Credit Suisse Ciputra Development

Weak sales continue
Indonesia’s property sales continue to be weak. Ciputra Development (CTRA) reported January 2009 marketing sales of Rp56.8 bn, 31.4% below management’s guidance and down 25% MoM and 49% YoY. Much of CTRA’s January 2009 sales was supported by landed residential sales and Ciputra World Jakarta failed to sell even a single apartment.

Property sales in Indonesia currently lack the necessary drivers, in our view, given softer end-user demand on the back of softer purchasing power and weak mortgage-financed property purchase, given lack of mortgage availability and high mortgage rate.

CTRA is currently trading at a 70% discount to 2009E RNAV, versus the regional average of a 42% discount. However, while we believe that CTRA offers attractive value for long-term investors, we recommend that only investors with holding power should accumulate on the counter and only on weakness.
Maintain OUTPERFORM rating and target price of Rp610.

Mansek Ciputra Development

Ciputra Development: Marketing sales off to a poor start in Jan09 (CTRA, Rp300, Buy, TP: Rp390)

Amidst the difficult environment, CTRA posted January marketing sales of Rp56.7bn (-49%yoy and -25%mom). Lower sales from both CTRA and CTRS contributed to the lower sales level. Again, its new CBD properties via CTRP failed to book any sales in January, thus marking the 3rd consecutive month of zero sales.

The company has targeted a total of Rp1.6tn in marketing sales for FY09, 14% higher from FY08 marketing sales. With BI rates easing, the pressure lower mortgage is more than heightened, which will hopefully stir up renewed demand.

Note that the impact of FY09 marketing sales will only partially reflect in the books by 2010. Chunk of projected revenues in 2009 will come from the Rp1.4tn marketing sales of 2008. Thus, we maintain our revenue and net income growth of 11% and 12% respectively. Buy for CTRA as the stock still shows a 30.0% upside to our TP while trading at a 69% discount to our stripped down NAV09F.