Ciputra Surya, Time for day in the sun, CLSA

Ciputra Surya (CTRS IJ) continued to record robust marketing sales
achieving 41.3% of FY12 target as of April 2012 number. Despite strong
performance of many successful launches in untapped regions, Surabaya
residential and commercial projects remains as CTRS’ backbone with
56.3% marketing sales contribution. Toll road expansion in Greater
Surabaya provides more connectivity and serves as further catalyst for
property price appreciation. We initiate coverage on CTRS with TP of
Rp2,500/sh, implying 40% discount to our estimated NAV. BUY.


Delivering the promise
4M12 CTRS sales were Rp832bn (US$88m), up 114% YoY and 41.3% of FY12
target. This signalled the CTRS ability to deliver its promise against quite an
aggressive target it set for FY12. With LTV regulation (30% down payment
requirement) looming large, few property developers have started introducing
measures, such as staggered DP schemes and extension of mortgage tenors,
to entice home buyers. CTRS is quite cautious on the downside as 72% of
sales were through mortgage with average DP of ~20% as of April 2012.

Eastern gate of Indonesia archipelago
The 2nd largest city in Indonesia Surabaya saw GDP per capita grew 12.8%
cagr, as compared to Jakarta’s at 11.7% cagr since 2007. CTRS has strong
presence with CitraLand as the largest township (1,701ha) on the west side of
Surabaya, serves as the key positive point. Saleable land bank (407ha) is still
plenty as compared to peers such as Pakuwon Jati (85ha) and Intiland
Development (63ha). Despite strong performance of many successful
launches in untapped regions, Surabaya projects (residential and commercial)
are still the main marketing sales contributors to CTRS portfolio with 56.3%.

Congestion ease-off = price take-off
CTRS and other property developers stand to benefit from the expansion of
toll road network in Greater Surabaya. The easing of road congestion and
better connectivity around cities in Greater Surabaya are further catalysts for
property price appreciation.

Initiate coverage with BUY recommendation @TP: Rp2,500/sh
We think CTRS has excellent project execution record, we applied higher
discount to NAV (@40%) to reflect its lower liquidity against the peers. CTRS
has the lowest market cap per sqm of land bank. On valuation, CTRS has the
lowest multiple with 15.7xPE12CL and 10.7xPE13CL as compared to other
property developers. Furthermore, CTRS offers deep discount to NAV at 60%
Initiate with BUY and TP: Rp2,500/sh.

Download file : Indonesia CTRS