteur-Cileunyi area (Cisumdawu toll road) to Gedebage area (Purbaleunyi toll road). With total investment estimation of Rp10tn, SMRA is targeting minority shares of 20%.

  6.2

  To invest in toll road business. SMRA signed a MoU with Wijaya Karya (WIKA

  9M18 presales below 3 years average historical. SMRA reported marketing sales of Rp2.2tn in 3Q18 (+12% yoy), forming 56% of company’s FY18F marketing sales guidance of Rp4tn (Ours: Rp3.8tn), which is slightly below the company’s 3 years average historical 9M performance of 62%. The 9M18 marketing sales were mainly contributed by Serpong, Bekasi, and Bandung projects with 47%, 28% and 14% contribution, respectively. Buyer profile uses Cash Installment (48%) as their main payment model, followed by mortgage and cash with 28% and 24%, respectively. Please note that company tends to made large land plot sales in 4Q to fulfill its full year marketing sales guidance.

  Strong 3Q18 earnings with better margins. SMRA reported 9M18 earnings of Rp203bn (+70% yoy), in-line with market expectation, forming 50%/54% of our/consensus FY18F estimate. Despite increase interest expense to Rp518bn (+9% yoy), there were margin expansion in 9M18 with operating and net margin of 25.9% and 5.1%, respectively (9M17: 20.9% and 3.0%) due to lower cost -7% yoy and lower opex -2.1 yoy%. In quarterly basis, SMRA has a strong 3Q18 bottom line of Rp125bn (+242 qoq, 77% yoy) with high net margin of 9.2% (2Q18: 2.5%; 3Q17: 5.4%), forming 31% of our FY18F forecast.

  Strong 3Q, but still in-line Earnings grew by 70% in 9M18, within expectation. However, marketing sales was weak at Rp2.2tn (+12% yoy). Creating better access for Summarecon Bandung. Maintain Hold with unchanged TP of Rp700.

  PT Indo Premier Sekuritas joey.faustian@ipc.co.id

  Joey Faustian

  6.7 Source: Bloomberg

• 62 21 5793 1168
• 5%
• 27%

• 2%
• 4%
• 500
• 30%
• 20%
• 10% 0% 10% 20% 30%
• 1,000 2,000 3,000 4,000 5,000
• 6%
• 4%
• 2% 0% 2% 4% 6% 8%

  10% 20% 30% 40% 50% 60% 70% 80%

  10.0% 20.0% 30.0% 40.0% 50.0% 60.0%

  Cash Cash Installment Mortgage 0.0%

  48% 28%

  24%

  14% 3% Kelapa Gading Bekasi Serpong Bandung Karawang

  8% 28% 47%

  Marketing sales % to full-year

  (Rp Bn)

  9M14

  9M15

  9M16

  9M17

  9M18

  1,000 1,500 2,000 2,500 3,000 3,500

  67% 0%

  63% 67%

  56% 57%

  2014A 2015A 2016A 2017A 2018F 2019F 2020F Marketing sales growth

  1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000

  6% 8% 10%

  13%

  24%

  2015A 2016A 2017A 2018F 2019F 2020F Recurring income Development properties growth _{(Rp bn)}

  6,000 7,000

  5% 7%

  4% 4%

• 500

  Fig. 5: 9M18 payment profile Fig. 6: Margin trend Source: Company, IndoPremier Source: Company, IndoPremier

  Fig. 3: 9M marketing sales achievement Fig. 4: 9M18 marketing sales by township Source: Company, IndoPremier Source: Company, IndoPremier

  Fig. 1: Revenue by segments Fig. 2: Marketing sales trend Source: Company, IndoPremier Source: Company, IndoPremier

  2014A 2015A 2016A 2017A 2018F 2019F 2020A Gross margin Operating margin Net margin

  Fig.7: 9M18 earnings result % of % of

  (Rp bn)

  9M18

  9M17 YoY

  3Q18

  2Q18 QoQ ours consensus

  Revenue 4,023 3,994 0.7% 1,356 1,468 -7.6% 69% 69% Gross profit 1,912 1,723 10.9% 669 705 -5.0% 72% 70% Operating profit 1,042 834 24.9% 410 342 20.0% 77% 74% Net income 203 119 70.2% 125 37 242.1% 50% 54%

  Margins

  Gross margin 47.5% 43.2% 49.4% 48.0% Operating margin 25.9% 20.9% 30.2% 23.3% Net margin 5.1% 3.0% 9.2% 2.5%

  Source: Company, IndoPremier

  Year To 31 Dec (RpBn) 2016A 2017A 2018F 2019F 2020F Income Statement

  Net Revenue 5,398 5,641 5,846 6,119 6,554 Cost of Sales (2,801) (3,074) (3,189) (3,282) (3,604) Gross Profit 2,597 2,567 2,657 2,836 2,950 SG&A Expenses (1,192) (1,229) (1,298) (1,381) (1,477) Operating Profit 1,406 1,339 1,358 1,455 1,473 Net Interest (532) (542) (489) (484) (473) Forex Gain (Loss) Others-Net

  1

  2

  3

  5

  8 Pre-Tax Income 874 799 873 976 1,007 Income Tax (272) (267) (280) (297) (319) Minorities (293) (170) (190) (217) (220) Net Income 308 362 403 462 468

  Balance Sheet

  2,039 1,482 1,426 1,577 1,884 Cash & Equivalent 548 661 685 720 816 Receivable

  5,531 6,498 7,748 8,748 10,248 Inventory 546 517 577 585 643 Other Current Assets

  8,664 9,158 10,437 11,631 13,591 Total Current Assets

  11,096 11,179 10,505 9,091 7,896 Fixed Assets - Net Goodwill

  1,001 1,315 1,560 1,850 2,196 Non Current Assets

  20,771 21,663 22,513 22,583 23,696 Total Assets

  1,041 906 1,406 2,406 3,406 ST Loans 369 423 405 444 Payable

  2,446 3,458 3,600 3,757 4,090 Other Payables 362 1,489 1,841 1,200 700 Current Portion of LT Loans

  4,217 6,276 7,240 7,767 8,640 Total Current Liab. 6,028 5,598 5,162 4,212 4,012

  Long Term Loans 2,399 1,436 1,505 1,696 1,840 Other LT Liab. 12,645 13,309 13,908 13,675 14,491

  Total Liabilities 1,467 1,467 1,467 1,467 1,467

  Equity 4,776 5,043 5,373 5,754 6,130

  Retained Earnings 1,923 1,844 1,765 1,686 1,608

  Minority Interest 8,166 8,354 8,606 8,908 9,205 Total SHE + Minority Int.

  Total Liabilities & Equity 20,810 21,663 22,513 22,583 23,696

  Source: SMRA, IndoPremier

  Year to 31 Dec 2016A 2017A 2018F 2019F 2020F Cash Flow

  602 532 593 679 688 Net Income (Excl.Extraordinary&Min.Int) 266 323 337 351 365 Depr. & Amortization

  (728) (1,297) (1,300) (972) (1,442) Changes in Working Capital

  (803) (223) 1,571 346 338 Others

  (663) (664) 1,200 404 (51) Cash Flow From Operating

  (910) (720) 92 773 484 Capital Expenditure

  101 91 132 132 132 Others

  (808) (630) 224 905 616 Cash Flow From Investing 954 562 417 (591) 300

  Loans Equity

  (72) (72) (72) (81) (92) Dividends 699 (1,676) (630) (505) (541) Others

  1,581 (1,186) (286) (1,177) (333) Cash Flow From Financing 109 (2,481) 1,139 132 232

  Changes in Cash

  Financial Ratios

  48.1

  45.5

  45.4

  46.4

  45.0 Gross Margin (%)

  26.0

  23.7

  23.2

  23.8

  22.5 Operating Margin (%)

  16.2

  14.2

  14.9

  15.9

  15.4 Pre-Tax Margin (%)

  5.7

  6.4

  6.9

  7.5

  7.1 Net Margin (%)

  1.6

  1.7

  1.8

  2.0

  2.0 ROA (%)

  3.9

  4.4

  4.8

  5.3

  5.2 ROE (%)

  3.1

  3.2

  3.6

  3.9

  3.9 ROIC (%)

  23.2

  38.3

  41.2

  41.2

  41.4 Acct. Receivables TO (days)

  0.5

  0.8

  0.8

  0.7

  1.4 Acct. Receivables - Other TO (days)

  0.5

  0.5

  0.4

  0.4

  0.4 Inventory TO (days)

  28.1

  47.0

  46.7

  44.4

  43.0 Payable TO (days)

  0.0

  0.0

  0.0

  0.0

  0.0 Acct. Payables - Other TO (days)

  91.0

  95.7

  97.7

  87.8

  88.2 Debt to Equity (%)

  0.5

  0.5

  0.5

  0.4

  0.4 Interest Coverage Ratio (x)

  66.0

  77.9

  81.1

  70.1

  67.7 Net Gearing (%)

  Source: SMRA, IndoPremier

  Head Office PT INDO PREMIER SEKURITAS Wisma GKBI 7/F Suite 718 Jl. Jend. Sudirman No.28 Jakarta 10210 - Indonesia p +62.21.5793.1168 f +62.21.5793.1167

INVESTMENT RATINGS

  BUY : Expected total return of 10% or more within a 12-month period HOLD : Expected total return between -10% and 10% within a 12-month period SELL : Expected total return of -10% or worse within a 12-month period ANALYSTS CERTIFICATION.

  The views expressed in this research report accurately reflect the analysts personal views about any and all of the subject securities or issuers; and no part of the research analyst's compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed in the report.

  DISCLAIMERS

  This research is based on information obtained from sources believed to be reliable, but we do not make any representation or warranty nor accept any responsibility or liability as to its accuracy, completeness or correctness. Opinions expressed are subject to change without notice. This document is prepared for general circulation. Any recommendations contained in this document does not have regard to the specific investment objectives, financial situation and the particular needs of any specific addressee. This document is not and should not be construed as an offer or a solicitation of an offer to purchase or subscribe or sell any securities. PT. Indo Premier Sekuritas or its affiliates may seek or will seek investment banking or other business relationships with the companies in this