Monday, November 5, 2012

Bumi Serpong Damai (BSDE-BUY-IDR1,240-TP:IDR1,450)

By Bahana

3Q12 results: Higher than our and consensus estimate

§        3Q12 earnings +32% y-y and 63% q-q: BSDE reported 3Q12 net profit of IDR395b (12% higher than our estimate), +32% y-y and 63% q-q, which brought 9M12 bottom line to IDR902b, +31% y-y. This is higher than consensus’ (82%) and our (90%) estimates.

§        Solid top line growth on strong past marketing sales: On top line, 3Q12 revenue grew 30% y-y on the back of strong revenue recognition of housing and land lots, bringing 9M12 top line to IDR2.6t, +27% y-y and in line with our estimate but slightly lower than consensus’.

§        High ASP to support high gross margin: As the company grew its marketing sales on higher selling priced products, 3Q12 gross margin improved to 69% (2Q12: 63%). Combined with manageable opex and extraordinary income, BSDE reported 9M12 net margin of 34%, higher than our full-year estimate of 28%.

Outlook: More launches to support share price performance

Going into 2013, BSDE plans to launch several commercial/high rise projects/township in Jakarta, Surabaya and Kalimantan as well as township development in BSD City (Serpong). We believe additional project launches outside Serpong area will continue to support share price performance ahead. On track 9M12 marketing sales of IDR3.1t (+25% y-y, 74% of our FY12 target) will also support 2013-14 top and bottom line growth, in our view.

Recommendation & valuation: BUY on 17% upside potential

We will revisit our numbers following this higher than expected 9M12 result release. Huge land bank reserve and project diversification combined with solid balance sheet and net cash position should sustain earnings growth and support expansion in the coming years. Based on 30% discount to NAV, we reiterate our BUY recommendation on the counter with IDR1,450 TP.

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