Ciputra Development (CTRA IJ, Rp 305 BUY) January Marketing sales - Danareksa Sekuritas

Highlights:

l January 2011’s marketing sales are up 52% YoY to Rp 206bn, with 2 new estates launched in Semarang and Jambi.

l Excluding the 2 new estates, marketing sales still grew 34% YoY.

l 63% of the sales were still contributed by residential projects under CTRA. The best performance came from CitraGarden City, for which sales surged 3.5 times YoY to Rp 48bn, underpinned by a 20% increase in average land selling prices (including building cost) in the area (up from Rp 3.8mn/sqm in FY09 to around Rp 4.6mn/sqm currently).

l The company also recorded Rp 12bn of pre-sales for 4 MyHome apartment units (CTRP).


Comments:

l The company’s FY11F marketing sales target is Rp 3.2Trn, up 85% YoY from FY10’s marketing sales of Rp 1.7Trn.

l However, this target is 50% above our FY11F marketing sales target of Rp 2.1Trn since we remain conservative and do not take into account the company’s 13 new projects launched in 2011.

l Yet if we exclude the new projects from the sales target, the company’s marketing sales target for FY11F would be Rp 2.2Trn - achievable in our view.

l An additional 4 MyHome apartment units were sold, meaning 79 units or 58% of the total 136 MyHome apartment units have been sold. The units are currently offered for sale at Rp 24mn/sqm, already 33% higher than the price at the first launch of Rp 18mn/sqm in 2008. At the current price, the company’s target is to sell a total of 50 MyHome apartment units.

l As previously mentioned, CTRA’s 13 new residential projects in 13 different cities will push up the company’s NAV by 4% to Rp 856/share.

l We remain upbeat on the company given that property investment remains a lucrative business in Indonesia . Compared to other countries in the region, Indonesian property prices are still among the cheapest, ranging from US$ 1,200 to US$ 1,700 per sqm on average. Prices in Malaysia and Vietnam are 3-4 times higher and even as much as 10 times higher in Singapore .

l Demand for housing in Indonesia is high with unfilled demand of around 7.1-8mn units. Since around 60% of the demand is for landed houses, we favor the company’s strategy to tap the property market in areas out of Java through joint operations with local land owners.

l All in all, we maintain our BUY call on the company with a TP of Rp 470 implying 19.9 -18.3x PE11-12F and 1.4-1.3x PBV11-12F.