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Tuesday, October 16, 2012

Earnings Discussion

by Trimegah : MDLN

Earnings Discussion

• MDLN posted 2Q12 bottom line of Rp74bn, slightly increasing by 6% QoQ while jumping by 438% YoY. 1H12 earnings reached Rp144bn, soared 185% YoY, outperforming our and consensus estimate by 7%. We perceive this increment is supported by MDLN’s new business on industrial estate division, that contributed higher GPM of 71%, compared to the residential division with 55% GPM.

Top line Discussion

• MDLN posted 2Q12 revenues of Rp204bn, declined 33% QoQ (as the majority of industrial land sales were booked in 1Q12), but increasing 135% YoY. 1H12 top line reached Rp510bn (+181% YoY), on the back of stronger residential sales of Rp381bn (+72% YoY) and robust industrial land sales of Rp129bn (new business in 2012). 2Q12 and 1H12 revenues are inline with our and consensus estimates.

Outlook

MDLN is targeting Rp1.3tr (60% YoY) on FY12 marketing sales. Thus, we presume that MDLN bottom line will grow by 169% YoY (due to low base in 2011 and GPM improvemet) and 76% YoY in FY12 and FY13, respectively. MDLN is in negotiation with ASRI for co-development project in Serpong-Tangerang areas, which we believe would grant MDLN a slight advantage in realizing higher value for its land area. MDLN is also currently pitching on Foxconn to invest in its Modern Cikande industrial estate, which we see would enhance its demand and hence ASP.

Valuation

MDLN is one of the most-lagged counters in our coverage, with 55% discount to NAV. We believe MDLN has NAV of Rp1,280/share, without including the potential deal with ASRI and Foxconn. Hence, we shall see potential NAV upgrade to around Rp1.934/share, in our calculation, when the deals go through. We retain our BUY recommendation for the stock with target price (TP) of Rp640/share, indicating 50% discount to NAV and 14% upside potential.

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