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BSDE - 4Q19 Update

DOUBLED EARNINGS

BSDE reported a revenue of Rp7.1T, which grew by +6.9% (Y/Y) and in line with our FY19 estimate at 100%. Also, we notice that there was change in measurement basis of investment in associate of Rp865B – a one-off gain, boosting BSDE’s bottom line. Net profit-wise, the figure reached Rp2.8B (+115.7% Y/Y) but missed our FY19 target at Rp3.4T (representing 83% of FY19 estimate).

 

AMBITIOUS TARGET

In 2019, BSDE reported a marketing sales achievement of Rp6.5T, exceeding its FY19 target at Rp6.2T. Two of the biggest contributors stemmed from BSD City with Rp1.8T and BSD Commercial lot with Rp1.3T. This year, BSDE expects to record a +11% growth of market sales achievement to Rp7.2T, which is projected to be underpinned by BSD City at Rp2.2T and JV land at Rp1T. Considering the BI rate cut last month, we assume that, at least, the government has shifted towards being more accommodative, possibly spurring property sector. Still, the question whether it is enough to recover customers’ purchasing power is still up in the air, given the recent global pandemic issue. Thus, as mentioned before, we estimate BSDE to record a flattish Rp6.6T of marketing sales (+1.2% Y/Y) this year, although our forecast is both conservative and subject to change amid current uncertainties.

 

STRONG 4Q19 RESULT

In 4Q19, BSDE registered a revenue of Rp1.9T (+13.8% Q/Q; +0.7% Y/Y), supported by strong land, buildings, and strata title sales (+4.8% Y/Y) and rental (+7.2% Y/Y), while at the same time, the Company also booked a quite resilient net profit of Rp481B (+121% Q/Q; -30.7% Y/Y). 4Q19 GPM remained strong at 71.4% vs. 4Q18’s 67.6%; 4Q19 NPM was solid as well at 25.9%. Going forward, in 2020F we estimate BSDE to report a revenue of Rp7.3T, grew by a limited +3.0% (Y/Y), as we believe demand for property may be slower this year due to uncertainties that could result in people curbing their spending. For net profit, we are hopeful BSDE to book a net profit of Rp2.2T, lower by -16.2% (Y/Y) due to a one-off gain back in 2019, but we see that BSDE’s net gearing declined to 0.1x from previously 0.2x, which in our view, could result in lower interest expense this year.

 

VALUATION

We maintain our BUY recommendation with adjusted 12-month target price of Rp1,200/share (68% discount to RNAV at -1SD; previous TP: Rp1,650/share) as slower property demand growth ahead amid uncertainties. TP reflects 12-month P/E and P/B of 9.4x and 0.6x, respectively. 

Wed April 1Th, 2020

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