Corporate Result Flash Bumi Serpong Damai - Bahana

1Q11 performance
§ BSDE reported 1Q11 bottom line which was in line with our and consensus estimates but operating profit was some 4-5% below due to 30% y-y higher operating expenses.
§ 1Q11 pre-tax profit was mostly in line with our and consensus estimates, supported by net interest income, high other incomes and profit from associated companies.
§ Despite lower 1Q11 gross and operating margins, BSDE showed higher 1Q11 net margin of 26.1%, partly helped by the absence of extraordinary loss.

Outlook
Post the consolidation of its 3 sister companies (DUTI, SMW and SMT), BSDE will book modest 2011 top line growth of only 9% y-y to IDR2.7t (sector 23%) based on our estimate. Most of this growth will come from BSDE while projects from the other 3 companies are already at maturing stages. However, we estimate higher revenue and earnings growth in 2012 (13% revenue and 19% net profit growth) on the back of high 3Q-4Q10-1Q11 marketing sales. Post this consolidation, additional land from these sister companies would provide BSDE the arsenal to develop property products outside Serpong area, supporting sales growth in the coming years.

Recommendation and valuation
Following the release of BSDE’s 1Q11 results, we raise 2011-12 net profit by 3-4% on the back of higher 2011-12 gross margin as a result of the consolidation of recurring incomes from its subsidiaries. Thus, we retain our BUY recommendation on the counter with discount-to-NAV based target price of IDR1,090, reflecting some 18% upside potential from current levels.