Corporate Flash Bumi Serpong Damai - Bahana

BSDE: 2Q11 top line grew 17% q-q, bringing ytd sales of IDR1.6t
§ Following strong marketing sales in 4Q09-1Q10, the management indicated 2Q11 top line of IDR730b (+17% q-q), bringing 1H11 revenue of IDR1.35t, inline to reach our FY11 revenue estimate of IDR2.7t. This 1H11 solid revenue would lead to the net profit of IDR350b, implying 2Q11 net margin of 26% (vis-à-vis our FY11 estimated net margin of 25%).
§ BSDE reported 1H11 marketing sales of IDR1.6t (+83% y-y), coming from residential units in BSD City and other projects under its subsidiary company, Duta Pertiwi (DUTI). These 1H11 marketing sales accounted for 47% of our FY11 target. Following the successful of sales on 5 sub-clusters in 1H, BSDE plans to launch another 3 sub-clusters and 1 new cluster (60ha) in BSD city. Concurrently, DUTI has continued to market its existing residential projects, followed by the new property projects in Benowo, Surabaya or Balikpapan at end 2011 or early 2012.
§ This strong demand of residential site has led to higher land ASP, reaching IDR3.5m/sqm (+29.6% ytd). In contrast, low land cost of IDR1.1-1.2m/sqm has enabled the company to reap 2011-12 operating and net margin of 35% and 26% respectively (vis-à-vis 27% and 19% the industry’s average).

Outlook
With the prolonging low interest rate, we believe that demand for property would remain buoyant in the next few years. The company’s plan to relocate its headquarters to BSD green office Park would bring more traffic flows into the premise and attract the potential development of office building in surrounding area. This would eventually support the company’s recurring income, coming from office leasing. With the continued development of infrastructure, BSDE is likely to benefit from its huge land bank reserve.

Recommendation and valuation
We maintain our BUY recommendation for BSDE due to its solid balance sheet, massive land bank and margin improvements, following the consolidation with DUTI/SMW/SMT that provides 24-25% recurring portion in 2011-12 revenue. The development of new residential projects in Surabaya and Balikpapan as well as new commercial projects in Jakarta should support the growth story. Importantly, BSDE’s current strong marketing sales should well support its 2013-14 top line growth. Thus, we maintain our Buy rating on BSDE with TP of IDR1,160, trading at 20% discount-to-NAV of IDR1,451.