Saturday, June 25, 2011

Intiland Development Tbk

by DBS Securities: DILD

• Attractive project pipeline for the next four years
• Huge landbank earmarked for wide range of properties to ride on the sector’s growth
• Cut FY11F/12F earnings by 31%/67% after imputing more conservative revenue recognition
• Albeit lower TP of Rp505, maintain BUY, due to cheap valuation of 0.33xP/NAV, offering 62% upside

Attractive project pipeline, busy years ahead. 2011 should be another busy year for DILD with the recent launch of a commercial cluster and three residential clusters and three high rise developments launches in 2H11. Two of its Whiz Hotel should also start operations by the end of this year. This year, the company is targeting 82% y-o-y marketing sales growth to Rp2tr.

Huge landbank to ride on property sector upcycle. DILD has 1608ha of undeveloped landbank, valued at Rp4.4tr, earmarked for various projects. Indonesia ’s property industry is in an upcycle because of the low interest rate environment and a growing middle income population. And armed with its large landbank, DILD can ride on this with a diverse project mix to cater to several target segments especially the middle income and inner city residential, as well as retail and commercial spaces. Its diverse product range should reduce concentration risks and provide more stable earnings.

Reiterate BUY with lower TP of Rp505 offering 62% upside. We cut FY11F/12F earnings by 31%/67% after imputing more conservative revenue recognition assumptions. Initially, we are too aggressive on the launch schedule. Our target price is also reduced to Rp505 after we shaved RNAV to Rp919/share and applied a larger 45% valuation discount. The counter is now trading at 0.33x P/NAV while average property companies in Indonesia are trading c.50% discount, presenting a cheap valuation. Rerating catalysts are project execution and stronger than expected marketing sales

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