CTRA reported declined in earnings for its 1Q2010 results to Rp33.8 bn (-37.2% yoy), which below our expectation (- 42.6%) and consensus estimates (-37.5%). The low in bottom line figure, however, resulted from booking of company’s marketing sales mainly in late 2008, which due to the global downturn, the company was only able to meet on average 40% of its sales target.
In addition, the income statement also gained pressure from forex loss of Rp17.4 bn, which the amount nurtured from company’s deposit in foreign exchange, which depreciated due to the strengthening Rupiah.
However, we believe the low figure will not be occurring for the rest of the year, as sales pick up in 2009 will reflect supports in earnings throughout the year. In the mean time, the company keeps showing improvement in sales this year,
which as of Mar10, the marketing sales has booked 26.6% of total target this year, thanks to low mortgage rate.
CTRA is currently trading at 38% discount to NAV10. We still maintain Buy on the stock.
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