23 Januari 2020
BSDE 9M19 - MNC Sekuritas Equity Report
PT Bumi Serpong Damai Tbk (BSDE)
Property
Compact House for Millenials
9M19 Highlights: Better Performance Driven by Residential Sales
BSDE booked 9M19 revenue of IDR5.23 trillion, grew 9.26% YoY (vs IDR4.78 trillion in 9M18) supported by higher residential sales (+10.13% YoY). The 9M19 revenue relatively in line with expectation, reaching 72.25%/71.83% of Consensus/MNCS estimates for FY19E. Marketing sales reached 85% of management target in FY19E to IDR5.3 trillion. The 9M19 marketing sales were mainly contributed from residential sales of IDR2.4 trillion from six projects in BSD City, Taman Banjar Wijaya, and Grand City Balikpapan. Furthermore, Fleekhauz gained popularity as a "most wanted" cluster, which was sold out within 2 weeks after being launched in 9M19.
Looking for Better Outlook in FY20E
If the pace of FY19 performance continues into FY20E, we expect BSDE to exceed our projections following the stronger demand. We believe that BSDE performance will recover supported by: 1) Successful launch of “the new compact houses project” such as Fleekhauz and Imaji Haus with average price range of IDR800 million to IDR1.5 billion per unit, while Fleekhauz phase II and Provence Suites will be launched in FY20E. The houses are installed with smart home system and fully furnished with a modern design; 2) Flagship development with an integrated business ecosystem including office, education facilities, and convention hall; 3) BSD City Phase III development covering ±2,500 ha in FY20E-FY35F; 4) Integrated infrastructure through Kunciran-Serpong toll road (11 km) which will be connected to JORR II toll road and MRT development in South Tangerang area.
Marketing Sales Robust in FY20E with Positive Catalyst Property Sector
We estimate BSDE marketing sales to reach IDR6.62 trillion in FY20E, increased by 7.29% YoY, supported by positive catalysts in the property sector such as: 1) LTV incentives through BI Regulation number 21/13/PBI/2019 effective in FY19; 2) 7-DRR interest rate trend which will potentially decrease by 25-50bps in FY20E; 3) Estimated 76% of ±81 million millennials will need a new house.
Valuation and Recommendation: BUY at Target Price IDR1,500
We recommend BUY for BSDE, with a TP: of IDR1,500 which implies PE/PBV 13.59x/0.83x in FY20E. BSDE’s valuation has become attractive as it is currently trading at a level of –1 STD (average 3-years PE) P/E at 8.06x and PBV at 0.84x. Risks to our call would include: 1) PSAK 72 implementation which has affected BSDE earnings; 2) Low purchasing power.
