17 January 2018

Industrial Estate
Sector Update

Sector Index Performance (JAKPROP)

3M 6M 12M
Strong sales to drive sector’s rerating
Absolute (%) 4.4 6.8 -0.6 Industrial estate developers mostly meet FY17 sales target.
Relative to JCI (%) -4.8 -4.4 -22.9
Industry-wide estate sales grew 35% in 9M17, according to Colliers.
52w high/low (Rp) 532-471
Demand still dominated from auto, consumer & logistic sector.
Equity | Indonesia | Property

120
Attractive valuation with steep NAV discount of 72-75%.

110 Strong sales achievement in FY17. BEST records total sales of 42ha (+34%
yoy), exceeding our/company’s FY17 target of 30-40ha, which is company’s best
100
performance since 2014. DMAS booked total industrial sales of 59.1ha (+12% yoy)
in FY17, which accounts for 102% of our/company’s FY17 forecast of 60ha. In the
90
other hand, SSIA booked total 2.1ha (-80% yoy) industrial sales in FY17, which
accounts for 42% of our/company’s target of 5ha. However, SSIA is the only
80
5-Dec 5-Mar 5-Jun 5-Sep 5-Dec industrial estate which record ASP appreciation with ASP growth of 22% yoy. Going
JCI JAKPROP Index
forward we forecast sector conservative ASP appreciation of 5-8% given FY18-FY19
ex Chart
political year (vs. FY12-F17 CAGR: 10%).
Source: Bloomberg
Industry’s sales recovery as of 9M17 (+35% yoy). According to Colliers,
land sales in industrial estates in the Greater Jakarta area, have reached 144ha in
9M17 (+35%), cumulating to 82% of FY16 sales of 175ha. The overall land sales
in 9M17 were mainly came from food-related industries (29%) with 42.4ha,
automotive-related industries (25%) with 36.7ha, and warehouse or logistic
purposes (7%) with 9.4ha. In quarterly basis, the industry booked a total sales of
only 22.7ha (-62% yoy, -64 qoq). However, in 4Q17 companies under our
coverage, namely DMAS and BEST managed to record substantial land sales of
20ha and 19.3ha, which brings industry FY17F sales at least to 183ha, exceeding
FY16 land sales of 175ha by 4%.

Inquiries still originated from Auto, Consumer and Logistic. Based on our
channel check, companies under our coverage have total inquiries of 207-237ha for
FY18F. The inquiries are still dominated by companies from automotive sector,
followed by consumer and logistic sector. Given adequate amount of inquiry, we
forecast modest marketing sales growth of 8-10% for FY18.

Attractive Valuation. We are bullish on the sector with Buy ratings on three
company under our coverage, namely BEST, DMAS and SSIA. We believe the
stocks are attractively valued following its FY17 good performance and stocks
recent de ratings since 9M17 (8-22%), which makes the stocks trade at steep
discount of 72-75% to our NAV estimates. We continue to like DMAS due to its
largest unscattered landbank (986ha), better residential/commercial facilities and
has no debt while BEST (750ha) is located closest to Jakarta and enjoys higher
prices and margins - both have most resilient earnings in the sector. SSIA
(974ha) has strongest recovery outlook from the construction of Subang-
Patimban toll road with total contract worth Rp1-1.5tn. We maintain our Buy
rating for BEST with TP of Rp380, DMAS with TP of Rp270 and SSIA with TP of
Rp825.

17F 18F 17F 18F 18F 18F

Price TP
Stock Ticker Rating P/E P/E P/B P/B ROA ROE
(Rp) (Rp) (x) (x) (x) (x) (%) (%)
Joey Faustian
Bekasi Fajar BEST IJ BUY 276 380 6.1 4.8 0.7 0.6 9.1 13.7
PT Indo Premier Sekuritas
Puradelta DMAS IJ BUY 165 270 11.4 8.8 1.1 1.0 11.2 11.8
Joey.faustian@ipc.co.id
Surya Semesta SSIA IJ BUY 500 825 2.3* 31.8 0.5 0.5 1.2 2.0
+62 21 5793 1169
*One off due to Cipali toll-road divestment
Source: IndoPremier Note: Share prices as of closing 17 January 2018

Refer to Important disclosures in the last page of this report

Sector Update - Property

Fig. 1 : FY17 sales achievement % of FY17 target Fig. 2 : SSIA’s ASP appreciate by +22% yoy

70 105% 120% 3.00

98.5%
60 100% 2.50
50
80% 2.00
40

Rp Mn
Rp bn

60% 1.50
30 42%
40% 1.00
20
20% 0.50
10

0 0% 0.00
DMAS BEST SSIA 2012 2013 2014 2015 2016 2017

FY17 Sales % FY17 Target BEST DMAS SSIA

Source : Colliers, IndoPremier Source : Company, IndoPremier

Fig. 3 : We forecast 13% yoy growth in FY17F Fig. 4 : BEST & DMAS’ sales in 4Q17F accounts for 39ha

1400 200% 200

1200 180
150%
160
1000
100% 140
hectares

800
120
hectares

50%
600 100
0%
400 80
200 -50% 60
40
0 -100%
20
0

Marketing Sales Growth

Source : Colliers, IndoPremier Source : Source : Colliers, IndoPremier

Fig. 5 : 9M17 sales is still dominated by Auto, F&B and Logistic

sector

Automotive
23.9% 25% F&B
Logistic/Warehouse
Chemical
4% Building Material

3% Metal
5%
Energy
29%
3% 7% Other

Source : Colliers, IndoPremier

Refer to Important disclosures in the last page of this report 2

 Head Office
PT INDO PREMIER SEKURITAS
Wisma GKBI 7/F Suite 718
Jl. Jend. Sudirman No.28
Jakarta 10210 - Indonesia
p +62.21.5793.1168
f +62.21.5793.1167

INVESTMENT RATINGS
BUY : Expected total return of 10% or more within a 12-month period
HOLD : Expected total return between -10% and 10% within a 12-month period
SELL : Expected total return of -10% or worse within a 12-month period

ANALYSTS CERTIFICATION.
The views expressed in this research report accurately reflect the analyst;s personal views about any and all of the subject securities or issuers; and no part of the
research analyst's compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed in the report.

DISCLAIMERS
This reserch is based on information obtained from sources believed to be reliable, but we do not make any representation or warraty nor accept any
responsibility or liability as to its accruracy, completeness or correctness. Opinions expressed are subject to change without notice. This document is prepared for
general circulation. Any recommendations contained in this document does not have regard to the specific investment objectives, finacial situation and the
particular needs of any specific addressee. This document is not and should not be construed as an offer or a solicitation of an offer to purchase or subscribe or
sell any securities. PT. Indo Premier Sekuritas or its affiliates may seek or will seek investment banking or other business relationships with the companies in this
report.