Mansek Bakrieland

Bakrieland: January sales start slow but toll project running ahead of scheduled completion (ELTY, Rp79, Buy, TP: Rp200)

Bakrieland is off to a modest start in 09 with Bogor unit sales of about 40units (vs ave monthly sales in 08 of 70 units but still higher to 07 ave of 33 units).

On its CBD projects Bakrie Tower and the Lifesytle Center is expected to be turned over to buyers by 2Q09, within the scheduled time-frame, sales backlog from this two projects is about Rp360bn (about 30% of ELTY’s sales backlog as of end 08). Full cash infusion of Limitless is imminent (about 30% of the US$100mn is in the books as of end08, while the balance is expected to come on stream soon), thus bringing in fresh funds to secure progress of on-going projects.

While housing sales have slowed down in January, the 35km Kanci-Pejagan toll road project is running ahead of scheduled completion by two months and could start commercial operation by late 2Q09. Thus, revenue contribution from this can start coming on stream by late 3Q09, the earliest. Once operation normalizes, we expect some 10-13% contribution to revenues coming from this segment annually. Talks are still on-going on three other toll road concessions covering some Rp185km in road length. Based on our computations, each kilometre built adds about Rp2.1/share to our NAV which currently stands Rp504/share, including Kanci Pejagan but without the additional 3 toll roads.

At current prices, the stock trades at 84.3% discount (the steepest among our property counters) to our stripped down FY09F NAV, while showing a 153% upside to our TP of Rp200/share. Maintain Buy.