Corporate Result Flash Summarecon Agung - Bahana

2Q11 performance
§ SMRA reported 2Q11 bottom line of IDR97b (+65% q-q and +93% y-y), inline with our and consensus estimates.
§ Strong 2Q11 top line of IDR539b (+35% q-q) coupled with lower growth in 2Q11 COGS and opex allowed 2Q11 operating profit to reach IDR140b (+67% q-q), translating to 26% operating margin in 2Q11, on track to reach our full-year 2011 estimate of 24%.
§ High 2Q11 bottom line resulted from improved operating performance has supported 1H11 net profit to reach IDR155b (+53% y-y), translating to 17% net margin, cushioning our 2011 net margin estimate of 15%.

Outlook
We expect improved quarterly results to persist in the subsequent quarters following revenue recognition from 2009-10 high marketing sales. On the back of higher products’ selling prices, we maintain our 2011-12 top line of IDR2.1t and IDR2.4t respectively. On the margin front, we expect 2011-12 operating margin improvements to 24% and 25% (from 22% in 2010), helped by greater efficiencies.

Recommendation and valuation
We think the company’s ability to create value on its existing 852ha land bank in three different areas and high recurring project contribution to EBIT should support the company’s performance going forward. With 15% upside potential to our TP of IDR1,450, we maintain our BUY recommendation on SMRA, which is currently our second top pick given its high EPS growth of 28.4% (sector: 5.3%) and high ROAE of 13.5% (sector: 9%). BUY.