Download PDFFaster revenue recognition in 4Q18
- Better than expected marketing sales of 35ha in FY18 (-17% yoy).
- Plans to develop new industrial estate in West Java.
- We upgrade our FY18F/19F earnings by 11%/25%.
- Maintain Buy with higher TP of Rp320 (from Rp250).
Strong 4Q18 marketing sales of 26.4ha. booked marketing sales of 35ha with ASP appreciation of 15% to Rp3mn/sqm, respectively in FY18, or 25% above our FY18 marketing sales assumptions of 28ha. recorded strong marketing sales of 26.4ha in 4Q18 to Daiwa Group (20.3ha) and Japanese packaging company (6.1ha). As Daiwa Group plans to begin the construction of the warehouse immediately, is expected to recognize the sales of 8ha in FY18. Thus, the fast recognition of 8ha land sale to Daiwa Group is expected to boost FY18F revenue by Rp220bn (Assuming ASP of Rp2.8mn/sqm).
Prepares capex of Rp600bn for second industrial estate. For long-term plan, has prepared capex of Rp600bn in FY19F, which will fund the development existing industrial estate in Bekasi and new industrial estate of 600ha. The new estate is expected to be located in East of Jakarta, given the recent completion of Trans Java toll road and lower worker wage in the areas (vs. Bekasi). In addition, lower land cost in East of Jakarta is also one of the reasons for the development of second industrial estate. For example, land price in Serang were 17-47% lower than land price in West of Jakarta (Fig. 6).
Expect higher earnings due to faster recognition and higher demand. We raise our FY18F/FY19F earnings forecast by 11%/25%, respectively as we expect faster recognition of 8ha land sales to Daiwa Group. In addition, given strong 4Q18 marketing sales and plentiful inquiry of 105ha (2017:70-80ha), we apply higher marketing sales assumptions for FY19F of 37ha (from 32ha) which raised our FY19F earnings forecast.
Maintain Buy with higher TP of Rp320 (from Rp250). We continue to like as our top picks in Industrial estate sector, given its strategic location, resilient marketing sales and cheap valuations. currently trades at 73% discount to our estimate RNAV or FY19F P/E of 4.5x. We raised our TP to Rp320/share as we apply lower discount to RNAV calculation to 60% (from 65%) as we expect better industrial property sector going forward. According to Industrial Estate Organization (HKI) marketing sales of industrial land could grow by 10-15% yoy in 2019, supported by security stability ahead and after the presidential election in April 2019. In addition, HKI also believe that with the availability of infrastructure and large market access, Indonesia will become the main choice of industrial relocation from China due to trade wars with America.
Sumber : IPS RESEARCH
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