Mandiri Sekuritas Ciputra Development: Key Takeaway from Company Visit (CTRA, Rp800, BUY, TP: 1,100)

We visited CTRA last Wednesday, and found some highlights as follow:

􀂄 CTRA is enjoying the current low mortgage rate trend that carries out good result of their YTD marketing sales, which has tapped 37.2% of this year’s sales target. Mortgage scheme covers up until 99% of its middle-low end segment residential sales, including in-house financing.

􀂄 Pressure from forex loss on their 1Q2010 result has been anticipated by reducing its foreign exchange cash reserves to 30% of its total cash from previously 50%, where expected to eliminate burden of its book throughout the year.

􀂄 However, the company will not be expecting any upside coming from its Ciputra World projects, both Jakarta and Surabaya, as low confidence on the approval of the new foreign ownership government regulation at least until end of this year.

􀂄 The company plans to do revaluation to its landbank assets with Richard Ellis at end of this month, to expect increase of its current discount to NAV to more than 50%. At the moment, the company trades at 44% discount to our NAV10. We still call Buy on the stock.