|We expect greater revenue recognition and better presales performance in 2H16. The near-term catalyst should be the tax amnesty bill. With numerous portfolios and land, Ciputra is one of the sector players that is likely to be at an advantage when the bill is passed. The company is also taking the opport…|
|– Weak 1Q16 result. CTRA reported earnings of Rp144bn (-37% YoY & -59% QoQ), which is only 10% of ours andconsensus. Slower delivery is the culprit of weak earnings. Revenue declines by 8% YoY to Rp1.3tn. CTRA’s developmentrevenue is down by 16% YoY to Rp940bn. CTRA’s G&A cost…|
CTRA posted sales of IDR2,882b in month of October, the highest monthly sales in FY15 and it also exceeded CTRA’s monthly target. The successful month was mainly contributed by Ciputra Surya (CTRS) which booked presales of IDR2,087b alone. With this, CTRA total YTD presales is IDR8,362b or 88% of its FY15 target. CTRS launched new project in Makassar which is a reclamation project with area of 157ha targeting to high-end segment. The launching in this project yields about IDR1,000b. Another big project launch was in Citraland Surabaya where CTRS opened a new cluster locating in North Surabaya and successfully booking presales of IDR1,000b. As of 10M15, CTRA has launched 6 new projects with another 4 new projects set to be launch in the last two months of 2015. We are currently reviewing our forecast and estimates for CTRA following the strong presales achievement.
This week has been full of uncertainty on the luxury tax regulation which will be revised by the Ministry of Finance. Finally the Minister of Finance has put the uncertainty to rest by stating the revision on the luxury tax (PPnBM) for property will be set at IDR10b (USD714k), not at IDR2b or IDR5b as previously reported. However, it is still unclear whether the new regulation would still use the building area as one of the criteria for the property to be subjected to the luxury tax. The regulation will soon be issued as part of the economic stimulus package by the Government. The luxury tax (PPnBM) will have 20% tax rate on the base value of the property.
Separately, the government has announced that the process for foreigners to own properties in Indonesia will be simplified. Although foreigners would only be entitled with Right To Use, the Minister of Agrarian has stated that foreigners with Right to Use license will have the same privileges as the Right to Own license (Own by Indonesian). During our latest discussion with Real Estate Association, the regulation for foreigners to own properties in Indonesia should be issued in Dec’15. At this point, it is still unsure of the term “Foreigners” are expatriates who works in Indonesia or any foreigners who does not live in Indonesia.
The two news on tax and foreign ownership will be positive for the residential property sector. Main beneficiaries are high-rise developers such as Ciputra Property (CTRP), Pakuwon Jati (PWON), Lippo Karawaci (LPKR), Intiland Development (DILD), Agung Podomoro (APLN)
Director of Fiscal Policy Agency correcting his statement on revision of the property luxury tax regulation.
Local newspaper (Kontan) reported that Mr Suahasil Nazara, Director of Fiscal Policy Agency as saying that the threshold value for the property which will be subjected to 20% tax rate would not be IDR2b (USD140k) as previously reported two days ago, but will be at IDR5b (USD350k). He also stated that the new luxury tax regulation for property should be issued in two-days’ time.
Comment: We think if the threshold value would be set at IDR5b, it will have less negative impact towards developers’ presales as we estimate that only around 5%-10% of the developers’ products are above IDR5b.
To overcome the slowdown in the property sector, the government has proposed several measures including allowing foreign buyers to purchase luxury apartments above IDR10b value.
Comment: The regulation which will allow foreigners to own properties in Indonesia is expected to be issued the latest by end of October this year. Several developers which may benefit from this regulation are Pakuwon Jati (PWON), Intiland Development (DILD), Agung Podomoro Land (APLN), Ciputra Property (CTRP), Bumi Serpong Damai (BSDE) and Lippo Karawaci (LPKR).
Mixed messages from government stimulus
■ The government announced that it would allow foreigners to own apartments
priced above Rp10bn/unit. We expect minimal impact on listed developers.
■ The government also plans to enforce a balanced housing programme, which is
negative for developers with limited landbank.
■ Maintain Overweight with BSDE as our top pick.
Limited details on the proposed new regulations
● The Coordinating Minister of Economic Affairs announced that the government would
allow foreigners to own apartments with price points equal to or above Rp10bn/unit. At
the same time, the government also announced that it would enforce the balanced
housing programme (1:2:3 rule) sponsored by private developers. There are currently
no details available on both proposed regulations.
Minimal impact from relaxed foreign ownership
● The pricing threshold of Rp10bn/unit was higher than our initial expectation of
Rp5bn/unit but we expect this to have minimal impact on property developers under
our coverage. The most expensive PWON’s units (in Kota Kasablanka) are priced at
Rp6bn-7bn, while BSDE’s most expensive apartment units in Kuningan area are
priced at Rp3bn-8bn. Only CTRA (through CTRP) has products in this price range
(Raffles – Rp16bn/unit).
● It is unclear whether this regulation would apply to all foreigners or only applicable to
working permit holders (KITAS/KITAP- held by only c.69k expatriates as per FY14
data). It is also unclear whether the underlying title would be strata (HGB) or right to
use (Hak Pakai). Our channel checks suggest that it is possible that the regulation will
be applicable to all foreigners and they would be entitled to similar underlying strata
titles as locals, instead of the previous right to use title (PP No.41/1996). This
regulation will be finalized by Oct 15 at the latest.
Other concerns about balanced housing programme
● In its announcement yesterday, the government also emphasised that it would enforce
the balanced housing programme (under Housing Ministry Regulation No.7/2013),
which requires developers to build two middle-class houses and three low-cost
houses for every luxury house built. A middle-class and luxury house are defined as a
house priced 1-6x and more than 6x, respectively, than a low-cost house.
● The problem with the definitions is that if a low-cost house is defined as a subsidised
house with price range of Rp130m-170m, then any house with a price point above
Rp1bn would be considered a luxury house. Hence, the developers of such properties
would be liable to build middle-class and low-cost houses. This is particularly negative
for developers with limited landbank such as PWON and CTRP.
Two developers, BSDE and CTRP, have announced share buybacks, utilising
the special provision by the regulator amid the stock market rout. While this
could provide some support for their shares, our channel checks suggest that
other developers are less keen on propping up their share prices this way.
Instead, they appear to be more inclined to preserving cash as sales slow and
working capital comes under pressure. An emerging bright spot is the
government’s plan to scrap the recently-introduced requirement on mortgage
for unfinished property which should be a relief on cash flow. Imminent
catalyst may include relaxation in foreign ownership. Maintain Overweight.
BSDE and CTRP this week announced plans for share buybacks. BSDE and
CTRP have respectively set aside Rp2tr and Rp100bn (maximum amount) for
their buyback plans for 7% and 5% stakes (maximum stake), with maximum
prices set at Rp1,700 (vs. current share price of Rp1,575) and Rp900 (current
price of Rp365), respectively. CTRP’s buyback period is set for 31 Aug 2015 to
30 Nov 2015, while BSDE’s has yet to be determined. Separately, the new
requirement on mortgage for unfinished property (which requires developers
to post bank guarantees/LC for the difference between mortgage facility and
mortgage disbursed) has been cancelled, even before implementation.
What We Think
Our channel checks suggest that other developers under our coverage have
chosen not to pursue the share buyback path. Some, like SMRA, even plan to
issue additional debt. Given that most players have geared up lately (all
developers under our coverage had net gearing positions in 1H15, with BSDE
the lowest at 3%, and ASRI the highest net gearing at 89%), coupled with the
slower sales environment amid weaker economic growth, steep IDR
depreciation, and inconsistent regulation were all exerting more pressure on
cash flow. As such, most developers do not have the flexibility for a share
buyback exercise, or at the least not without forgoing landbanking/investment
property capex needs. Separately, the new development on mortgage
requirement is positive, especially for mid-sized and small developers as it
would eliminate any additional working capital requirements.
What You Should Do
The sector has fallen by 14% in the past one month and underperformed the
JCI by 6% during the same period. It is currently trading at 11.5x FY15 P/E vs.
its 5Y/10Y average of 13.2x/14.5x, while offering a 57% discount to NAV (vs. its
5-year average of 46%). Maintain Overweight. Our unchanged top picks are
BSDE and PWON for their robust balance sheet and strong marketing sales.
CTRP: Property developer, Ciputra Properti, plans to build seven more apartments with the first two is expected to finish by 2016. The company is currently in negotiation with its partner regarding land allocation. The entire cost of construction of around Rp2tn will be expensed solely by the company, while cost of land of Rp270bn will be shared between the two partners: CTRP paying 55.5% of the cost and the other entity paying the rest.
Indonesia’s property market update
Recently, the central bank loosened macro prudential policy by raising loan-to-value (LTV) ratio for property loans in order to boost economic growth. Thereby, it reduces the minimum DP requirement for first home buyers. However, we think that It needs a more time to feel the impact of lower DP requirement given the recent slowdown on economic growth which make consumers become more cautious on spending. Thus, in our view the impact should be minimal to the property sector this year. Furthermore, developers also recorded further decline in its mortgage loan portion since the central bank tightened its LTV ratio as developers could offer aternative for its financing solutions (in-house financing/installment). According to central bank data, during 1Q15 mortgage loan grew only 13% yoy way below than 1Q14 which grew at 24% yoy. Property players that will benefit the most from the easing on LTV ratio are BSDE and CTRA due to their relatively high mortgage loan portion on their consumer payment profile. They also have more flexibility to adjust property prices, as well as more landed residential exposure.
Revising on foreign ownership regulation
The government has announced that it will allow foreigners to own properties in Indonesia as an effort to boost property industry which is facing a sluggish growth. Without clearer details of zoning and price, we expect it to allow for price above Rp5 bn, in order to absorb supply of luxurious property and tax (namely PPNBM and PPH22). Currently, only some developers which focus on construction of luxurious products and it takes only small portion to its portfolio. However, if this implemented for foreigners who stays in Indonesia, the impact should be insignificant. Whether these changes are implemented it remains to be seen what requirement to be introduced by government. We believe developers which have exposure to upper segment are PWON, DILD, CTRP, APLN and LPKR.
Marketing sales achievement update
Within our coverage, marketing sales achievement by some of property developers during 1H15 is below than its target especially for industrial estate developers. However, residential land developers catering for middle income segment shows their marketing sales during 1H15 remains intact to achieve company’s target. Property developers under our coverage whose marketing sales is lower than its target are SSIA and BEST, while BSDE and PWON’s marketing sales in-line with company’s target.
Recommendation: Remains overweight
At this juncture, we maintain overweight stance on property sector as in the long run, property market in Indonesia is still promising due to Indonesia’s demography composition which has a large of population with productive age (<30 years old) around 50% of total population. It implies that people are expected to buy their first property for living. The property price in Indonesia is also the cheapest compared to the Southeast Asia region. The property sector based on companies under our coverage is currently trading at 2015F PER of 18.6x, relatively lower compared to its historical PER at around 21.0x. Our top pick remains BSDE on its huge land bank and flexibility on produce and pricing.
Foreign ownership. The government plans to allow foreigners to own property in Indonesia through unlimited years of Rights to Use title; at the moment, the foreigners can own property with Rights to Use title with limited number of years. The government also plans to limit the property ownership to (1) foreigners who have residence permit and (2) hi-rise/apartment. When the foreigners no longer stay in Indonesia, they have to sell the rights to other parties within 1 year.
Luxury VAT price threshold at Rp5bn, reportedly, equal to the super luxury tax threshold. The Ministry of Finance is still discussing to update luxury VAT threshold. Reportedly by Bisnis Indonesia, the Finance Ministry Bambang Brodjonegoro stated that the luxury VAT threshold is at Rp5bn equal to the super luxury tax threshold.
Comment: the foreign ownership is rehash, while the luxury VAT threshold indication is a new info. Our last understanding was that the government plans to make progressive scheme for the luxury VAT. The news spells positively for the property developers, particularly for those that cater higher-end segment, e.g. DILD, CTRP, and PWON.
§ Downward marketing sales revisions: In light of weak marketing sales of IDR3,235bn as of May (29.5% of IDR10,963bn full-year estimate), CTRA has recently considered to lower its 2015 target. On project launches, subsidiary Ciputra Surya (CTRS) has confirmed a delay in its Jayapura development, from which IDR100bn marketing sales contribution was expected this year, due to longer-than-expected license approvals. Additionally, another subsidiary, Ciputra Property (CTRP) with 2015 total marketing sales target of IDR2.6tn (IDR1.8tn from new projects) may also experience disappointment on weak strata office sales, which are unlikely to reach IDR1tn expected this year.
§ Support from Surabaya office, asset sale & backlog: On a more positive note, CTRS’ CWS Office generated IDR570bn from its April launch and IDR630bn ytd, surpassing management’s conservative full-year IDR125bn target. On CTRP, its Ascott serviced-apartment sale to CapitaLand amounting to IDR835bn, to be booked in 3Q15, should provide additional marketing sales support. Furthermore, CTRA has some IDR8tn in marketing sales backlog, which should provide short-term earnings support. Nevertheless, with economic challenges, we prefer to retain our conservative IDR9.5tn marketing sales target, 13% below management’s guidance.
Outlook: Beneficiary of relaxed policies, backlog to support earnings
At this stage, we expect CTRA to see earnings support from significant backlog, allowing for 21% revenue CAGR in 2014-16F. Additionally, further upside could come from: (1) BI’s recent relaxation of loan-to-value (LTV) regulations (exhibit 7), as mortgage payments typically make up some 40% of CTRA’s buyer-payment schemes; and (2) the government’s upcoming plan to loosen foreign ownership restrictions for apartments, which would benefit CTRP. We also believe that the company’s diversified projects should foster a margin of safety given current tough macroeconomic conditions.
Recommendation: Upgrade to BUY on recent underperformance
While we have fine-tuned our 2015-16F earnings, we retain our 12M TP of IDR1,400, based on unchanged 60% discount to NAV on continued tough operating environment. However, on the back of severe market underperformance of more than 10% in the past month and a share price drop past our TP, we now upgrade CTRA to BUY (from Reduce). Risks to our call include project delays and additional policy risks.
CTRA reported 5M15 marketing sales of Rp3.2tn. As of 5M15, CTRA has booked 5M15 marketing sales of Rp3.2tn or
equivalent to 30% of FY15F marketing sales target of c. Rp11tn. Landed residential accounts for 53% of marketing sales.
While in terms of location, Greater Jakarta and Surabaya are the two largest contributors, making up 62% of 5M15
Downgrade risk due to CTRP? As of 5M15, CTRP only generates 5% of its FY15F marketing sales target of Rp2.6tn. The
company account this due to weak demand, in particular strata title office. We think that the weak demand could
continue for the next two years, due to oversupply in office. Hence, we see risk of marketing sales downgrade on CTRA,
due to downward revision on CTRP. Additionally, there is some risk that its high-rise projects (Fatmawati and Kemayoran)
would get delayed into next year, as economy is weak.
Relatively healthy balance sheet. As of 1Q15, CTRA has a net debt position of Rp858bn, implying a net gearing of 7%.
Meanwhile, the company has issued a fully-hedged SGD-denominated notes payable in February 2015 amounting to
SGD65mn or IDR618bn, with interest rate of 5.625%p.a. due in 2018. With the full hedge, total cost is approximately
Maintain Neutral with PT of Rp1,350. We maintain Neutral for CTRA with PT of Rp1,350. Stock is trading at 43% discount
to NAV and FY15F P/E of 13.4x.
The Indonesian Real Estate Association (REI) has proposed two limitations with regards to foreign ownership rights on property: 1) Ownership is limited to luxury apartments priced above Rp5bn/unit 2) foreign purchases of apartments are capped at 49% of total units in one building. The limitations are aimed at protecting national backlog housing needs.
Government will likely to relax foreigners to own property in Indonesia. According to Teten Masduki, one of the presidential communication team, President has approved proposal from Real Estate Indonesia to allowed foreign property ownerships while still prioritize public access. This is to face property competition in regional level. Minister of public workers and housing, M Basuki Hadimoeljono, said that government is currently preparing the regulation for foreign property ownership such as for landed residential and apartment. As part of the relaxation plan, Government will then give residenital permit for the foreigner who own property. The regulation for foreign ownership in property will be regulated through the Ministry of Finance.
According to Bambang Brodjonegoro, Minister of Finance, there will be follow-up in the minister of economy level due to opening property ownership for foreigner. However, he emphasizes that the relaxation only given to luxury apartment only and not landed residential. Despite government has yet decided the foreign limitations, they will not differentiate the base price for luxury tax purposes between foreigners and domestics.
The Directorate General of Tax Authorities, Sigit Priadi Pramudito, welcomed the president’s blessing to open the property ownership to foreigners as he believes the relaxation will push the property sector in the middle of economic slowdown as well as increase potential tax revenue from PPNBM (luxury sales tax). Nonetheless, he still await for revision of Government Regulation No. 41/1996 about property ownerships for foreigner that authorized by National Land Agency (BPN). Currently, foreigner an only buy apartment which build on land with right to used status. (Bisnis Indonesia)
Comments: We believe the relaxation will surely bring more fresh air to property sector, especially when early year tax revision for luxury tax (PPh 22 and PPNBM) has been finalized. Although the regulation on limitation in terms of pricing or total area for foreigners has to be set properly, as it might create significant increase in land price which resulting increase in price for low segment properties. Which stocks is benefiting from this relaxation? Those who has large exposure to high rise projects, such as: Lippo Karawaci (LPKR IJ, Neutral, TP: IDR1,460) and its subsidiary Lippo Cikarang (LPCK IJ, BUY, TP:IDR14,300), Intiland Development (DILD IJ, BUY, TP: IDR750), Agung Podmoro (APLN IJ, BUY, TP:IDR520) specifically for Pakubuwono Spring project, and Ciputra Property (CTRP IJ, NR).
CTRA announced 5M15 presales of IDR3,235b which makes up 29.5% of its FY2015 presales target of IDR10,963b and 33% of our presales forecast of IDR9,670b. New product launching in May’15 still very slow and we are seeing higher downside risk from CTRP as it continue to book very weak presales in 5M15. CTRP presales target for FY2015 is IDR2,606b (24% of total presales guidance). Maintain HOLD for CTRA with TP of IDR1,550 (50% disc. to RNAV).
Tata cara Pemungutan pajak Penghasilan (PPh) Pasal 22 atas Penjualan barang sangat mewah meresahkan pengusaha properti. Dasar harga acuan properti yang dipakai untuk memungut PPh pasal 22 termasuk Pajak Pertambahan Nilai (PPn) 10% serta Pajak Penjualan Barang Mewah (PPnBM) yang pajaknya sebesar 20%.
Dengan hitungan itu, dasar pungutan PPh atas properti sangat mewah setelah dikurangi PPn serta PPnBm menjadi Rp3,5 miliar, bulan Rp5 miliar seperti yang tertuang di PMK.
Ciputra Development (CTRA)’s consolidated marketing sales reached IDR2.8trn, accounted for 25.8/25.3% of ours /company’s target, in line with our estimates. The strong marketing sales posted by company’s subsidiary, Ciputra Surya (CTRS) with 4M15 marketing sales reached IDR1.04trn or 40/43.6% of ours/company target.
¨ Ciputra Surya’s marketing sales in April alone was IDR695bn, the better than expectation marketing sales came from the new launch of Ciputra World Surabaya Office in April. Ciputra Property (CTRP) marketing sales in other hand is rather weak, with marketing sales up to April 2015 of IDR98.5bn, merely achieved at 4.4/3.8% of ours/company target. While, Ciputra Development (only) marketing sales is inline with sales of IDR1.6trn accounted for 27/28% ours/company target.
¨ We still stick with our preference to Ciputra Surya amongst other Ciputra’s names. CTRS is currently trading at 70% discount to RNAV, implying 11.0-10.3 P/E for FY15-16F vs Industry’s 57% discount to RNAV with 14.4-12.6x P/E for FY15-16F.
§ Biggest beneficiary of foreign ownership revision: At a recent sharing session held by the Indonesia Stock Exchange, Finance Minister Bambang Brodjonegoro indicated that the government is planning to revise Government Regulation No. 41/1996 on foreign ownership of Indonesian property, which would allow foreigners to own luxury apartments. Currently, foreign investors can only be awarded strata titles on apartments built on land with “rights to use” licenses (Hak Pakai), which are capped at 50 years (25 years, renewable for 25 years), and titles are not bankable as collateral due to the limited claims to the properties. However, the Finance Minister has not said what the price floor would be, nor has he commented on what type of title deeds foreigners would be allowed to hold under the revised regulation. The Finance Minister believes the revision should take effect in 2015, in conjunction with revisions to the luxury goods tax (PPNBM).
Outlook: Marketing sales should pick up
Despite CTRP’s weak 1Q15 marketing sales performance, we think the above-mentioned foreign ownership rule bodes well for its project pipeline, which includes a portfolio of luxury apartments at Ciputra World Jakarta (exhibit 7). Despite threats of a 20% PPNBM, we think foreign interest in these properties would be robust, given how property prices in Indonesia are still significantly cheaper than those in neighbouring countries (exhibit 8). Foreign demand would also pave the way for CTRP to offer increased higher-end units at its prime Ciputra World sites (exhibits 9-10). However, we think most of this upside would occur post 3Q15, when the details of the regulation are likely to be made public. In addition, we expect Bank Indonesia to cut its benchmark interest rate by at least 25bps this year, which would support the property market by allowing for improved demand.
Recommendation: Raising to BUY with higher TP of IDR790
On CTRP’s brighter outlook, we reduce the stock’s discount to NAV to 55% from 60% and raise our 12-month TP to IDR790 (from IDR700). With 13% upside potential, CTRP is now a BUY (previously: Hold). We also note that despite the pricing uncertainty, CTRP has the highest likelihood amongst developers in our coverage of its offerings exceeding the government’s floor pricing given its high-end Ciputra World apartments. Risk to our call: delays in foreign ownership rule implementation.
Pengembang properti makin agresif merambah bisnis rumah sakit. Seperti Grup Ciputra lewat Ciputra Healthcare yang meresmikan klinik pertama di mal bertajuk Ciputra Medical Center (CMC) di Lotte Shopping Avenue, Ciputra Wolrd Jakarta 1 akhir pekan lalu.
Menurut Direktur Ciputra Mitra Medika, Veimeirawaty Kusnadi, Ciputra sengaja memilih lokasi ini demi merangkul eksekutif dan profesional yang beraktivitas di Ciputra Wolrd Jakarta, seperti penghuni apartemen, tamu hotel, maupun pengunjung mal.
Beberapa klinik di Ciputra Medical dikelola sendiri Ciputra Helathcare. Tapi ada juga yang bermitra dengan kelompok dokter spesialis. Khusus Eye Clinic, Ciputra membentuk anak usaha patungan dengan Singapore Medical Group (SMG).
Veimeirawaty bilang, bukan tidak mungkin nantinya Ciputra akan buka klinik di dalam mal yang lain. “Visi kami adalah masuk ke bisnis rumah sakit di proyek atau kota yang sudah kami kembangkan. Bisa berbentuk rumah sakit atau klinik,” ujarnya kepada KONTAN, Senin (23/3).
Apalagi investasi untuk mendirikan klinik jelas lebih kecil ketimbang rumah sakit. Untuk satu rumah sakit, Ciputra mengeluarkan dana sedikitnya Rp 250 miliar. Sedangkan nilai investasi untuk CMC hanya Rp 50 miliar.
Hingga saat ini Ciputra Healthcare sudah mengoperasikan Ciputra Hospital Citra Raya Tangerang dan Klinik Ciputra di Citra Garden City Jakarta Barat.
PT Siloam International Hospitals (SILO) juga akan menempuh strategi yang sama dengan meluncurkan rumah sakit mini bertajuk Siloam Express berkapasitas 40 tempat tidur.
“Kami sudah punya rencana membangun Siloam Express di mal-mal Grup Lippo,” ujar Presiden Direktur Siloam Romeo Lledo.
Dua Siloam Express sudah masuk tahap konstruksi. Pihaknya menargetkan punya 17 Siloam Express di 2017.
Post the latest BI decision to cut the benchmark interest rate to 7.5%, as well as the recovery in consumer spending, we adjust our TP for Ciputra Development to IDR1,490 (from IDR1,350, 5% upside). Nonetheless, we downgrade our recommendation to NEUTRAL (from Buy) due to limited upside to our new TP and prefer Ciputra Surya among the listed Ciputra entities.
¨ FY15 marketing sales to grow by 23%. Ciputra Development is aiming to get IDR10.6trn of presales value for FY15, ie a 23% YoY increase and slightly lower than our IDR10.7trn FY15 presales estimate. It expects existing projects to contribute IDR8.4trn, while the remaining IDR2.2trn will come from new developments – this includes the IDR835bn of luxury apartments sold to Ascott that was concluded in FY14 but were not booked yet. The company advised that it plans to launch 10 new projects in total with target sales per project of around IDR100bn-200bn. This estimation excludes the Fatmawati project, which is targeted to yield sales value of IDR400bn.
¨ Change in forecasts. We raise our net earnings forecast for FY15-16 by 8.2-12% on the back of higher sales booked as revenue from the assets sold to Ascott. We also take into account Ciputra Property’s (CTRP) medium term notes (MTN) Phase 1 of SGD65m, which is equivalent to IDR609bn with coupon rate of 5.625% per annum. Note that the MTN is part of SGD200m in multi-currency notes that will partly be used to refinance Ciputra Development’s existing loans as well as finance the development of Ciputra World II Jakarta, Ciputra Puri International and the Rosewood Hotel in Bali.
¨ Limited upside. Taking into account the adjustments, we raise our TP to IDR1,490 however, the upside is limited (only 5%). Hence, we downgrade Ciputra Development to NEUTRAL (from Buy). The counter is currently trading at a 43% discount to RNAV with 14.9-13.5x FY15F-16F P/Es. The subsidiary Ciputra Surya (CTRS) is our preferred stock amongst the listed Ciputra names since it is trading at 10.4-9.7x FY15F-16F P/Es and FY15F ROE of 19%.
Tax official was quoted by online news report as saying the gov’t will revise income tax regulation on the sale of property; property to be categorized as luxury item.
Currently, income tax is charged on sale of property in primary mkt valued above IDR5b and building area >500sqm. This will be lowered to IDR2b and building area >400sqm.
We estimate limited impact for SMRA as its blended ASP/unit is still below IDR2b. BSDE and LPKR might be at risk.
Local online news site Mardiasmo quoted the Officer In Charge for the Directorate General for Tax as saying the government will revise the income tax regulation (PPh 22) for sales of property. Current regulation charges income tax on the sale of houses valued more than IDR10b and building area of >500sqm and apartments and condominiums valued more than IDR10b and building area of >400sqm. Regulation may be revised to apply to houses valued IDR2b and 400sqm while the official did not specify revisions for apartments and condominiums. In addition to the income tax for sales of property above the stated value, currently there is also VAT of 10% and luxury tax VAT of 20% on sales and purchases of property in the primary market.
What’s Our View
While the revision on income tax for property developers is still not final, we think there is possibility the regulation will be tightened by having it apply to “houses above IDR2b OR >400sqm” instead of “houses above IDR2b AND >400sqm”. We estimate that since the current regulation must fulfil the two conditions of value and building area, many property developers are not yet taxed with this tax article (PPh 22). We view this news as negative for the property sector especially for those serving the middle to high segment such as BSDE, LPKR and Ciputra Property (CTRP IJ, NR). We note limited risk for SMRA, ASRI and BKSL as their blended ASP are still below IDR2b per unit.
CTRA accomplished marketing sales of Rp8.6tn for FY14F, a slight decline compared to last year’s target of Rpp8.9tn. Further details yet to be released for FY15F marketing sales, but the company is looking for 10-15% marketing sales growth. We maintain our Neutral recommendation for CTRA.
Looking for 10-15% growth. Last year, CTRA accomplished marketing sales of Rp8.6tn, after revision. In FY14, around 80% of CTRA’s marketing sales are contributed from Java projects versus 60% in FY13. Weakness of sales on outside of Java, in our view is due to commodities, slightly weak realization of budget spending, and a more aggressive tax investigation on property purchase. Official target is yet to be released, but CTRA is aiming for 10-15% marketing sales growth for FY15F.
Can they meet this year’s target? CTRA plans to release its FY15F marketing sales target in early February. We would look for breakdown between Java and outside of Java. We would start worrying on this year’s target if there is a chunk of marketing sales which is focused on outside of Java Island. We are more confident on property demand in Java Island compared to outside of Java. We are also worried on CTRP’s marketing sales target. Despite the strong accomplishment of Ciputra Puri (booking Rp828bn, triple the initial target of Rp276bn), we are not too confident on property demand for Ciputra World Jakarta.
CTRP plans to issue Sing dollar bond. To fund its project capex for next year (which is estimated to be around Rp3tn), CTRP plans to issue around 200mn of Sing dollar bond. Based on recent bond issuance, CTRP could get a rate between 4.5-5.5%. Our number currently has not priced in the bond issuance.
Maintain our Neutral recommendation. At this juncture, we maintain our Neutral recommendation with new PT of Rp1,350 (based on 40% discount to NAV). We attached lower discount to NAV compared to peers of 50%, as we favor its JV & JO structure, which allows the company to expand without incurring much landbanking capex. Our PT implies FY16F P/E of 14.5x.
Another slight downward revision. CTRA menurunkan target marketing sales untuk kedua kalinya tahun ini, dari Rp9,2 triliun menjadi Rp8,5 triliun (turun 8%).
Meskipun marketing sales di Ciputra Office Kemayoran, Citra Raya Maja, dan Citra Raya Tangerang sudah lebih baik daripada ekspektasi, kinerja tersebut tidak mampu menahan penurunan di proyek lain.
Proyeksi turun itu disebabkan kinerja marketing sales PT Ciputra Property Tbk (CTRP) di luar Jawa yang lebih rendah daripada ekspektasi (karena pelemahan sektor komoditas), dan tertundanya beberapa peluncuran proyek (mixed-use di Fatmawati, Citragarden Malang, dan apartemen di Kemayoran).
CTRP juga menurunkan target marketing sales dari Rp1,7 triliun hingga Rp1,3 triliun karena lemahnya realisasi marketing sales di apartemen CWJ Raffles dan perkantoran CWJ.
Weaker than expected demand in outer Java. Kami juga menilai tren pelemahan terjadi pada penjualan semen di luar, yang kami duga karena penurunan harga komoditas. Pasar di Jakarta dan Jabodetabek masih tetap kuat, karena hasil dari peluncuran beberapa proyek lebih baik daripada ekspektasi (Summarecon Serpong Midtown, Orange County di Lippo Cikarang, Kemayoran di Ciputra).
Kami menilai tren tersebut akan tetap berlanjut hingga tahun depan. Kami masih tetap NEUTRAL, kami menilai ada risiko profit taking karena kinerja saham perseroan yang sudah outperform. Saham perseroan ditransaksikan pada valuasi nilai aset bersih (NAV) yang terdiskon 22% dan valuasi rasio harga saham per laba (PE ratio) 2015 sebesar 12,8x.
PT Ciputra Property Tbk (CTRP) menjual apartemen kelas atas Ascott di Kuningan ke Capitaland Ltd melalui anak usahanya yaitu Ciputra Adigraha senilai SG$90 juta (setara Rp840 miliar). Berdasarkan manajemen Ascott, akuisisi itu adalah langkah strategis untuk menguatkan posisi pasar emiten di Indonesia.
Ciputra Group bekerja sama dengan Mitsui Fudosan pada proyek kondominium CitraLake Tower B yang dibangun di lahan 6 ha. Dua tipe kamar yang tersedia adalah: seluas 48,97 meter persegi dengan rerata harga jual (ASP) Rp900 juta per unit; dan seluas 70,65 meter persegi dengan ASP Rp1,5 miliar per unit. Sejak dipasarkan mulai Juni lalu, sebanyak 90% dari total tersedia 126 unit telah terjual.
PT Ciputra Property Tbk (CTRP) memutuskan untuk memperpanjang waktu penjualan treasury stock yang sudah dibeli pada Desember 2011. Tenggat waktunya diperpanjang dari 19 Januari 2015 menjadi 19 Januari 2017. Perpanjangan waktu itu disebabkan harga saham yang relatif masih rendah.
Ciputra Development’s 3Q14 net profit of IDR282bn (-24% q-o-q, +3% y-o-y) brought 9M14 net profit to IDR882bn, in line with our/consensus expectations at 71%/73% of the respective full-year estimates. 3Q14 gross margin edged lower by 20bps to 51.3%, but was still above our 50.2% GPM estimate for FY14. We keep our earnings forecast unchanged. Maintain BUY with an IDR1,350 TP, implying an 18% upside.
¨ 9M14 earnings in line, GPM beats forecast. Ciputra Development’s 3Q14 revenue dropped 12% QoQ, as delays in construction led to slower revenue recognition. The company’s 9M14 blended gross margin also dipped to 51.9% (from 52.1% in 6M14) due to slower margin from its hotel business and the booking of lower-margin projects. Nonetheless, its GPM still beat our 50.2% forecast for FY14. 3Q14 net profit of IDR282bn (-24% QoQ, +3% YoY) brought 9M14 net profit to IDR882bn, accounting for 71%/73% of our/consensus estimates, in line with expectations.
¨ Higher gearing as expected. Starting 6M14, Ciputra Development is no longer in a net cash position. Its interest-bearing debt has increased by 40% YTD to IDR3.8trn, mainly to finance its high-rise projects under its subsidiary Ciputra Property (CTRP). Nonetheless, we believe the company’s cash remains sufficient with a gearing of 55% as of 9M14. Advance from its customers (which would potentially be booked as revenue) stood at IDR5.8trn over the same period.
¨ Maintain BUY, with IDR1,350 TP. We have rolled our valuation to FY15 (see our 21 Oct 2014 report Ciputra Development: A Temporary Bleak Outlook). The counter is currently trading at a 49% discount to its RNAV of IDR2,253/share, with an 18% potential upside to our TP of IDR1,350. Maintain BUY.
Ciputra Property (CTRP) has allocated IDR1.5tn to expand its Citradream budget hotel chain, with plans to build 30 hotels over the next 3 years. It will be funded using bank loans and internal cash. With the addition of the 30 hotels, the company hopes to grow its revenue from hotels to 25% from 10% currently.
CTRA membukukan marketing sales senilai Rp5,8 triliun pada 9M2014 sebesar 59% dari target tahun ini sebesar Rp10 triliun. Marketing sales PT Ciputra Surya Tbk (CTRS) dibukuakn Rp1,3 triliun, 74% dari target yang sudah direvisi sebesar Rp1,8 triliun.
PT Ciputra Property Tbk (CTRP) per 9M2014 membukukan marketing sales sebesar Rp833 miliar, 49% dari target marketing sales 2014 sebesar Rp1,7 triliun.
Berdasarkan keterangan agen marketing dari Ciputra Puri International, kami mengetahui bahwa menara perkantoran di Ciputra International telah dibeli oleh perusahaan manufaktur. Meskipun demikian, hal itu belum terkonfirmasi oleh perusahaan. Berdasarkan ukuran dari pembelian tersebut, CTRP dapat memenuhi target marketing sales tahun ini.
Downgrade risk? Dengan penurunan target manajemen CTRS, kami menilai ada risiko bahwa CTRA akan menurunkan targetnya targetnya dalam waktu dekat. Beberapa proyek dapat tertunda hingga 2015 karena masalah waktu dan izin. Beberapa di antaranya yang memiliki potensi tertunda adalah proyek Maja, mixed use Kemayoran dan Fatmawati, dengan total nilai sekitar Rp1 triliun.
Perkantoran Ciputra Kemayoran telah soft launch sejak Agustus, dengan rerata harga jual (ASP) Rp27 juta per meter persegi. Dengan risiko penundaan, Mandiri Sekuritas menilai bahwa CTRA dapat menurunkan target marketing sales sekitar 10%-20%.
§ Significant marketing-sales boost from robust sales of new condo: On the back of robust demand at CTRP’s new condominium tower at its Ciputra International mixed-use project in Puri Indah, West Jakarta, the company booked 8M14 marketing sales of IDR750bn, up 156% m-m, translating to 44% of its full-year target of IDR1.7tn. Sales of the Ciputra International condominium units contributed IDR413bn, 91% of CTRP’s total August marketing sales of IDR457bn. Our recent discussion with CTRP’s management revealed that the company’s soft launch of the condominium, offering units only to buyers of its existing projects, began in late 2Q14. Through this, CTRP has sold 330 of 412 units ytd, translating to a take-up rate of 80%. It is planning an official launch in November 2014, during which it expects to sell the remaining 20% at an ASP of IDR25m/sqm. This report marks a transfer of coverage.
§ Replacing slow Raffles Residence sales with more Puri launches: Sales of CTRP’s Raffles Residence luxury apartment units at its Ciputra World 1 site have been slow at IDR51bn as of 8M14, 14% of the project’s full-year target of IDR356bn. With each unit being 470sqm in size and asking price of IDR20bn/unit, the company cites the high price tag as the main reason behind the slow sales performance. As a result, it plans to launch an office tower and a second condominium tower at Ciputra International in 4Q14 as substitutes for Raffles Residence’s 2014 marketing sales contribution. CTRP targets IDR1.3tn in total marketing sales from the 2 towers, 70% of which it expects to book by end-2014.
Outlook: Raising our 2014F marketing-sales target
On CTRP’s improved marketing-sales data, we raise our 2014F marketing sales target to IDR1.2tn (+85% from IDR650bn previously; +126% y-y). We expect the strong demand for the company’s first condominium at Ciputra International to repeat at its 4Q14 office and condominium tower launches on the site. In light of this, we are raising our 2016F top line by 11%, while broadly maintaining our 2014-15F forecasts (exhibit 5).
Recommendation: Maintaining HOLD, raising TP to IDR750
On our updated NAV assumptions on the back of CTRP’s new projects and increases in market value of its land banks (exhibits 6-7), we raise our 12-month TP to IDR750 (from IDR720), based on a 50% discount to our end-2015F NAV, which is at par with the sector. HOLD. Risks: weak project sales, greater-than-expected interest rate hikes.
Long waited license for Puri project finally obtained
The company reported that they have received the license for its Ciputra
International project in Puri area, West Jakarta last week. This approval
includes the license for 1 apartment tower and 1 office tower, which implies
license for 2 out of 3 towers planned to be launched this year. The license
allows the company to book marketing sales from the Puri apartment project.
CTRP booked Rp709bn marketing sales YTD Aug
MTD August, the company has booked Rp416bn marketing sales. This brings
the YTD marketing sales to Rp709bn (+157% YoY) and accounts for 62% of
our FY14 forecast of Rp1.1tr and 42% of company’s target of Rp1.7tr. The big
jump in marketing sales is as the company starts to book the pre-sales from
the Puri apartment launch in early 2Q14, which received 80% take-up rate (this
is as the company recently obtained the license for its Puri project. The strong
take-up of Puri apartment project is inline with our expectation given the
relatively more mass market pricing (between Rp600m-Rp2bn/unit) vs. the
CBD project. The company is now selling the remaining un-sold units at about
While we believe that the company is on-target to achieve our FY14 target, we
still see downside risks to the company’s FY14 target given the slower than
expected sales from the company’s high-rise (both apartments and offices)
project in CBD. Over the next few months, the company will launch 1 office
tower and 1 apartment tower.
Maintain our FY14 marketing sales target for CTRA….but may see downside
risk on company’s target
Despite the strong August sales for CTRP, we see downside risks to the
company’s FY14 marketing sales of Rp10.1tr target towards our forecast of
Rp8.2tr. As of July, CTRA’s marketing sales has merely reached Rp3.9tr
(accounts for 48% of our FY14 forecast but merely 39% of the company’s
Maintain Buy on CTRA
We maintain our Buy rating on CTRA with Rp1,370/shr price target. This is
especially its high-rise division (CTRP) as the license approval for Puri project
should help the company achieve our FY14 marketing sales target.
The new toll road JORR W2 to increase the nearby land prices. According to IPW (Indonesia Property Watch) executive director, area around the toll road will become a target for developers. He predicted that West Jakarta area, especially Puri Indah, Kebon Jeruk, Permata Hijau will become Jakarta’s new golden triangle. He estimated that land prices around those areas are now Rp20-30mn (US$ 1,710-2,564) per sqm. The newly opened JORR W2 is also positive for developers such as Ciputra Property (CTRP), which is developing 7.4ha superblock in the area and Lippo Karawaci, which is developing the St. Moritz superblock.
Ciputra Development (CTRA) booked YTD Aug-14 pre-sales of IDR4,807bn which makes up 70% of our forecast and 48% of the company’s target. Pre-sales in Aug was encouraging at IDR951bn driven by the sales of first apartment tower of Ciputra International in Puri area, West Jakarta. This is one of the long awaited project by Ciputra Property (CTRP). Both CTRA and Ciputra Surya (CTRS) book stable monthly pre-sales as there were no major new project launches in these two entities. We maintain our pre-sales forecast for CTRA at IDR6,820bn vs. company’s target of IDR9,959bn. Maintain HOLD for CTRA with TP of IDR1,250 (53% discount to RNAV).
PT Ciputra Property (CTRP) lewat anak usaha PT Ciputra Puri Trisula menggaet Trisula Group dalam menggarap proyek Ciputra International di atas lahan 7,4HA yang terletak di Jalan Lingkar Luar Barat. Proyek berupa mixed-use development terdiri dari 10 menara dengan 6 menara perkantoran, 3 apartemen dan 1 hotel berbintang 5.
§ 2Q14 bottom line +221.1% q-q and +61.6% y-y: CTRP booked 2Q14 net profit of IDR97bn (87% of our 2Q14 estimate), +221.1% q-q and +61.6% y-y, translating into 1H14 net profit of IDR127bn (-49.6% y-y). Despite better 2Q14 performance compared to 1Q14, CTRP’s 1H14 results still were below our (32%) and consensus (36%) estimates.
§ Revenue supported by office sales: CTRP achieved 2Q14 revenue of IDR436bn (+73.0% q-q; +85.8% y-y); however, 1H14 revenue still declined to IDR689bn (-18.5% y-y). Office sales supported CTRP’s 2Q14 earnings by booking IDR212bn (1Q14: IDR23bn; 2Q14: IDR57bn). However, condominium recognition continued to be weak, with 2Q14 sales of IDR60bn, or 1H14 condominium sales of IDR121bn (-72% y-y).
§ Recurring income contributes 48% to 1H14 revenue: CTRP recorded 2Q14 recurring income of IDR166bn (-0.7% q-q; +61.8% y-y), bringing 1H14 recurring revenue to IDR333bn (+69% y-y) with shopping centers (43%) the main driver. Recurring income represented 48% of 1H14 sales.
Outlook: Revising down 2014-15F earnings by 20-26%
On CTRP’s weak 1H14 results, we cut our net profit by 26% for 2015F and 20% for 2016F. We expect CTRP’s office tower project with CWJ ll to be recognised in 2H14, coupled with sales at its Raffles apartments. As of 1H14, CTRP has booked marketing sales of IDR218bn (13% of CTRP’s 2014 target; 34% of ours). In 2H14, supported by better political conditions, CTRP expects pre-sales to be boosted by the launches of its 7.2ha mixed-used project in Puri Jakarta and the second office tower launch of CWJ l.
Recommendation: Reiterating HOLD, lowering TP to IDR720
We reduce our TP to IDR720 (from IDR750), based on a 50% discount to our end-2015F NAV calculation, as CTRP’s increased 2015 net gearing from 36% to 46%. HOLD. Risks: weak apartment sales, interest rate increases.
If KPU announces Jokowi win on 22 July, what does it mean for
property stocks? We think a Jokowi presidency would likely introduce
long-term structural improvement for Indonesia’s property sector. This
could present upside for property share prices due to potential valuation rerating.
We are positive on 2H pre-sales outlook. We maintain our top pick
status on SMRA, second preferred stock is CTRA and remain Neutral on
LPKR. We expect property share prices to trade with higher volatility in
response to political news developments in the near term.
· Potential Jokowi presidency impact on property sector. We believe
that a Jokowi presidency would present positive structural changes for
the property sector due to delivery of infrastructure, prudent macro
policy, and land or housing reform. Property stocks could test two
standard deviations above the historical average discount to NAVs in
anticipation of changes in our view.
· Positive 2H pre-sales outlook. We expect between 60% and 67% of
pre-sales in FY14 to be delivered in 2H14 due to developers’ launch
schedule, postponed purchases to date and smaller banks taking
advantage of the lower competition on mortgage-lending environment in
1H14. We identify the main risks for our 2H pre-sales outlook: on the
upside is JORR completion, which is positive for ASP outlook, and on
the downside is fuel subsidy removal event, which could potentially
deter volume transactions.
· Q2 results announcement to be a non-event for share prices. We
expect Q2 result announcements for property stocks to be a non-event for
share prices due to lagged revenue booking of pre-sales.
· Reiterate our stock preferences. We believe SMRA (our most
preferred stock) and CTRA (our second preferred stock) are trading at
attractive discounts to RNAV and delivering strong QoQ improvements
Grup Ciputra mencatatkan pertumbuhan aset tertinggi sejak akhir tahun lalu. Asetnya tumbuh 55,4% menjadi Rp27,63 triliun dari Rp17,78 triliun.
Ciputra Property (CTRP) menghabiskan dana Rp225 miliar untuk investasi pengembangan lima hotel budget tahun 2014. Perseroan menyatakan, tahun ini akan ada setidaknya tiga hotel yang beroperasi. Nilai total masing-masing hotel tersebut sebesar Rp45 miliar per hotel. Selanjutnya, diluar lima hotel budget tersebut, perseroan juga sedang mempersiapkan pembangunan proyek serupa di Bengkulu dan Serpong. Untuk hotel di Bengkulu rencanannya akan mulai dibangun tahun ini, sedangkan di Serpong masih dalam proses perizinan.
Ciputra Development (CTRA) booked pre-sales of IDR1,030bn in May-14, bringing its YTD pre-sales to IDR2,893bn (29% of its FY2014F target). In previous months, the company on average booked pre-sales of IDR500bn per month. CTRA managed to book higher monthly pre-sales on the back of one new shophouse cluster launching in Citra Raya Tangerang amounting IDR360bn. Ciputra Development and Ciputra Surya (CTRS) booked stronger pre-sales MoM and Ciputra Property (CTRP) pre-sales in May-14 down to IDR57bn from IDR109bn in Apr-14 as it only managed to sell few units of its inventory in the month. We remain positive on Ciputra Development as it shows that the company’s products are still well anticipated by the market and with its new project pipeline in the coming months, we believe that the company will be able to achieve its FY2014F pre-sales target of IDR9,959bn. We maintain BUY on CTRA as one of our top pick in the sector with TP of IDR1,330.
CTRA, CTRS, CTRP – Ciputra Group announced its May 2014’s pre-sales performance after the market. CTRA booked encouraging pre-sales, while CTRP and CTRS booked weak pre-sales. CTRA strong pre-sales was driven by shop house and house products sales, which jumped 66% and 448% MoM. Mortgage financing portion increased to 39% in May 2014 from 36% in April 2014, but still below 2012-13 level of 41-44%. If CTRA can sustain its Rp1tn monthly pre-sales for the rest of the year, it can reach its FY14 target of Rp10tn.
- CTRA booked Rp1tn pre-sales in May 2014, up 106% MoM and sent 5M14 pre-sales to Rp2.9tn, down 40% YoY and 29% to CTRA’s FY target.
- CTRP booked Rp57bn pre-sales in May 2014, down 48% MoM and sent 5M14 pre-sales to Rp208bn, down 1% YoY and 12% to CTRP’s FY target.
- CTRS booked Rp179bn pre-sales in May 2014, up 15% MoM and sent 5M14 pre-sales to Rp684bn, down 66% YoY and 31% to CTRS’s FY target.
· As expected 1Q14 marketing sales showed slowdown, where most company achieve 15-20% of their FY14 target. We see that developers with strong brand name managed to book in-line marketing sales.
· 1Q14 extraordinaires. APLN and BSDE managed to book strong marketing sales in 1Q14. In APLN’s case strong sales coming from the newly launched Harco Glodok, Orchard Park Batam, and Podomoro City Medan helped the company reach 28% of its FY14 target. In BSDE’s case, the company did see marketing sales slowdown from residential shown by the slower sales from the new Whelford cluster. However, the 20ha commercial land sales in BSD City managed to help BSDE book 29% of its FY14 target.
· Strong brand, defensive sales. Most developers with strong brand names such as SMRA, ASRI, and PWON recorded in-line marketing sales at 16-22% of FY14 target. SMRA’s Serpong Faraday cluster launch was a hit and ASRI’s Ayodhya Apartment also contributed over 60% of 1Q14 marketing sales. JRPT achieved 22% of its FY14 marketing sales due to its more affordable products and launching of the Kebayoran shophouses in Bintaro. PWON has also done well in 1Q14 booking marketing sales of Rp586bn which is 20% of its FY14 target with no new project launches at all. BKSL managed to hang on with 16% of FY14 target marketing sales achieved due to one shophouse and 2 residential cluster launches.
· Weak 1Q14 for CTRA, LPCK, and MDLN. CTRA only booked 14% of its FY14 target, as the company was not able to book the sales from CTRP’s Puri project until the license is received. LPCK experienced a very slow 1Q14 marketing sales, booking 9% to target, because the company held back launches in anticipation of the Km 34.7 toll access opening. MDLN’s 1Q14 marketing is recorded at Rp448bn or 11% to FY14 target. The number was still supported by land sales to ASRI of Rp300bn. Thus, MDLN’s core sales which mostly came from Cikande and JGC were only Rp148bn.
· What are the launches in 2Q14? Our channel check indicates thin project launches for 2Q14. SMRA just launched its Edison cluster in Serpong tagged at Rp1.5-1.7bn/unit ASP. The company also launched 2 towers at the Springlake apartment in Bekasi at Rp300-800mn/unit. MDLN will launch a new mid size cluster with 400 units priced at Rp2.5bn/unit at JGC. Lastly, JRPT will launch its new Discovery Aluvia cluster and the CBD apartment both in its Bintaro Jaya estate..
Marketing sales improve QoQ in 1Q14
Overall, 1Q14 marketing sales of companies under our coverage (ex-industrial
estate) reached Rp7.4tr (-26% YoY, but +10% QoQ). This accounts for 19% of
the companies’ guidance and 21% of our forecast for FY14. The YoY marketing
sales decline was expected due to the impact of higher mortgage rate
environment, tighter mortgage regulation, and lack of product launches ahead
of the elections. However, we believe the QoQ improvement was due to better
mortgage availability, more flexible payment terms, and lower pricing segment.
Residential and commercial products drive 1Q14 sales
The residential products accounted for 40% of 1Q14 marketing sales.
Residential launches were relatively limited as developers postponed them to
post-legislative elections in 2Q14. The residential launches in 1Q14 were
characterized by: 1) lower pricing segment, evidenced by SMRA’s Faraday
launch, which was priced at Rp1.5-2.0bn/unit; 2) more flexible payment terms
with installments of up to 48 months vs. 24 months previously; and 3)
availability of mortgage, albeit at higher rates, with usage of CTRA’s mortgage
increasing from 10% in 4Q13 to 35% in 1Q14.
Meanwhile, the commercial products accounted for 30% of 1Q14 marketing
sales. This was mainly driven by: 1) 8.6Ha commercial land sales to Astra and
3.7Ha to Prasetya Mulya (1Q14 commercial land sales in BSDE totaled
Rp1.1tr); 2) APLN’s marketing sales generating Rp585bn at its retail space in
Central Jakarta (i.e. Harco project); and 3) shop-housing projects across CTRA
amounting to Rp432bn.
Further, the apartment segment accounted for 25% of 1Q14 marketing sales.
The mid-to-low market apartment segment (
reasonable price range of Rp600m-2bn/unit, and 79% take-up of ASRI’s Kota
Ayodhya project at a price range of Rp230-670m/sqm. However, we
acknowledge that the higher-end apartments (above Rp4bn/unit) continue to
struggle as evidenced by CTRP’s slow sales (even seeing cancellations at its
high-end Raffles Residence project).
More activities in the coming quarters
We expect more activities in the coming quarters as developers become more
confident on the market on the back of the relatively safe election process.
This is evidenced by developers’ launch plan, including: 1) SMRA’s two
residential clusters in Serpong, one tower apartment in Kelapa Gading (subject
to permit), and two tower apartments in Bekasi; 2) ASRI’s Pasar Kemis project
in May; and 3) APLN’s apartment project in South Jakarta.
Prefer landed residential segment
We reiterate our preference for landed residential projects (especially those
with lower pricing segment) over high-end high rise projects. Further, we also
reiterate the importance of a strong balance sheet given current higher
working capital requirements (evidenced by the increasing industry net gearing
from 11% in 3Q13 to 17% in 4Q13). We continue to prefer BSDE and CTRA.
The 1Q14 pre-sales of four developers were relatively mixed. There were generally fewer project launches during the period than in the past. We sense many of the developers are delaying project launches to avoid disappointments or low take-up rates as interest rate remains high at 7.5% and mortgage availability was tight in the first two months of this year.
Bumi Serpong Damai (BSDE) had the strongest pre-sales of IDR1,765bn (+98% YoY on organic sales) in 1Q14 which was mainly driven by strong commercial land sales of IDR1,144bn and a 20ha plot in BSD City sold to businesses such as Astra International. The 1Q14 pre-sales makes up 29% of its FY2014 pre-sales target of IDR6,000bn. We maintain our positive view on BSDE (Buy, TP IDR2,000). Our TP for BSDE is under review post the FY13 results.
Summarecon Agung (SMRA) booked strong pre-sales of IDR628n (+174% YoY) in 1Q14. Although 1Q14 pre-sales covered only 16% of its FY2014 target, historically the first quarter is generally slow for SMRA. We are reviewing our recommendation and TP for SMRA post the FY13 results.
Alam Sutera booked weak pre-sales of IDR850bn (-38% YoY) in 1Q14 which makes up 17% of its FY2014 target. The 1Q14 pre-sales was mainly generated by its new apartment complex called ‘Kota Ayodhya’ valued at IDR400-500bn. The plan to sell its office tower to an anchor tenant is cancelled and ASRI plans to sell 50% of the office space to retail buyers in early May-14. We maintain our cautious view on ASRI and our TP is under review post FY13 results.
Ciputra Development (CTRA) booked weak pre-sales of IDR1,362bn (-52% YoY) in 1Q14. This is due to weak pre-sales booked in Mar-14 of only IDR327bn which was slower than the first two months. CTRA has not launched any major new projects yet and it relied mainly on selling inventory in 1Q14. Ciputra Property (CTRP) booked the weakest pre-sales while Ciputra Surya (CTRS) together with CTRA are doing relatively better. Mortgage supply is also increasingly becoming more available in Mar-14. We are reviewing our recommendation and TP for CTRA post FY13 results.
Ciputra Development (CTRA) announced its 1Q14 marketing sales of IDR1,362bn which makes up 13.7% of its FY2014 target of IDR9,959bn. The Ciputra Surya (CTRS) contributed lower marketing sales in Mar14 of IDR77bn (vs. IDR150bn in Feb14) and Ciputra Property (CTRP) booked negative IDR45bn pre-sales as some units from the Raffles Apartment and CWJ1 Office pre-sales were cancelled. The Group did not launch any new property launch in Mar14. Property purchase using mortgage improved to 35% in Mar14 from 29% in Feb14 as more banks like BRI and BNI are now offering more mortgage facilities with competitive rates. Maintain Buy for CTRA with TP of IDR1,330.
Ciputra Development (CTRA) booked net earnings of IDR977bn (+66% YoY) in FY2013 which is below our expectation and in-line with consensus estimates. The top line of IDR5,077bn (+53% YoY) in FY2013 fell short of our and consensus estimates. We think this is due from the weak revenue bookings contributed by Ciputra Property (CTRP) which mainly offers high-rise property products. However, the company managed to expand its EBIT margin to 31% in FY2013 (vs. 29% in FY2012), ahead of our and consensus estimates. We will provide more details when the full financial statement is published. We will be reviewing our TP and forecast post the FY2013 result.
Weak 2M14 marketing sales. For 2M14, CTRA recorded marketing sales
of Rp1tn, out of expected 2M14 marketing sales target of Rp1.7tn. For
2M14, the company booked marketing sales of 10%. CTRS booked
Rp272bn of marketing sales in 2M14, versus its 2M14 target of Rp308bn.
CTRP only booked Rp86bn from its FY14F target of Rp1.7tn. Office and its
apartment in Ciputra World still showed a weak demand. However, there
would be a chunk of marketing sales booked in March 2014, considering
that CTRP’s Puri International was able to sold one full tower. We estimate
that the tower should able to contribute around Rp400-500bn of marketing
sales to CTRP.
Picky customers. Our discussion with the management indicate that the
customers become more picky. New products with good concept could be
1.5-3.0x oversubscribed (SMRA’s cluster Faraday and Ciputra’s Puri Indah
International). Some of its existing projects show weakness as customers
flocked to newer projects. Customers preferred units with price tag of
Rp2bn or below. Currently mortgage usage is 29% of its pre-sale. It is
showing a recovery compared to 4Q13, in which the developer is still
adjusting to the new ruling.
Maintain Neutral. At this juncture we maintain our Neutral
recommendation. We think that there could be more value in CTRS,
considering that CTRS is more conservative in its FY14F target (aiming for
30% decline as it holds of introduction of new products until market gets
Ciputra Development (CTRA) booked YTD Feb14 pre-sales of IDR1,0.34bn which makes up 10.4% of its FY2014 target. Subsidiary Ciputra Surya (CTRS) continues to perform relatively well in the slowing property market with realized pre-sales of 83% of its monthly target while Ciputra Property (CTRP) booked the weakest sales realized pre-sales of only 26% to its monthly target in the same month. Note that Ciputra Surya focuses in low-rise products in the Greater Surabaya area while CIputra Property focuses in high-rise premium products in Jakarta area. This is in-line with our view that low-rise property products will be more resilient than high-rise products. Mortgage loan payments remain low at 29% in Feb14 as homebuyers who use mortgage facilities postpone purchases while supply of mortgage loans remain available.
CTRA, CTRS & CTRP – announced February’s marketing sales. CTRA posted February marketing sales of Rp1tn (US$83mn), 10% of company’s FY14 target. CTRS and CTRP posted February’s marketing sales of Rp272bn (US$23mn) and Rp86bn (US$7mn), respectively, 12% and 5% of each FY14 target In-house financing still dominates funding source, but mortgage portion picking up.
Penjualan properti sepanjang Februari lumayan baik, setelah emiten-emiten memperkenalkan produknya dengan harga rendah (kurang dari Rp2 miliar per unit).
Beberapa peluncuran produk menunjukkan permintaan yang tinggi, yang sebagian besar mengalami kelebihan permintaan sebesar 1,5x-2x. Peluncuran selanjutnya pada Maret mengindikasikan perusahaan properti akan fokus pada produk yang harganya di bawah Rp2 miliar.
Pada Februari, PT Summarecon Agung Tbk (SMRA) meluncurkan klaster Faraday di Summarecon Serpong seharga Rp1,7 miliar-Rp2,3 miliar per unit, yang mencerminkan rerata harga jual (ASP) tanah sebesar Rp10 juta-Rp11,5 juta per unit.
Sebelumnya, SMRA hanya membuka diri untuk fase pertama sejumlah 174 unit, tetapi mengalami kelebihan permintaan sebesar 1,5x-2x sehingga emiten membuka fase kedua. Penelusuran Mandiri Sekuritas menunjukkan 98% dari kedua fase penjualan klaster tersebut sudah terjual. Fase pertama berisi 174 unit, sedangkan fase kedua 202 unit.
Kami memprediksi penjualan itu bisa mengontribusi marketing sales SMRA sebesar Rp600 miliar-Rp700 miliar tahun ini. Dengan pencapaian itu, marketing sales perusahaan sejak awal tahun sudah berporsi 15%-17% dari target tahun ini Rp4,1 triliun.
Diskusi kami dengan agen penjual produk PT Alam Sutera Realty Tbk (ASRI) menunjukkan permintaan untuk Ayodhya Residence meyakinkan, karena menara pertama yaitu Tower Jade sudah terjual habis. Ayodhya Residence adalah proyek baru Alam Sutera yang berlokasi di Cikokol, Tangerang.
Akhir tahun lalu, ASRI membeli 16,5 hektare cadangan lahan dari perusahaan afiliasi untuk Ayodhya Residence. Ayodhya Residence adalah proyek menara apartemen dengan total 18 menara, dan menargetkan pangsa pasar menengah ke bawah dan memiliki ASP Rp10 juta per meter persegi dan harga jual Rp230 juta-Rp850 juta. Tower Jade memiliki 765 unit.
Kami memprediksi proyek itu dapat menghasilkan marketing sales senilai Rp200 miliar-Rp300 miliar untuk ASRI. Kami memprediksi sejak awal tahun, perusahaan sudah memenuhi 6%-8% dari targetnya tahun ini.
PT Ciputra Development Tbk (CTRA) meluncurkan apartemen Ciputra Puri Indah di Jakarta Barat. Tower pertama yang memiliki 300 unit sudah terjual habis dengan ASP Rp23 juta-Rp24 juta per meter persegi. Ukuran unit antara 30 meter persegi-115 meter persegi.
Kami memprediksi proyek itu akan memberikan marketing sales sebesar Rp350 miliar-Rp500 miliar bagi PT Ciputra Property Tbk (CTRP).
PT Lippo Cikarang Tbk (LPCK) sebelumnya meluncurkan apartemen Trivium Tower pada akhir Februari dengan total 304 unit. ASP sekitar Rp12 juta-Rp13 juta per meter persegi dan harga per unit sebesar Rp420 juta-Rp1,9 miliar.
Dalam sepekan, penelusuran kami menunjukkan bahwa sekitar 40%-50% unit sudah terjual. Kami memprediksi proyek itu akan menghasilkan marketing sales sebesar Rp100 miliar-Rp150 miliar.