Company Update

Pakuwon Jati Bloomberg: PWON.IJ | Reuters: PWON.JK

25 April 2016 Samuel Equity Research

Deserve a bit premium valuation Terlepas dari penurunan tajam kinerja keuangan sepanjang tahun lalu (-49.84%YoY) dan pada periode 4Q15 (-77.20%QoQ, -92.16%YoY) kami masih memiliki sudut pandang yang optimis pada PWON sebagai salah satu potensi penerima benefit dari ekspektasi membaiknya aktivitas perekonomian yang akan berdampak pada kontinuitas pertumbuhan recurring income PWON dan membaiknya nilai pra penjualan produk high rise tahun ini. Kekhawatiran utama kami terletak pada rugi selisih kurs dan tingginya beban keuangan perusahaan. Di sisi lain, kami juga melihat pertumbuhan core earnings PWON (10A-15A) terbilang kuat (CAGR 48.56%). Kontinuitas memperkuat bisnis utama (recurring) sekaligus menjaga pertumbuhan penjualan kondominium serta cadangan lahan yang mencukupi selama 10 tahun kedepan untuk mendukung rencana pipeline project akan menjadi katalis utama penjaga kinerja keuangan PWON kedepannya. Sambil menanti hasil kinerja keuangan 1Q16 kami menaikan rekomendasi menjadi BUY dari HOLD dengan target harga Rp590/saham (21.18x P/E16E dan 3.57x PBV16E). Core earnings yang masih stabil bertumbuh. Kinerja FY15 yang tidak sejalan dengan ekspektasi kami lebih disebabkan oleh adanya kerugian selisih kurs (Rp276.83bn) dan kerugian instrument keuangan derivative (Rp75.94bn) serta tidak adanya keuntungan pembelian entitas anak dan investasi dengan nilai sekitar Rp1.12triliun. Tanpa kehadiran one time gain dan rugi selisih kurs tersebut di tahun 2014 dan 2015, maka laba PWON bertumbuh +20.13%YoY dan net income mencatat pertumbuhan CAGR sebesar 48.56%. Potensi berlanjutnya deleveraging. kami juga percaya beban keuangan perusahaan serta tingkat leverage kedepannya akan berpotensi mengalami penurunan. Kenaikan angka gearing ratio menjadi 23% dan 36% pada akhir tahun lalu sebagai akibat kebutuhan pendanaan untuk ekspansi kami lihat dapat dimaklumi. Hal ini juga pernah terjadi saat perusahaan membukukan angka net debt to equity hingga 75% (10A) dan konsisten mengalami deleveraging menjadi hanya 7% di akhir tahun 2013. Kerugian selisih kurs juga kami proyeksikan akan cendereung mereda, seiring dengan ekspektasi kami atas menguatnya nilai tukar rupiah. Potensi perbaikan angka pre-sales dan terjaganya kinerja segmen bisnis. Sebagai developer yang memiliki porsi recurring income tinggi akan menjadi kelebihan PWON ditengah masih belum membaiknya aktivitas industri properti (tahun lalu pendapatan berulang PWON bertumbuh 29%YoY). Selama lima tahun terakhir porsi pendapatan berulang rata-rata sebesar 47.8% dan kami perkirakan akan stabil pada angka 50% di tahun mendatang. Demikian pula halnya dengan angka pre-sales yang mengalami pelemahan Rp3.13tn vs Rp3.06tn (15A), yang kami perkirakan akan bertumbuh positif tahun ini seiring ekspektasi membaiknya aktivitas perekonomian. Dorongan pertumbuhan di masa yang akan datang. Proyeksi kami terhadap porsi pendapatan berulang (50%) adalah sejalan dengan strategi perusahaan yang mentargetkan recurring income akan berkontribusi separuh dari total pendapatan. Kekuatan posisi bargaining PWON di pasar retail juga kami lihat akan memberikan keuntungan kedepannya saat kenaikan harga sewa kembali diberlakukan namun berpotensi tidak akan menurunkan tingkat occupancy. Upaya secara kontinyu mendominasi pasar retail di Surabaya dan memperkuat posisi portfolio di Jakarta juga kami lihat akan menjadi katalis penggerak pertumbuhan usaha, seiring dengan rencana moratorium mal di Jakarta dan terbatasnya pasokan ruang retail di Surabaya. Kami juga menyukai ekspansi yang dilakukan PWON dalam segmen healthcare (meskipun masih terhitung kecil) untuk melakukan diversifikasi sekaligus mendorong pertumbuhan recurring kedepannya. Demikian pula halnya dengan akuisisi Pakuwon Permai yang telah menambah portfolio PWON. Upgrade to BUY. Kami masih melihat berlanjutnya tantangan industri properti tahun ini. Membaiknya aktivitas perekonomian akan mendorong pertumbuhan non recurring income, sementara pendapatan berulang potensi akan kembali stabil dan menjaga kinerja keuangan PWON ditengah perbaikan aktivitas sektor yang masih belum menunjukan pemulihan secara menyeluruh. Kekhawatiran kami terletak pada (1) angka recurring yang lebih rendah (2) tertundanya sejumlah proyek (3) perbaikan aktivitas perekonomian yang lebih lambat dari perkiraan dan kembali melemahnya nilai tukar rupiah. BUY PWON target harga Rp590/saham (21.18x P/E16E dan 3.57x PBV16E)

Forecast and Valuation (at closing price Rp530 per share) Y/E Dec (Rpbn) 14A 15A 16E 17E Revenue 3,872 4,625 4,867 5,174 EBITDA 2,471 2,535 2,655 2,779 Net Profit 2,516 1,262 1,342 1,448 EPS (Rp) 52 26 28 30 DPS (Rp) 5 11 5 6 Akhmad Nurcahyadi Dividend Yield (%) 0.9 2.1 1.0 1.1 +62 21 2854 8144 BV per Share (Rp) 128 150 165 190 [email protected] EV/EBITDA (x) 10.9 11.1 10.6 10.1 P/E Ratio (x) 10.1 20.2 19.0 17.6 P/BV Ratio (x) 4.1 3.5 3.2 2.8 Page 1 of 6 DISCLAIMERS: Analyst Certification: The views expressed in this research accurately reflect the personal views of the analyst(s) about the subject securities or issuers and no part of the compensation of the analyst(s) was, is, or will be directly or indirectly related to the inclusion of specific recommendations or views in this research. The analyst(s) principally responsible for the preparation of this research has taken reasonable care to achieve and maintain independence and objectivity in making any recommendations. This document is for information only and for the use of the recipient. It is not to be reproduced or copied or made available to others. Under no circumstances is it to be considered as an offer to sell or solicitation to buy any security. Any recommendation contained in this report may not be suitable for all investors. Moreover, although the information contained herein has been obtained from sources believed to be reliable, its accuracy, completeness and reliability cannot be guaranteed. All rights reserved by PT Samuel Sekuritas Indonesia.

Figure 1. PWON - Quarterly result

12M15E 15A/15E 15A/15E Rpbn 4Q14 3Q15 4Q15 QoQ YoY 12M14 12M15 YoY 12M15E Cons SSI Cons Sales 1,155.58 1,137.40 1,062.02 (6.63) (8.10) 3,872 4,625 19.44 5,371 4,915 86.1 94.1

Cost Of Sales (623.02) (479.19) (486.08) 1.44 (21.98) (1,714) (1,957) 14.13 (2,198)

Gross Profit 532.56 658.21 575.94 (12.50) 8.15 2,158 2,669 23.66 3,173 2,792 84.1 95.6

Operating Expense (87.21) (89.02) (150.02) 68.52 72.02 (268) (404) 50.50 (311)

Operating Profit 445.35 569.18 425.91 (25.17) (4.36) 1,890 2,265 19.84 2,862 2,432 79.1 93.1

Net Interest expense (35.36) (71.32) 107.49 (250.71) (403.94) (77) (74) (2.65) (142)

Interest Income 60.30 35.89 39.62 10.41 (34.29) 216 176 (18.58) 133

Interest expense (95.66) (107.21) 67.86 (163.30) (170.94) (293) (251) (14.42) (275)

Forex loss (46.05) 23.18 (137.33) (692.43) 198.24 (40) (277) 589.86 -

Other 735.14 (13.14) (483.84) 3,583.03 (165.82) 837 (488) (158.34) (200)

Pre-tax Income 1,099.07 507.91 (87.77) (117.28) (107.99) 2,610 1,425 (45.39) 2,520 2,201 56.6 64.7

Tax 162.93 (74.23) 227.55 (406.55) 39.66 (10) (25) 136.39 (403)

Net income for the year 1,262.01 433.68 139.78 (67.77) (88.92) 2,599 1,401 (46.11) 2,117 1,778 66.2 78.8

Non Controling interest 62.15 21.14 45.70 116.15 (26.47) 84 139 65.88 116

Net income owners company 1,199.85 412.53 94.07 (77.20) (92.16) 2,516 1,262 (49.84) 2,001

EPS 623.60 214.40 48.89 (77.20) (92.16) 1,307 656 (49.84) 1,040

Margin

Gross margin 46.09 57.87 54.23 (3.64) 8.14 55.73 57.70 1.97 59.07

Operating margin 38.54 50.04 40.10 (9.94) 1.57 48.80 48.96 0.16 53.28

Net margin 109.21 38.13 13.16 (24.97) (96.05) 67.12 30.28 (36.84) 39.42

Source : Company, SSI Research

Figure 1. PWON - Forward P/E Band

Source: Bloomberg, SSI Research

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Figure 1. Expect marketing sales to improve (IDRbn) Figure 5. Core profit still growing strong (IDRbn)

Expect marketing sales to improve (IDRbn) Core profit still growing strong (IDRbn)

3500 2500

3000 2000 2500

1500 2000

1500 1000

1000 500 500

0 0 2011 2012 2013 2014 2015 2016E 2010 2011 2012 2013 2014 2015 2016 2017 Source: Company, SSI Research Source: Company, SSI Research

Figure 2. Expect rental and service to support growth (%) Figure 6. Debt maturity profile (IDRbn)

Expect rental and service to continue support growth (%) Debt maturity profile (IDRbn)

100% 3500 90% 3000 80%

70% 2500 60%

50% 2000

40% 1500 30%

20% 1000

10% 500 0% 2009 2010 2011 2012 2013 2014 2015 2016 2017 0 Rental and Service Condo and Office Hotel Revenue Land and Buildings Other 2016 2017 2018 2019 2020 onwards Source: Company, SSI Research Source: Company, SSI Research

Figure 3. Expect deleveraging to continue (%) Figure 7. PWON retail portfolio

Expect deleveraging to continue (%) PWON Retail Portfolio 2012 2013 2014 2015 90% Tunjungan Plaza 98% 99% 99% 98% 80%

70% Kota Kasablanka Mall 94% 94% 99% 99% 60% Gandaria City Mall 95% 98% 98% 98% 50%

40% Supermal Pakuwon Indah 89% 91% 91% 91%

30% Pakuwon Trade Center 91% 93% 91% 92% 20% Royal Plaza 96% 96% 96% 97% 10%

0% Blok M Plaza 88% 95% 93% 92% 2010 2011 2012 2013 2014 2015 2016 2017 Source: Company, SSI Research Source: Company, SSI Research

Figure 4. Recurring portion to support growth (%) Figure 8. Shopping centre, Office and Hotel

Recurring portion to support growth (%) Non recurring Recurring income Shopping Centre Pipeline Year Developer NLA (Sqm) Dev Status 100% Marvell City 2016 UE ASSA 15,000 Under Cons 90% Supermal Pakuwon 2 2016 Pakuwon Jati 40,000 Under Cons 80% Tunjungan Plaza VI 2017 Pakuwon Jati 33,000 Under Cons 70% Central Gunawangsa Tidar 2017 Warna warni 10,000 Under Cons 60% Capital Square 2017 Greenwood 6,000 Paper Planning 50% Office rental and Hotel RevPAR 2012 2013 2014 2015 Average office rental (Rp psm/mnt) 40% Kota Kasablanka Tower A N/A 207 224 223 30% Kota Kasablanka Tower B N/A 183 187 168 20% Gandaria Tower A 135 171 187 230 10% Hotel RevPAR (Rp psm/mnth) Tunjungan Sheraton 639 724 784 717 0% 2009 2010 2011 2012 2013 2014 2015 2016 2017 Somerset Berlian 764 939 896 866 Source: Company, SSI Research Source: Company, SSI Research

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Key Financials

Profit and Loss Cash Flow

Yr-end Dec (Rp bn) 14A 15A 16E 17E Yr-end Dec (Rp bn) 14A 15A 16E 17E

Revenue 3,872 4,625 4,867 5,174 Net income 2,516 1,262 1,342 1,448

COGS 1,714 1,957 2,083 2,251 Depreciation & amort. 581 271 301 689

Gross profit 2,158 2,669 2,784 2,923 Working Capital 456 (480) 284 (709)

Gross margin (%) 55.7 57.7 57.2 56.5 Operating cash flow 3,553 1,052 1,927 1,428

Operating profit 1,890 2,265 2,364 2,471 Net - Capital expenditure (6,969) (2,208) (1,453) (1,115)

Operating margin (%) 48.8 49.0 48.6 47.8 Others 286 5 (2) 1

EBITDA 2,471 2,535 2,655 2,779 Investing cash flow (6,683) (2,203) (1,455) (1,114)

EBITDA margin (%) 63.8 54.8 54.5 53.7 Dividend (236) (525) (263) (280)

Other income (expenses) 720 (839) (850) (840) Others 4,270 782 (131) 43

Pre-tax profit 2,610 1,425 1,514 1,631 Financing cash flow 4,034 257 (394) (237)

Income tax - net (10) (25) (26) (28) Net - Cash flow 903 (894) 77 78

Net profit - owners 2,516 1,262 1,342 1,448 Cash at beginning 2,273 3,176 2,283 2,360

Net profit margin (%) 65.0 27.3 27.6 28.0 Cash at ending 3,176 2,283 2,360 2,438

Balance Sheet Key Ratios

Yr-end Dec (Rp bn) 14A 15A 16E 17E Yr-end Dec 14A 15A 16E 17E

Cash & ST Investment 3,177 2,283 2,360 2,438 ROE (%) 30.4 13.3 12.7 12.4

Receivables 303 302 317 337 ROA (%) 15.0 6.7 6.8 7.0

Inventories 1,672 2,254 2,361 2,497 Revenue Growth (%) 27.8 19.4 5.2 6.3

Others 355 570 716 761 EBITDA Growth (%) 45.4 2.6 4.7 4.7

Total current assets 5,507 5,409 5,755 6,034 EPS Growth (%) 122.1 -49.8 6.3 7.9

Net fixed assets 964 1,457 1,734 1,800 Interest Coverage (x) 6.3 7.9 7.8 8.6

Other assets 10,299 11,912 12,305 12,716 Debt to Equity (%) 55.5 51.9 46.1 41.4

Total assets 16,771 18,778 19,793 20,549 Net gearing (%) 17.2 27.8 23.7 20.6

Payables 134 198 136 176

ST. debt and curr. maturity 514 536 590 649 Major Assumption

Other current liabilities 3,265 3,689 3,820 3,324 Yr-end Dec 14A 15A 16E 17E

LT. debt 4,082 4,372 4,265 4,201 GDP growth (%) 5.5 4.7 5.1 5.4

Other long term liabilities 499 528 443 490 CPI (%) 8.3 3.0 4.5 5.5

Total liabilities 8,494 9,323 9,253 8,841 USD/IDR (AvG) 11,885 13,500 13,650 13,200

Total equity 8,277 9,455 10,541 11,709 USD/IDR (EoP) 12,440 14,000 13,000 12,500

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Research Team

Andy Ferdinand, CFA M. Makky Dandytra, CSA, CFTe Rangga Cipta Head Of Equity Research Technical Analyst Economist Strategy, Banking, Consumer Indices, Equities, Commodities, +6221 2854 8396 +6221 2854 8148 Currencies, Fixed Income [email protected] [email protected] +6221 2854 8382 [email protected]

Akhmad Nurcahyadi, CSA Adrianus Bias Prasuryo Marlene Tanumihardja Analyst Analyst Analyst Auto, Heavy Equipment, Property, Cement, Infrastructure,Telecommunication Retail, Poultry, Consumer, Small Cap Cigarette, Media, Aviation, Healthcare +6221 2854 8392 +6221 2854 8387 +6221 2854 8144 [email protected] [email protected] [email protected]

Yudi Ilhamsyah Adde Chandra Kurniawan Analyst Research Associate Property, Construction +6221 2854 8338 +6221 2854 8881 [email protected] [email protected]

Equity Sales Team Kelvin Long Evelyn Satyono Lucia Irawati Director of Equities Head of Institutional Equity Sales Head of Retail Equity Sales +6221 2854 8150 +6221 2854 8148 +6221 2854 8173 [email protected] [email protected] [email protected]

Yulianah Ronny Ardianto Ferry Khusaeri Senior Institutional Sales Institutional Equity Sales Equity Sales +6221 2854 8146 +6221 2854 8399 +6221 2854 8304 [email protected] [email protected] [email protected]

Indra S. Affandi Muhammad Isfandi Peter Hamsja Senior Institutional Sales Institutional Equity Sales Equity Sales +6221 2854 8334 +6221 2854 8329 +6221 2854 8325 [email protected] [email protected] [email protected]

Jovita Widjaja Clarice Wijana Iwan Setiadi Equity Sales Institutional Equity Sales Equity Sales +6221 2854 8314 +6221 2854 8395 +6221 2854 8313 [email protected] [email protected] [email protected]

James Wihardja Equity Sales +6221 2854 8397 [email protected]

Online Trading Sales Team Nugroho Nuswantoro Rina Lestari Head Of Marketing OLT SPV Customer Service +6221 2854 8372 +6221 2854 8180 [email protected] [email protected]

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