One in a Million
Marketing Sales Target of Rp3,5 trillion or Increase by 68.76% in FY18E, but MDLN successfully booked of Rp1.95 trillion in 1Q18
MDLN sets marketing sales target of Rp3.5 trillion, with residential sales of Rp2.5 trillion and industrial land sales of Rp1.5 trillion. MDLN has booked sales of Rp 1.95 trillion in 1Q18 or 55.63% of the total target in FY18E. We assess the achievement of marketing sales is above the average marketing sales of other property companies in 1Q18.
Unexpected Potential Growth of Joint Ventures with Waskita Karya Realty
MDLN and Waskita Realty Property (WKR) will join together to develop Modern Bekasi. The JV Company will build landed house, mixed use, apartment, commercial area, educational facility, and hospital with the concept of toll road city (TRC). TRC is a residential development concept that has direct access to the Cibitung-Cilincing toll road (Bekasi, West Java), which is approximately 20 km away with Tanjung Priok Seaport.
Industrial Estate Marketing Sales of Rp 1 Trillion, Supported by 6.66% Price Increase & Ease of Toll Road Access to Modernland Cikande
Industrial land sales will grow 72.05% in FY18E, compared to FY17 realization of Rp581.24 billion. In addition, MDLN plans to increase the selling price of the industrial land in FY18E up to Rp1 million per m2 or an increase of 6.66% compared to FY17 which was average selling price at Rp1.5 million per m2.
Site Visit : AEON Mall is the Center of Attraction in Jakarta Garden City
Our visit to AEON Mall gave a charming impression both from the point of view of design and location. We believe that MDLN will get benefit from the presence of AEON Mall in Jakarta Garden City area. This is supported by 1) The presence of AEON Mall will attract potential buyers for property in Kelapa Gading and Bekasi areas, due to cheaper prices with similar facilities; 2) Direct access to toll roads that can easily get to the city center.
Risk of Corporate Credit Rating
In April 2018, Pefindo has lowered the MDLN rating to "idA-" from "idA". In addition, MDLN has bonds payable worth Rp600 billion, but this risk may decrease as the debt repayment of the bonds will be paid by using internal cash which MDLN has cash of Rp1 trillion in FY17.
BUY Recommendation with TP: Rp440
We consider MDLN to have an attractive prospect, driven by 1) JV with WKR is an advantage; 2) Aeon Mall with potential customer appeal; and 2) Direct toll road access to Modern Cikande & the lowest industrial land prices. We recommend BUY for MDLN at a TP: Rp440, implies on PE18E / FY19F of 5.85x - 4,45x and PBV18E / PBV19F of 0.71x - 0.63x.
