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11 Agustus 2022

BSDE IJ - MNC Sekuritas Equity Report August 11, 2022

Good Result On Marketing Sales, Yet Challenging Bottom-Line
 
Marketing Sales Reached 61% in 1H22
• BSDE IJ recorded a marketing sales growth of 3.78% YoY or IDR4.67 tn in 1H22, reflecting 61%/55% of the management/MNCS FY22E target.
• This solid performance was driven from residential which was booked at IDR2.97 tn, contributing 63.53% of the total revenue. Majority of buyers were in BSD City, such as at The Blizfield, Myza (Breezy House), Vanya Park (Askara Nue), Tanakayu Jiva and Svani, Kiyomi and Kanade The Zora (residential segment), Laurel and Marigold Nava Park (premium segment), and shophouses in the BSD City business district such as Northridge and Latinos Business District. Furthermore, cost of revenues grew by 71.77% YoY to IDR767.38 bn and advertising, promotions and commissions was up 231.97% YoY to IDR167.74bn, while other expenses recorded IDR233.83 bn in 1Q22.
• Aside of BSD City, BSDE has other products in the Greater Jakarta area which contributed positively to its sales such as Grand Wisata (New Westfield, Z Living) and Kota Wisata (Mississippi, Nashville). Commercial products including commercial lots, strata title (apartments) and shop houses reached IDR1.4 tn, which represented a 31% contribution to the total pre-sales. These sales were comprised of: 1) IDR541 bn from commercial lots sold mostly in BSD City; 2) IDR316 bn in strata title (apartments/condos); 3) IDR570 bn from shops. Moving forward, we believe that amidst the current uncertain and challenging situation, BSDE should maintain a positive performance throughout the year.
• Management targeted marketing sales to be around IDR7.7 tn while we targeted around IDR8 tn. Our assessments regarding the target include: 1) Decent marketing strategy from “Double Dream”; 2) VAT incentives for DTP until Sept-22, which helped absorbing BSDE properties; and 3) capability of BSDE in residential products to attract consumers, with 6,000 ha and strategic location. BSDE has completed the construction of the 5.15 km Serpong-Balaraja (Serbaraja) toll road section 1A. This toll road connects the existing toll road (Ulujami-Pondok Aren-Serpong) on the side of The Green BSD City cluster to the BSD City CBD interchange (on the side of AEON Mall) and directly connected to the Transit-Oriented Development (TOD) Intermoda BSD City area.
• However, we remain concerned on soaring mortgage rates put pressure on Indonesian properties, as BI’s hawkish.
 
Revenue Double Digit Growth in 1H22, Despite High Cost
• BSDE posted revenue of IDR3.84 tn in 1H22, an increase of 17.87% YoY, reflecting our 47.70%/47.80% target/consensus of FY22E.
• Sales division recorded a growth of 12.35% YoY, while recurring income and others grew by 38.69% YoY. This performance was supported marketing sales in FY21, while the increased recurring income was from the relaxation of mobility in malls along with the turnover from WFH to WFO. The addition of AEON Southgate TB Simatupang also contributed optimally in this period.
• Furthermore, the cost of revenues grew by 37.34% YoY to IDR1.46 tn, followed by higher selling and general expenses at 26.75% YoY. We note that commissions, advertising, and promotion costs increased by 130.75% YoY to IDR336.11 bn in 1H22.
• Thus, net profit decreased by 42.01% YoY to IDR347.90 bn, below consensus/ours expectation implying 35.42%/31.14% of FY22E target.
 
Valuation and Recommendation: BUY at Target Price IDR1,500
We recommend BUY for BSDE, with a TP: of IDR1,500 which implies PE/PBV 24.26x/0.96x in FY22E. BSDE’s valuation has become attractive as it is currently traded at a level of –1 STD (average 5-years PE) PBV at 0.62x. Risks to our call would include: 1) Low purchasing power; 2) Interest rate; 3) USD/IDR.
 
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