Summarecon, Raising Value, CLSA

We raised our NAV estimate for SMRA to Rp2,000/sh on the back of
additional land bank in Serpong and Bekasi. We also raised our profit
forecasts for FY12/13 by 7.5% to reflect lower operating expenses.
SMRA is ramping up its Bekasi development, with ASP at Rp4m psm when
flyover is completed; closing the gap with Serpong’s ASP of Rp4.5m psm.
SMRA will also do a non-preemptive rights issuance in the future to buy
more land bank. Stock now trades at 26% disc to NAV. Maintain O-PF.


Strong sales momentum continues: ASP drives growth!
5M12 sales reached Rp1.65tn (US$173m); 47% of FY12E Rp3.5tn (+17%
YoY). ASP in Serpong rose to Rp4.5m psm (+13% YoY), with recent launches
at Rp8m. Kelapa Gading townhouse was sold at Rp25m psm. Shop-houses’
ASP had doubled to Rp30m psm from Rp16m for Serpong, and to Rp40m
from Rp18m psm for Kelapa Gading. Even its Bekasi shop-house was priced
at Rp14m psm (Rp11m in 2011). SMRA is not too concerned with higher DP
rule, given only 30% of its Serpong buyers use mortgage, and close to none
in Kelapa Gading; while for Bekasi, it is 60%, but already at min. 30% DP.

Ramping up Bekasi township development
In 4Q, SMRA will launch a new cluster in Bekasi at Rp4m psm, in time with
the completion of the flyover (ASP 2011: Rp3m psm). Next development will
be the phase 1 of Bekasi mall (NLA 60k sqm) to be completed in 3Q13.
Construction has commenced in Apr, and tenants are now being sourced. The
target is to develop Bekasi to get the ASP closer to its Serpong township.

Non-preemptive rights issue to buy land bank
Shareholders approved the plan for non-preemptive rights to raise up to 10%
of equity at min. Rp1,550/sh. This can be done in stages within two years
after 31May EGM. This can potentially raise US$110m, and will be for buying
land bank in Greater Jakarta, and Bandung, and for investment properties.

Maintain O-PF
We tweaked our profit for FY12/13 by 7.5% to reflect lower operating
expenses. We also raised our NAV forecast to Rp2,000/sh from Rp1,680/sh
previously. This is on the back of more land bank for Serpong and Bekasi (JV
with PT DSA of 230ha), and higher ASP assumptions. SMRA now trades at
26% discount to this NAV. Our TP of Rp1,700/sh represents 15% disc to the
NAV. There is upside to our NAV assumptions as the company replenishes its
land bank and raising ASP. Maintain O-PF.

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