Company Update

21 September 2021

KPIG IJ - MNC Sekuritas Equity Report 21 September 2021

Beyond Luxury with Harmony Entertainment


Office Space Rental Performance Continues to Grow During The Pandemic

•KPIG records a revenue of IDR341.80 billion in 1H21 (vs IDR368.08 billion in 1H20).
•Security and other services grew 5.09% YoY to IDR189.68bn and the largest contribution around 55.49% in 1H21. Office space rental increase 11.33% YoY to IDR104.25bn in 1H21 (vs IDR93.64bn in 1H20).   
•KPIG managed to implement efficiency, shown in the decrease on cost of revenue by -2.74% YoY to IDR270.12bn in 1H21 (vs IDR277.73bn in 1H20). While, gross profit margin stood at 20.97% in 1H21 (vs 24.55% in 1H20). Thus, KPIG recorded a net profit of IDR85.74bn in 1H21.


SEZ MNC Lido City

•KPIG officially received Government Regulation (PP) No. 69 of 2021 regarding Government Regulation (PP) No. 69 of 2021 designating the area as a Tourism Special Economic Zone (SEZ) MNC Lido City which was handed over directly on 8-Sept 2021. The government targets the SEZ MNC Lido City to be able to absorb an investment value Foreign exchange inflows from foreign tourists and savings on foreign exchange outflows from domestic tourists, who would prefer SEZ MNC Lido City to travel abroad, are predicted to reach US$ 4.1 billion over 20 years.
•Currently MNC Lido City is developing commercial, tourist destinations and integrated resorts covering an area of 3,000 hectares, namely: 1) MNC World Lido which will become the first world-class theme park in Indonesia with advanced technology; 2) International Golf Club Lido featuring 18-hole PGA standard golf course; 3) Transit Oriented Development; 4) Lido Music & Arts Center; 5) Movieland; 6) Lido World Garden; 7) Techno Park and Data Center, International circuits, various hotels, retail and dining; & 8) universities and office areas will be built soon.
•In addition, KPIG is also a partner of the Agricultural Research and Development Agency (Balitbangtan) of the Ministry of Agriculture for collaborative research and innovation in agricultural development, including endemic crops.
•By obtaining the Tourism SEZ status, businesses in SEZ MNC Lido City area (Cigombong, Bogor, West Java) will receive incentives for tax incentives in the form of Value Added Tax (VAT) exemption, Luxury Goods Sales Tax (PPnBM), Corporate Income Tax, Excise, and Import Duties, as well as various benefits for investors related to goods traffic, employment, immigration, land, and spatial planning, business permits, and/or other facilities and relaxation.
•After the completion, SEZ MNC Lido City is expected to be the host 6-7mn visitors in the next 5 years, further develop MSMEs and the creative economy, as well as increasing local government revenues.


Lido world garden:Beyond a Family Edutainment paradise.

•The 17-hectare flower garden will present visitors with various architectural and historical-cultural innovations, inspired by Indonesian and international timelines depicting the evolution of human civilization, alongside iconic man-made and natural landmarks scattered across geographical areas.
•The adventure at Lido World Garden starts from the uniquely designed Gate of Time zone, alongside a welcome center and waterfront feature. Then onwards to the Fairy Village zone with the stunning Supreme Tree and Throne Tree icons, whilst experiencing breathtaking views across the flower gardens. The adventure continues to the World of Wonders zone, which presents nine historical icons of human civilization from across the globe. The beauty of the park and the rich culture of the Indonesian archipelago are presented within the Magnificent Indonesia zone with the main complex Gallery of Indonesia bringing various regional attractions surrounded by thematic meditation, wellness, and healing gardens. After the Noah's Garden zone, a replica of Noah's Ark, the visitors will be greeted with the beautiful gardens from countries around the world in the Embassy Pavilion Garden zone.


Valuation and Recommendation: NOT RATED

Based on the Company data, KPIG 1H21 RNAV was IDR483 per share. However the stock price is reflected at a 77% discount to RNAV and trailing PBV currently at 0.37x, near –1STD PBV. While MNCS is affiliated with the Company, it does not offer any recommendation related to company prospects. Recommendation: NOT RATED.


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