FY18 results beat forecasts
SSIA IJ / SSIA.JK | ADD - Maintained | Rp595.00 tp:Rp725.00
Aurelia BARUS +62 (21) 3006 1721,
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■ Revenue and margins in FY18 were ahead of our forecasts. It booked a core NP of Rp33.1bn in FY18 (vs. a core net loss of Rp28.8bn in FY17).
■ We now expect a 3-year NP CAGR of 87% in FY18-21F, after cutting our FY19-20F core EPS by 5-10% due to higher opex and lower interest income.
■ Retain Add with an unchanged TP of Rp725, based on 0.85x P/BV.
FY18 revenue was ahead, mainly due to construction revenue
SSIA booked Rp3.7tr (+12% yoy, -10% qoq) revenue in FY18, ahead of our expectations at 108% of our estimate. This was mainly driven by stronger-than-expected construction revenue of Rp2.4tr (vs. our estimate of Rp2.2tr in FY18F).
Stronger-than-expected margins in all business segments
FY18 gross profit came in at Rp980.9bn (+14%yoy, +34%qoq). Overall FY18 GPM was 26.6%, stronger than our forecast of 25%. This was again mainly driven by stronger-than-expected construction GPM of 9.9% (vs. our estimate of 9.4%) and industrial land GPM of 79% (vs. our estimate 76%).
Core NP turned positive in 4Q18 from land revenue booking
FY18 EBIT was ahead at Rp277.4bn (+18.3% yoy, +220% qoq). Strong qoq EBIT growth was due to Rp157bn land revenue booked in 4Q18. In 9M18, it had booked land revenue of only Rp5bn. This resulted in a core NP of Rp89.6bn in 4Q18 (vs. a core net loss of Rp56.4bn in 9M18). Overall, core NP in FY18 turned positive to Rp33bn (vs. core net loss of Rp28.8bn in FY17), better than our core NP estimate of Rp18bn in FY18F.
Project a 3-year core NP CAGR of 87% in FY18-21F
We lower our FY19-20F core EPS by 5.2-10% to mainly reflect our higher operating expense (opex) and lower interest income assumptions. We introduce FY21F numbers and expect core NP to grow by +129% yoy in FY21F, mainly driven by strong land revenue bookings in Subang industrial estate (IE) of Rp596bn (+204% yoy). We pencil in 55ha of land presales in FY21F. We expect Subang IE to be launched in FY20F, and forecast land presales of 50ha in FY20F.
Add call maintained with an unchanged TP of Rp725
We maintain our Add call. Our Rp725 TP is based on 0.85x FY19F P/BV (0.5 s.d. below 10-year mean). Better-than-expected land presales and construction job wins are potential re-rating catalysts. Downside risks to our Add call are slower-than-expected land presales and construction contract awards.
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