Ciputra Development - Bahana

3M marketing sales: 16% of 2011, in line on 2H project acceleration

§ CTRA reported March 2011 marketing sales of IDR161b (-16% m-m and -3.8% y-y), mostly stemming from a new residential project launch in Kendari (IDR90b), the 4th new project launched this year.

§ This brought 3M11 sales to around IDR560b (+19.5% y-y) sales in 3M11, supported by the company’s existing 18 residential projects and 2 mixed-used developments.

§ Going forward, CTRA has prepared 8 new residential projects (including Shenyang – China ) and launches from 2 new apartments/ premium residences to achieve 2011 marketing sales of IDR3.4t, doubled compared to 2010’s level of IDR1.7t.

Outlook: More projects, higher marketing sales
We think the growth story is imminent in the coming years for CTRA, supported by existing and upcoming projects. With IDR3t marketing sales in 2009-10, we estimate 2011-12 revenue to grow at least 16% and 24% respectively. On the bottom line, with higher than expected 2010 net margin, it is possible that we may upgrade our earnings this year.

Recommendation and valuation
We continue to like CTRA for its prudent management, project diversification and additional recurring incomes in the future. More aggressive expansions this year should support the company’s growth going forward. This will result in continued positive sentiment on the stock, allowing continued ytd market outperformance (exhibit 4). Thus, we reiterate our BUY rating on CTRA and retain our target price of IDR520, which is based on 30% discount to NAV.