Mandiri Sekuritas BSDE: 1Q10: Landed growth

Bumi Serpong Damai is delivering what as expected with in-line 1Q revenue and net earnings of Rp311bn (+48%yoy) and Rp82bn (+55%yoy). We continue to like its platform of catering to the resilient low to middle up income segment, manifested by a growing takeup rate in its BSD projects. We currently have a buy on the stock which trades at 53% discount to NAV10F.

Revenue shift led to high growth and improved margins. As a testament to its thrust for a more aggressive residential rollout, house and lots made up of 70% of realized revenue in 1Q10 versus only 38% in 1Q09. Thus, being a high margin sub-segment, this redounded to better gross and operating margins of 54% and 38% respectively from 51% and 28% in the same period a year ago.

1Q10 marketing sales on target to reach FY10F, rising land prices. For 1Q10, BSDE registered marketing sales worth some Rp545bn equating to about 27% of FY10F of Rp2tn. Consistent to its thrust; housing contributed about 50% while the remainder came from sale of lots and a few commercial and industrial plots. Thus, the prospects of a better FY11-12F remain should FY10F sales target be reached. With good demand and project deliveries executed as scheduled, cur! rent aver age land selling price in BSD is now about Rp2.6/sqm, up by some 11-13% from last year’s quoted prices.

Aggressive rollout continues. This year, the company plans to build some 2,000 housing units divided into clusters with 150-200 housing units each. So far, it has pre-sold some 400 units of houses and close to 200 land plots. The company is also looking for possible land acquisition of some 1,200ha within the Serpong area to add to its industry leading current land bank of 3,100ha.

Maintain Buy. With better stock liquidity (post placement free float of 26%) and expectations being fulfilled on a financial and current demand standpoint, as evidenced of having the highest ROAE of about 15% in FY10F among property stock under our cover, we maintain a buy on the stock, which presently enjoys the benefits of strong domestic consumption coupled with low interest rate environment. The stock trades at a 53% discount to our NAV10F, thus maintain ! buy at TP of Rp1,100/share.