Expecting revenue growth recovery
Alam Sutra Tbk (ASRI)
Shinhan Sekuritas Indonesia
Helmi Therik
Background. ASRI is a property developer company that owned 2,200ha land bank. Most of the land bank (70% or 1,555ha) is located at Pasar Kemis (Tanggerang) followed by 262ha in North Serpong. The company also has 67,369 sqm leasable area at Mall Alam Sutra and 107,373 sqm of office tower while in the apartment business, the company has 171,037sqm (semi gross) that ready to be monetized. The company also has contractual land bank sales with CLFD for the projects at Pasar Kemis for 1mn (sqm) each year for the next 3 years. This would support the revenue from the land plot sales going forward.
Land bank and the prospect of the Pasar Kemis area. The average sales price for the land bank in Pasar Kemis is lower than the Serpong area (IDR 4mn/m2 vs IDR15mn/m2). This would make the attraction point that could be offered to the customer. We think that the prospect of the rising in the ASP especially at Pasar Kamis would come from the development of the toll road that will connect the Serpong-Balaraja and the toll road from Balaraja to the Airport. This would reduce the pricing gap at Tanggerang especially between Serpong and Pasar Kamis. The toll road is expected to commercially operating next year.
Managable debt level. Debt level is at manageable level due to its Debt to EBITDA ratio at IDR4.2x while the EBITDA is estimated to grow by 9% to IDR2.2tn this year. However the risk would come from the forex loss due to its USD bond at USD245mn matured at 2020 and USD235mn matured at 2022. With the rupiah that depreciated by 7.4%yoy would cause the forex loss at IDR235bn and the net profit margin would be lower to 20% this year from 35.4% last year. The refinancing of the Debt is likely as the company still have a decent Debt to EBITDA and the total estimated land bank value at IDR29tn.
Strong revenue growth. The company derived 40% revenue from the land plot sales, followed by 33% from the house and shop houses. The company is targeting to sell another IDR2tn land this year to CLFD (China Property Developer) that owned the projects at Pasar Kemis named “Lavon City”. We expect the company would post the revenue growth this year by 22%yoy to IDR4.6tn, while at the 1H, the revenue represented 47% of our target at IDR2,2tn or up by 30%yoy. The pre marketing sales in 1H was IDR2.9tn or representing 72% of the full year target, which indicates that the revenue target is attainable. The positive factor that would support the property sector in the 2H would come from the relaxation in the banking policy regarding the LTV, the risk weighted assets to calculate the banking capital adequacy and the launching of the new projects as about 40% sales is done through mortgage loan. The marketing sales in the 2H are estimated to come from the “Loyd” low base apartment and the residential at Pasar Kemis that targets the mid to high segment.
Valuation. The negative factor regarding the solvability amid the weaker rupiah has depressed the price to its lower PE band. However we see an upbeat on the 1H performance while the negative factored has factorized on its low ‘18PE at 7x and ‘19PE at 5x. We set our TP at IDR 440 which reflects 70% discount to our RNAV calculation.
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