The Strategy is Running Well: Marketing Sales Hit 32% of Target
Solid 1Q22 Result Across All Segments, but Net Profit Decreased
• Consolidated net revenue increased in all segments by 21.43% YoY, translated to IDR2.03tn in 1Q22; in-line with consensus/ours estimate, implies 25.66%/24.53% of FY22E target.
• Land and buildings strata title segment recorded a 20.11% YoY growth, while recurring income and other grew by 27.03% YoY, thanks to the Government VAT incentives (PPN DTP) program and the opening of community mobility is gradually loosened.
• Furthermore, cost of revenues grew by 71.77% YoY to IDR767.38bn and advertising, promotions and commissions was up 231.97% YoY to IDR167.74bn, while other expenses recorded IDR233.83bn in 1Q22.
• Net profit decreased by 42.01% YoY to IDR347.90bn, below with consensus/ours expectation implying 22.40%/20.13% of FY22E target.
• Moving forward, we believe that amidst the current uncertain and challenging situation, BSDE should maintain a positive performance throughout the year.
Marketing Sales Hit 32.21% of FY22E Target
• BSDE booked IDR2.48tn in 1Q22 marketing sales, grew by 50.45%/0.24% QoQ/YoY, or implies 32.21%/29.02% with consensus/ours expectation. Residential contribute 64.12% and commercial 38% in 1Q22.
• The management estimate the marketing sales to be IDR7.7tn or moderate case in FY22E, but we estimate potentially to IDR8.55tn supported by the high demand of the domino effect commodity boom, as well as the economic recovery that can help housing demand.
• BSD City is still the main driver, with “Double Dream 22” promotion, which provides a 27% plus IDR50mn save added with VAT incentive during the FY22 period. BSDE continues to await a significant contribution of BSD City, supported by the development of the 10 km toll road passing through BSD City, which will bring positive performance for BSDE. According to management, the toll road would be built in two stages: 1) 5 km to connect The Green BSD to Aeon Mall; 2) 5 km will connect Aeon Mall to Legok. BSDE will also seek to develop Grand Wisata Bekasi with the potential of Jakarta satellite area (besides Tangerang) through the Z Living region.
• However, we remain concerned about mortgage rate during The Fed aggressively raises the benchmark interest rate as inflation in the US has the potential to be followed by BI in the future.
Valuation and Recommendation: BUY at Target Price IDR1,500
We recommend BUY for BSDE, with a TP: of IDR1,500 which implies PE/PBV 18.38x/0.95x in FY22E. BSDE’s valuation has become attractive as it is currently traded at a level of –1 STD (average 3-years PE) PBV at 0.60x. Risks to our call would include: 1) 4th Wave Covid-19; 2) Lower purchasing power; 3) Interest rate hike.
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