Pembangunan Perumahan

(PTPP IJ)
Better in time
We initiate coverage on Pembangunan Perumahan (PTPP) with Trading Buy recommendation and
TP of IDR2,100. Despite expected weak FY19 performance, with strong FY20 order book growth
and healthy B/S position, we believe stellar FY20 revenue and net profit growth is achievable.
Construction Overall, we estimate PTPP’s FY19F core net profit and revenue to reach IDR1.2tr (-2.7% YoY) and
IDR27.9tr (+11.0% YoY), but both will grow by 22.7% YoY and 15.7% YoY to IDR1.5tr and
Initiation Report IDR32.3tr in FY20.

September 6, 2019
(Initiate)
Target Price (12M, IDR)
Share Price (9/5/19, IDR)
Expected Return
Consensus OP (19F, IDRtr)
EPS Growth (19F, %)
P/E (19F, x)
Industry P/E (19F, x)
Benchmark P/E (19F, x)
Market Cap (IDRbn)
Shares Outstanding (mn)
Free Float (%)
Institutional Ownership (%)
Beta (Adjusted, 24M)
52-Week High (IDR)
52-Week Low (IDR)
(%)
Absolute
Relative
(D-1yr=100)
JCI
Project delays and slow JO project progress put a lid on FY19 performance
Despite less affected by land acquisition problems compared to its peers, PTPP revenue
generation in FY19 is expected to be negatively affected by delayed EPC projects, due to poor
design planning. Hence in FY19, we expect lower revenue contribution from EPC segment at 13%
Trading Buy (vs FY18: 16%), in-line with company guidance at 10-15%. Moreover, we also expect FY19 JO
profit to decline, attributable to slow JO project progress. We estimate FY19 revenue to grow by
2,100 11.0% YoY to IDR27.9tr, while FY19 core net profit declining by 2.7% to IDR1.2tr.
Expecting FY20 performance to bounce back, supported by strong order book growth
1,780
As of 1H19, PTPP had booked new contract of IDR14.8tr. This was equivalent to 31% of our FY19
year-end target of IDR47.8tr (+9.9% YoY), which led its peers. With expected FY19 carry over of
18.0% IDR63.5tr, we estimate order book to reach IDR111.3tr, grow by 15.9% YoY, which is also highest
growth among its peers. With strong order book growth, coupled with improving JO profit, we
estimate FY20 revenue and core net profit at IDR32.3tr (+15.7% YoY) and IDR1.5tr (+22.7% YoY).
Exceptional B/S position, which leads its peers, expected to last long
3.3
During FY15-18 infra boom period, PTPP successfully maintained its superior B/S position relative
-2.7 to its peers. PTPP bested them in terms of gearing level, cash conversion days, cash flow margin,
9.2 and cash flow coverage ratio. Going forward, with only a small portion of turnkey projects, a
10.9 conservative stance on its investment projects, and less aggressive land bank capex of PPRO, we
15.3 believe this competitive advantage will enable PTPP to convert its plentiful order book to revenue
with ease.
11,035.8
PPRO FY20: Time for aggressive development
6,199.9
49.0 After aggressively allocating capex for land acquisition throughout FY16-17, PPRO has started to
65.9 trim land acquisition capex since FY18, only acquired 10 ha land bank, and will continue to do so
in FY19. As for marketing sales, 1H19 achievement was sluggish, at only 26% of its year-end
1.6
target of IDR3.8tr due to unfavorable macroeconomic conditions. While expecting FY19
2,550
marketing sales to drop by 8% YoY, we estimate FY20 marketing sales to grow by 5.2% YoY,
1,330
supported by initial expansion into landed house market, which will be located in Cibubur,
1M 6M 12M Bandung, Semarang, and Manado. As landed house generally yields higher gross margin than
-4.8 -9.9 6.9 high-rise, we believe PPRO’s net margin will rise.
-7.9 -8.7 -4.1 Initiate Trading Buy with TP of IDR2,100
Despite expected weak FY19 performance, with strong FY20 order book growth and healthy B/S
position, we believe stellar FY20 revenue and net profit growth is achievable. Furthermore, by
PTPP

150 looking at the current price, we believe there’s still some upside potential left. We derived the
130 target price of IDR2,100 for PTPP by using equally blended target FY19F P/E of 10.2x (-1.0 SD of
110
10-year mean) and P/B of 1.0x (-1.0 SD of 3-year mean). Hence, we recommend Trading Buy as
90
our TP represents 16.7% upside potential. At our TP, PTPP is traded at FY19 P/E of 10.9x (-0.9 SD
of 10-year mean).
70
9/18 11/18 1/19 3/19 5/19 7/19 9/19

12/15 12/16 12/17 12/18 12/19F 12/20F

FY (Dec.)
PT Mirae Asset Sekuritas Indonesia Revenue (IDRbn) 14,217 16,459 21,502 25,120 27,871 32,253
Gross Profit (IDRbn) 2,007 2,457 3,251 3,546 3,890 4,459
Property
Op. Profit (IDRbn) 1,597 1,965 2,525 2,628 2,915 3,330
Joshua Michael Net Profit (IDRbn) 740 1,020 1,453 1,502 1,194 1,465
+62-21-515-1140 (ext. 124) EPS (IDR) 153 206 234 242 193 236
joshua.michael@miraeasset.co.id BPS (IDR) 911 1,951 1,847 2,059 2,320 2,638
P/E (x) 11.6 8.6 7.6 7.3 9.2 7.5
P/B (x) 2.0 0.9 1.0 0.9 0.8 0.7
ROA (%) 3.9 3.3 3.5 2.9 2.0 2.3
ROE (%) 16.8 10.6 12.7 11.8 8.3 9.0
Dividend Yield (%) 1.2 1.7 2.8 2.6 3.4 2.7
Net gearing (%) 6.2 Net Cash Net Cash 21.0 27.5 28.8
Note: NP refers to net profit attributable to controlling interests
Source: Company data, Mirae Asset Sekuritas Indonesia Research estimates

PLEASE SEE ANALYST CERTIFICATIONS AND IMPORTANT DISCLOSURES & DISCLAIMERS IN APPENDIX 1 AT THE END OF REPORT.
September 6, 2019 Pembangunan Perumahan

Project delays and slow JO project progress put a lid on FY19 performance

Delayed EPC projects due to poor design planning

Although the company is less affected by land acquisition problems compared to its peers, PTPP’s
revenue generation in FY19 is expected to be disrupted by delayed EPC projects due to poor
design planning which happened at RDMP Pertamina, Balikpapan and Ferronickel Smelter, Kolaka,
with contract value of IDR700bn and IDR5.8tr, respectively.

However, for now, both contracts have been acquired by PTPP. Hence, despite 43.9% YoY
decrease in EPC revenue in 1H19, we believe FY19 EPC revenue can reach IDR3.6tr (-11.4% YoY).
We also expect its contribution to total revenue to reach 13% (vs. FY18: 16%), in-line with the
company’s guidance at 10-15%.

Slow JO project progress

We expect FY19 JO profit to decline, attributable to slow JO project progress in newly acquired
contracts, including RDMP Pertamina, Patimban Port, and several dam constructions. Furthermore,
several major JO projects have reached completion in FY18, including Solo-Kertosono Toll Road,
Kertajati Airport, and Holtekamp Bridge. For FY19, PTPP believes that it can maintain FY18 JO
profit at IDR371bn. However, we prefer to use FY18 run-rate of 20%. Thus, we obtained FY19 JO
profit estimation at IDR178bn (-51.8% YoY).

Figure 1. EPC revenue, FY14-20F Figure 2. JO profit, FY14-20F

(IDR bn) EPC revenue (L) % to total revenue (R) (%) (IDR bn) JO profit (L) % to total revenue (R) (%)
5,000 30.0 500 5.0

25.0
4,000 400 4.0

20.0
3,000 300 3.0
15.0
2,000 200 2.0
10.0

1,000 100 1.0

5.0

- - - -
2014 2015 2016 2017 2018 2019F 2020F 2014 2015 2016 2017 2018 2019F 2020F

Source: Mirae Asset Sekuritas Indonesia Research Source: Mirae Asset Sekuritas Indonesia Research

Lower FY19F core net profit than FY18

All in all, we estimate FY19 revenue to grow by 11.0% YoY to IDR27.9tr, while expecting FY19 core
net profit to decline by 2.7% to IDR1.2tr. Both of them will be elaborated further in “Financial
Analysis” section. Please note that we assume no non-operating income/expenses in our model.

Mirae Asset Sekuritas Indonesia Research 2

September 6, 2019 Pembangunan Perumahan

Expecting FY20 performance to bounce back, supported by strong order book

growth

Strong FY19 order book growth

As of 1H19, PTPP had booked new contracts of IDR14.8tr. This is equivalent to 31% (vs. 1H18:
40%) of our FY19 year-end target of IDR47.8tr (+10% YoY), outperforming its peers. In obtaining
FY19 new contract target, we discounted PTPP’s target of IDR50.3tr by 5% based on its 5-year
historical average target achievement rate of 95%. With expected FY19 carry over of IDR63.5tr, we
estimate order book to reach IDR111.3tr, or growing by 15.9% YoY, which also represents the
fastest growth relative to its peers.

Figure 3. 1H19 new contract achievement: PTPP vs peers Figure 4. FY19F order book growth: PTPP vs peers

1H19 New Contract (L) FY19 Company target (L) (IDR bn) FY19F order book (L) Growth YoY (R) (%)
(IDR bn) FY19 Mirae target (L) 1H19 Achievement vs Company target (R) (%) 150,000 50.0
150,000 50.0
125,000 35.0
125,000
40.0
100,000 20.0
100,000
30.0
75,000 5.0
75,000
20.0
50,000 50,000 (10.0)

10.0 25,000 (25.0)

25,000

- 0.0 - (40.0)
PTPP WIKA ADHI WSKT PTPP WIKA ADHI WSKT

Source: Mirae Asset Sekuritas Indonesia Research Source: Mirae Asset Sekuritas Indonesia Research

Figure 5. PTPP new contract FY14-19F Figure 6. PTPP order book FY14-19F

New Contract (L) Growth YoY (R) (IDR bn) Order Book (L) Growth YoY (R) (%)
(IDR bn) (%)
120,000 50.0 120,000 50.0

100,000 100,000
40.0 40.0

80,000 80,000
30.0 30.0
60,000 60,000
20.0 20.0
40,000 40,000

10.0 10.0
20,000 20,000

- - - -
2014 2015 2016 2017 2018 2019F 2014 2015 2016 2017 2018 2019F

Source: Mirae Asset Sekuritas Indonesia Research Source: Mirae Asset Sekuritas Indonesia Research

Expecting FY20 performance to bounce back

Without further hassle from design planning, we believe the progress of newly acquired EPC
contracts will accelerate in FY20. We also predict that accelerated progress in RDMP Pertamina
and Patimban Port projects, which are targeted to be completed in late FY20, will improve FY20 JO
profit to IDR355bn. Coupled with strong order book growth, we estimate FY20 revenue and net
profit to reach IDR32.3tr (+15.7% YoY) and IDR1.5tr (+22.7% YoY), respectively.

Mirae Asset Sekuritas Indonesia Research 3

September 6, 2019 Pembangunan Perumahan

Exceptional B/S position, which leads its peers, expected to last long

During FY15-18 infra boom period, PTPP successfully maintained its superior B/S position relative
to its peers. PTPP bested them in terms of gearing level, cash conversion days, cash flow margin,
and cash flow coverage ratio. This is unsurprising as PTPP has consistently maintained little
exposure to turnkey projects. Currently, PTPP only has two turnkey projects, which are Bogor Ring
Road (IDR1.1tr) and Indrapura-Kisaran Toll Road (IDR3.0tr).

Furthermore, PTPP retains its conservative stance on investment projects by keeping only minority
ownership, except for Semarang-Demak Toll Road (65% ownership) and BUMN Center (95%
ownership) with investment value of IDR6.5tr and IDR905bn, respectively. On the other hand, we
expect less aggressive land bank capex of PPRO in FY19-20 (to be elaborated further below),
which will, in turn, lessen cash used for investing and financing. As of 1H19, PPRO has realized
23.5% of FY19 targeted capex of IDR1.1tr.

Figure 7. PTPP Investment Project as of 1H19

No. Project name Investment Value (IDRbn) PP shares (%) Concession Period (Years)
1 PLTU Jambi 2x300 MW 17,000 5 25
2 Balikpapan-Samarinda Toll Road 9,973 15 40
3 Cisumdawu Toll Road 8,409 14 40
4 Pandaan-Malang Toll Road 6,843 35 40
5 Semarang-Demak Toll Road 6,479 65 40
6 Serang-Panimbang Toll Road 5,970 15 40
7 Manado-Bitung Toll Road 5,548 15 35
8 Depok-Antasari Toll Road 5,123 12.5 40
9 Kualanamu Toll Road 4,964 15 40
10 Kuala Tanjung Port 4,127 15 30
11 Makassar-Parepare Railway 1,005 15 20
12 BUMN Centre 905 95 30
13 PLTSa Solo 737 40 20
Source: Company Presentation

Going forward, with only a small portion of turnkey projects, a conservative stance on its
investment projects, and less aggressive land bank capex of PPRO, we believe this competitive
advantage will enable PTPP to convert its plentiful order book to revenue with ease.

Mirae Asset Sekuritas Indonesia Research 4

September 6, 2019 Pembangunan Perumahan

PPRO FY20: time for aggressive development

Throughout FY16-17, PPRO aggressively allocated capex, which was mostly spent for land
acquisition. 237 ha land bank was acquired for IDR2.6tr, but since FY18, PPRO has started to trim
land acquisition capex, only acquired 10 ha land bank, and will continue to do so in FY19. Most of
FY19 capex, totaling IDR1.1tr, will be allocated for hotel development and repay installments for
past land acquisitions.

As for marketing sales, 1H19 achievement was sluggish at only 26% run-rate against its year-end
target of IDR3.8tr due to unfavorable macroeconomic conditions. We estimate FY19 marketing
sales to reach IDR3.2tr, 15% lower than the company’s target, with 50% contribution from
apartment projects in Surabaya (Grand Sungkono Lagoon and Grand Shamaya). While we expect
FY19 marketing sales to drop by 8% YoY, we estimate FY20 marketing sales to grow by 5.2% YoY,
supported by initial expansion into landed house market, which will be located in Cibubur,
Bandung, Semarang and Manado. Landed house will be priced between IDR600-900mn/unit,
which we deem approporiate, given the current market condition that is dominated by first-time
buyers. As landed house generally yields higher gross margin than high-rise, we believe PPRO’s
net margin will improve.

Furthermore, PPRO plans to boost its recurring income contribution, which currently stands at 7%.
PPRO wants to improve the utilization of Lagoon Avenue Mall, Bekasi, from 60% to 80%, followed
by other investment properties, i.e. Kaza City Mall, Surabaya and Balikpapan Ocean Square. PPRO
also intends to expand its hotel portfolio to Lombok, with estimated total room capacity of 700-
950. This will complement its existing hotel portfolio in Bandung and Surabaya, with room
capacity of 535 and 150, respectively.

Figure 8. PPRO portfolio

Source: Company Presentation

Mirae Asset Sekuritas Indonesia Research 5

September 6, 2019 Pembangunan Perumahan

Financial analysis

FY19-20F revenue to grow by 11% and 16%

In FY19, as PTPP is less affected by land acquisition problems compared to its peers, we expect
construction revenue to keep accelerating and grow by 19.5% YoY on the back of airport
constructions, i.e. Kulon Progo, Soekarno-Hatta, and Syamsudin Noor, and also toll roads, i.e.
Pandaan-Malang, Manado-Bitung, and Bogor Ring Road.

However, we expect PTPP to be negatively affected by delayed EPC projects. Thus, we estimate
FY19 EPC revenue to reach IDR3.6tr (-11.4% YoY). Meanwhile, revenue from property segment is
projected to decline by 4.7% YoY to IDR2.4tr, not because of delayed construction progress but,
rather, non-compliance with PSAK 44 revenue recognition condition. All in all, we estimate FY19
revenue to grow by 11.0% YoY to IDR27.9tr.

For FY20, we expect that construction revenue will keep speeding up on the back of strong order
book growth. Moreover, without further hassle from design planning, we believe that the progress
of newly acquired EPC contracts will accelerate. That being said, we estimate FY20 revenue to
reach IDR32.3tr (+15.7% YoY).

Figure 9. Revenue FY14-20F

(IDR bn) Revenue (L) Growth YoY (R) (%)

40,000 50.0

32,000 40.0

24,000 30.0

16,000 20.0

8,000 10.0

- -
2014 2015 2016 2017 2018 2019F 2020F

Source: Mirae Asset Sekuritas Indonesia Research

No significant change on profitability level

As PTPP wants to keep toll road exposure at the current level, construction segment’s gross
margin will stay at 10-11%. The company is also committed to maintaining EPC gross margin
between 13-15%. As for property gross margin, we believe that the impact of landed house on
gross margin improvement will take effect starting FY21-22. Hence, property gross margin will be
maintained between 25-30%.

For FY19, we expect JO profit to decline, attributable to slow JO project progress in newly acquired
contracts, including RDMP Pertamina, Patimban Port, and several dam constructions. Furthermore,
several major JO projects have reached completion in FY18, including Solo-Kertosono Toll Road,
Kertajati Airport, and Holtekamp Bridge. For FY19, PTPP believes that it can maintain FY18 JO
profit at IDR371bn. However, we prefer to use FY18 run-rate of 20%. Thus, we obtained FY19 JO
profit estimation at IDR178bn (-51.8% YoY). As for FY20, we expect that the accelerated progress
in RDMP Pertamina and Patimban Port, which are targeted to be completed in late FY20, will
improve FY20 JO profit to IDR355bn.

All in all, we estimate FY19 core net profit to decline by 2.7% to IDR1.2tr with 4.3% net margin and
FY20 core net profit totaling at IDR1.5tr (+22.7% YoY) with 4.5% net margin. Once again, please
note that we assume no non-operating income/expenses in our model.

Mirae Asset Sekuritas Indonesia Research 6

September 6, 2019 Pembangunan Perumahan

Figure 10. Gross and operating margin FY14-20F Figure 11. Net profit and net margin FY14-20F

(%) Gross margin Operating margin Net profit (L) Core net profit (L) Net margin (R) Core net margin (R)
30.0 (IDR bn) (%)
2,000 10.0
25.0
1,600 8.0
20.0

1,200 6.0
15.0

10.0 800 4.0

5.0 400 2.0

- - -
2014 2015 2016 2017 2018 2019F 2020F 2014 2015 2016 2017 2018 2019F 2020F

Source: Mirae Asset Sekuritas Indonesia Research Source: Mirae Asset Sekuritas Indonesia Research

Stable cash flow and B/S position, with limited payment risks
With only a small portion of turnkey projects, a conservative stance on its investment projects, and
less aggressive land bank capex of PPRO, we believe achieving positive operating cash flow is
feasible. With limited payment risks due to diversified portfolio (only RDMP Balikpapan and Kulon
Progo Airport being higher than IDR5tr), we forecast cash conversion days to hover at 85-90 days
in FY19-20, the lowest among peers. We also estimate that gross/net gearing can be maintained
at 0.7-0.8x/0.2-0.3x, while interest coverage can be sustained at 3.2-3.3x in FY19-20.

Figure 5. Gross and net gearing vs industry average Figure 6. Interest coverage and cash conversion days

PTPP Gross Gearing Industry Gross Gearing Average PTPP Cash Conversion Days (R) Industry Cash Conversion Days Average (R)
(%) PTPP Net Gearing Industry Net Gearing Average PTPP Interest Coverage (L) Industry Interest Coverage Average (L)
200.0 6.0 250.0

5.0
150.0 200.0

4.0
150.0
100.0
3.0
100.0
50.0 2.0

50.0
1.0
-
2014 2015 2016 2017 2018 1H18 1H19
- -
2014 2015 2016 2017 2018 1H18 1H19
(50.0)

Source: Mirae Asset Sekuritas Indonesia Research Source: Mirae Asset Sekuritas Indonesia Research

Figure 7. Cash flow margin vs industry average Figure 8. Cash flow coverage ratio vs industry average

(%) PTPP Industry Average (%) PTPP Industry Average

15.0 40.0

10.0 30.0

5.0 20.0

- 10.0
2014 2015 2016 2017 2018
(5.0) -
2014 2015 2016 2017 2018
(10.0) (10.0)

(15.0) (20.0)

Source: Mirae Asset Sekuritas Indonesia Research Source: Mirae Asset Sekuritas Indonesia Research

Mirae Asset Sekuritas Indonesia Research 7

September 6, 2019 Pembangunan Perumahan

Valuation and recommendation

Initiate coverage with TP of IDR2,100

Using equally blended target FY19F P/E and P/B

We set FY19F P/E of 10.2x for PTPP and obtained a fair value of IDR1,950/share, based on FY19F
EPS of IDR193. We believe that upside potential persists at the current FY19F P/E of 9.3x (-1.1 SD
of 10-year mean). However, due to: 1) limited growth of FY20 state infra budget; and, 2)
significantly lower CAGR FY18-20F core net profit (9.2%) vs. CAGR FY09-19F core net profit
(16.4%), the upside potential should be limited at 1.0 SD below 10-year mean, i.e. 10.2x.

We also use FY19F P/B of 1.0x, -1.0SD of 3-year mean (post FY16 right issue), compared with
current FY19F P/B of 0.8x (-1.2SD of 3-year mean). Assuming FY19F book value per share of
IDR2,250, we obtain fair value of IDR1,950/share.

After obtaining fair values from FY19F P/E and P/B, we equally blended them and derived a target
price of IDR2,100/share for PTPP. As our TP represents 16.7% upside potential, we recommend
Trading Buy on the company. At our TP, PTPP is traded at FY19 P/E of 10.9x (-0.9SD of 10-year
mean).

Figure 13. Forward P/E band

(x)
40.0

32.0
+2sd = 29.9x

24.0 +1sd = 23.3x

16.0 Mean = 16.7x

-1sd = 10.2x
8.0

-2sd = 3.6x
-
Feb-10 Feb-12 Feb-14 Feb-16 Feb-18

Source: Mirae Asset Sekuritas Indonesia Research

Figure 14. Forward P/B band

(x)
4.8

4.0

3.2 +2sd = 3.3x

2.4 +1sd = 2.5x

1.6 Mean = 1.7x

-1sd = 1.0x
0.8

-2sd = 0.2x
-
Jan-16 Jul-16 Jan-17 Jul-17 Jan-18 Jul-18 Jan-19

Source: Mirae Asset Sekuritas Indonesia Research

Mirae Asset Sekuritas Indonesia Research 8

September 6, 2019 Pembangunan Perumahan

Risks

Slow project progress

Any disruption to the LRT project may negatively affect revenue and expected net profit.
Disruptions include work accidents, force majeur, and land acquisition matters.

Delayed projects
Despite lots of project tender in its pipeline, project tender is subject to various uncertainties and
can be delayed, even for national strategic projects. Delayed project tender may lead to new
contracts and revenue underachievement in the future.

Interest rate volatility

Based on our model, every 10bps deviation from PTPP’s effective interest rate will
increase/decrease net profit by ~IDR13bn in FY19-20.

Mirae Asset Sekuritas Indonesia Research 9

September 6, 2019 Pembangunan Perumahan

PTPP at a glance

Company snapshot
PT. Pembangunan Perumahan (Persero) Tbk, abbreviated as PTPP, was originally a business entity
- called NV Pembangunan Perumahan - established in Jakarta pursuant to Deed No. 48 dated 26
August 1953. The first project of NV Pembangunan Perumahan was to build an official housing
complex of PT. Semen Gresik Tbk, a subsidiary of BAPINDO, located in Gresik. Along with
increasing trust, NV Pembangunan Perumahan carried the task of building large war booty
projects from the Japanese government, such as Indonesian Hotel, Bali Beach Hotel, Ambarukmo
Palace Hotel, and Samudera Beach Hotel. Then according to Law No. 19 PRP in 1960, NV
Pembangunan Perumahan was changed into Perusahaan Negara (PN) Pembangunan Perumahan,
a state company established on March 29, 1961 based on Government Regulation No. 63.
Subsequently, PN Pembangunan Perumahan underwent a legal entity change in 1971, based on
Government Regulation No. 39, concerning the transfer of PN-form Pembangunan Perumahan to
PTPP.

In 1991, PTPP diversified its business activities into property and realty, including the leasing of
office space at Plaza PP and the development of real estate businesses in the Cibubur area. In
2004, PTPP accomplished an Employee Management Buy Out (EMBO) program, namely the sale of
shares of the Republic of Indonesia (divestment) for the company’s share ownership program by
employees and management. In 2010, PTPP carried out a large corporate action, namely the Initial
Public Offering/IPO, and registered its shares to the Development Board of the Indonesia Stock
Exchange on February 09, 2010. PTPP’s IPO program was approved by the government of the
Republic of Indonesia in accordance with Government Regulation No. 76 of 2009 concerning
Changing the State Ownership Structure through the Issuance and Sale of New Shares in PT PP
(Persero) Tbk dated December 28, 2009.

PTPP, which originally served as a construction services, real estate, and developer company, has
now transformed by dividing the company’s businesses into 7 (seven) business lines and
developing into an investment holding company with 7 (seven) subsidiaries and 42 (forty two)
associations/affiliations under its auspices.

Figure 15. PTPP’s milestone

Source: Company Presentation

Mirae Asset Sekuritas Indonesia Research 10

September 6, 2019 Pembangunan Perumahan

Pembangunan Perumahan (PTPP IJ/Trading Buy/TP IDR2,100)

Comprehensive Income Statement (Summarized) Statement of Financial Condition (Summarized)

(IDRbn) 12/17 12/18 12/19F 12/20F (IDRbn) 12/17 12/18 12/19F 12/20F
Revenue 21,502 25,120 27,871 32,253 Current Assets
Cost of sales (18,251) (21,574) (23,981) (27,794) Cash and Cash Equivalent 9,383 8,647 8,875 8,928
Gross profit 3,251 3,546 3,890 4,459 Trade Receivables 6,510 10,285 11,321 12,781
Operating expenses (726) (918) (975) (1,129) Due from Customer 7,926 9,494 10,450 11,798
EBIT 2,525 2,628 2,915 3,330 Inventories 2,421 4,659 5,999 6,354
EBITDA 3,291 3,053 3,514 4,034 Other Current Assets 3,668 4,448 4,893 5,138
Interest income 261 295 303 311 Non-Current Assets
Interest expense (653) (760) (909) (1,008) Investments in Associates & JV 1,184 1,858 2,036 2,391
Other income (expense) 302 649 178 355 Land for Development 3,154 3,519 4,000 4,500
Pretax profit 2,436 2,813 2,487 2,987 Fixed Assets 5,790 6,605 7,507 8,303
Income taxes (712) (854) (929) (1,077) Other Fixed Assets 113 1,347 1,500 1,750
Minority interest (271) (457) (363) (446) Other Non-Current Assets 1,635 1,685 1,853 1,946
Net profit 1,453 1,502 1,194 1,465 Total Assets 41,783 52,549 58,434 63,890
Net profit (core) 1,513 1,227 1,194 1,465 Current Liabilities
Account Payables 14,506 19,571 21,268 23,061
Margin 12/17 12/18 12/19F 12/20F Short-Term Financial Liabilities 3,403 3,862 4,400 4,900
Gross Margin (%) 15.1 14.1 14.0 13.8 Account Payables 2,788 3,090 3,399 3,569
EBITDA Margin (%) 15.3 12.2 12.6 12.5 Non-Current Liabilities
Operating Margin (%) 11.7 10.5 10.5 10.3 Long-Term Financial Liabilities 5,421 8,217 9,500 10,000
Net Margin (%) 6.8 6.0 4.3 4.5 Other Non-Current Liabilities 1,421 1,494 1,569 1,647
Core Net Margin (%) 7.0 4.9 4.3 4.5 Total Liabilities 27,540 36,234 40,135 43,177
Controlling Interests
Capital Stock 620 620 620 620
Additional Paid in Capital 4,710 4,710 4,710 4,710
Retained Earnings 4,063 5,274 6,894 8,863
Capital Adjustments 2,061 2,161 2,161 2,161
Non-controlling Interest 2,789 3,550 3,913 4,359
Stockholders' Equity 14,243 16,316 18,299 20,713

Forecasts/Valuations (Summarized)
12/17 12/18 12/19F 12/20F
P/E (x) 7.6 7.3 9.2 7.5
P/B (x) 1.0 0.9 0.8 0.7
Cash Flows (Summarized) EV/EBITDA (x) 4.0 5.9 5.7 5.3
(IDRbn) 12/17 12/18 12/19F 12/20F EPS (IDR) 234 242 193 236
Cash Flows from Op Activities 1,679 (1,068) 22 723 BPS (IDR) 1,847 2,059 2,320 2,638
Net Profit 1,453 1,502 1,194 1,465 DPS (IDR) 50 47 61 48
Depreciation 765 425 599 704 Payout ratio (%) 30.1 20.0 25.0 25.0
Change in Working Cap (214) (2,517) (1,635) (1,370) Div. yield (%) 2.8 2.6 3.4 2.7
Others (325) (478) (136) (75) Revenue growth (%) 30.6 16.8 11.0 15.7
Cash Flows from Inv. Activities (6,018) (3,492) (2,406) (2,619) EBITDA growth (%) 37.6 (7.2) 15.1 14.8
Capex (4,573) (2,841) (2,133) (2,250) Operating profit growth (%) 28.5 4.1 10.9 14.2
Change in Long-term Investment (520) (674) (178) (355) Net profit growth (%) 42.5 3.4 (20.5) 22.7
Others (926) 23 (94) (14) A/R turnover (x) 1.6 1.3 1.2 1.3
Cash Flows from Fin. Activities 4,598 3,825 2,611 1,949 Inventory turnover (x) 6.7 6.1 4.5 4.5
Change in Financial Liabilities 2,586 3,254 1,821 1,000 A/P turnover (x) 1.4 1.4 1.2 1.3
Change in Equity - - - - ROA (%) 3.5 2.9 2.0 2.3
Dividends Paid (307) (291) (291) (375) ROE (%) 12.7 11.8 8.3 9.0
Others 2,319 861 1,080 1,325 Current ratio (X) 1.4 1.4 1.4 1.4
Increase (Decrease) in Cash 258 (736) 227 53 Gross debt/equity (%) 62.0 74.0 76.0 71.9
Beginning Balance 9,125 9,383 8,647 8,875 Net debt/equity (%) Net Cash 21.0 27.5 28.8
Ending Balance 9,383 8,647 8,875 8,928 Int. coverage (x) 3.9 3.5 3.2 3.3
Source: Company, Mirae Asset Sekuritas Indonesia Research estimates

Mirae Asset Sekuritas Indonesia Research 11

September 6, 2019 Pembangunan Perumahan

APPENDIX 1

Important Disclosures & Disclaimers

Disclosures
As of the publication date, PT. Mirae Asset Sekuritas Indonesia, and/or its affiliates do not have any special interest with the subject company and do not
own 1% or more of the subject company's shares outstanding.

Stock Ratings Industry Ratings

Buy Relative performance of 20% or greater Overweight Fundamentals are favorable or improving
Trading Buy Relative performance of 10% or greater, but with volatility Neutral Fundamentals are steady without any material changes
Hold Relative performance of -10% and 10% Underweight Fundamentals are unfavorable or worsening
Sell Relative performance of -10%
* Our investment rating is a guide to the relative return of the stock versus the market over the next 12 months.
* Although it is not part of the official ratings at Mirae Asset Sekuritas Indonesia, we may call a trading opportunity in case there is a technical or short-term
material development.
* The target price was determined by the research analyst through valuation methods discussed in this report, in part based on the analyst’s estimate of
future earnings.
The achievement of the target price may be impeded by risks related to the subject securities and companies, as well as general market and economic
conditions.

Analyst Certification
Opinions expressed in this publication about the subject securities and companies accurately reflect the personal views of the Analysts primarily responsible
for this report. PT. Mirae Asset Sekuritas Indonesia (“Mirae Asset Daewoo”) policy prohibits its Analysts and members of their households from owning
securities of any company in the Analyst’s area of coverage, and the Analysts do not serve as an officer, director or advisory board member of the subject
companies. Except as otherwise specified herein, the Analysts have not received any compensation or any other benefits from the subject companies in the
past 12 months and have not been promised the same in connection with this report. No part of the compensation of the Analysts was, is, or will be directly
or indirectly related to the specific recommendations or views contained in this report but, like all employees of Mirae Asset Daewoo, the Analysts receive
compensation that is determined by overall firm profitability, which includes revenues from, among other business units, the institutional equities,
investment banking, proprietary trading and private client division. At the time of publication of this report, the Analysts do not know or have reason to
know of any actual, material conflict of interest of the Analyst or Mirae Asset Daewoo except as otherwise stated herein.

Disclaimers
This report is published by Mirae Asset Daewoo, a broker-dealer registered in the Republic of Indonesia and a member of the Indonesia Stock Exchange.
Information and opinions contained herein have been compiled in good faith and from sources believed to be reliable, but such information has not been
independently verified and Mirae Asset Daewoo makes no guarantee, representation or warranty, express or implied, as to the fairness, accuracy,
completeness or correctness of the information and opinions contained herein or of any translation into English from the Indonesian language. In case of an
English translation of a report prepared in the Indonesian language, the original Indonesian language report may have been made available to investors in
advance of this report.
The intended recipients of this report are sophisticated institutional investors who have substantial knowledge of the local business environment, its
common practices, laws and accounting principles and no person whose receipt or use of this report would violate any laws and regulations or subject
Mirae Asset Daewoo and its affiliates to registration or licensing requirements in any jurisdiction shall receive or make any use hereof.
This report is for general information purposes only and it is not and shall not be construed as an offer or a solicitation of an offer to effect transactions in
any securities or other financial instruments. The report does not constitute investment advice to any person and such person shall not be treated as a client
of Mirae Asset Daewoo by virtue of receiving this report. This report does not take into account the particular investment objectives, financial situations, or
needs of individual clients. The report is not to be relied upon in substitution for the exercise of independent judgment. Information and opinions contained
herein are as of the date hereof and are subject to change without notice. The price and value of the investments referred to in this report and the income
from them may depreciate or appreciate, and investors may incur losses on investments. Past performance is not a guide to future performance. Future
returns are not guaranteed, and a loss of original capital may occur. Mirae Asset Daewoo, its affiliates and their directors, officers, employees and agents do
not accept any liability for any loss arising out of the use hereof.
Mirae Asset Daewoo may have issued other reports that are inconsistent with, and reach different conclusions from, the opinions presented in this report.
The reports may reflect different assumptions, views and analytical methods of the analysts who prepared them. Mirae Asset Daewoo may make investment
decisions that are inconsistent with the opinions and views expressed in this research report. Mirae Asset Daewoo, its affiliates and their directors, officers,
employees and agents may have long or short positions in any of the subject securities at any time and may make a purchase or sale, or offer to make a
purchase or sale, of any such securities or other financial instruments from time to time in the open market or otherwise, in each case either as principals or
agents. Mirae Asset Daewoo and its affiliates may have had, or may be expecting to enter into, business relationships with the subject companies to provide
investment banking, market-making or other financial services as are permitted under applicable laws and regulations.
No part of this document may be copied or reproduced in any manner or form or redistributed or published, in whole or in part, without the prior written
consent of Mirae Asset Daewoo.

Mirae Asset Sekuritas Indonesia Research 12

September 6, 2019 Pembangunan Perumahan

Distribution
United Kingdom: This report is being distributed by Mirae Asset Securities (UK) Ltd. in the United Kingdom only to (i) investment professionals falling within
Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”), and (ii) high net worth companies and other
persons to whom it may lawfully be communicated, falling within Article 49(2)(A) to (E) of the Order (all such persons together being referred to as “Relevant
Persons”). This report is directed only at Relevant Persons. Any person who is not a Relevant Person should not act or rely on this report or any of its
contents.
United States: This report is distributed in the U.S. by Mirae Asset Securities (USA) Inc., a member of FINRA/SIPC, and is only intended for major institutional
investors as defined in Rule 15a-6(b)(4) under the U.S. Securities Exchange Act of 1934. All U.S. persons that receive this document by their acceptance
thereof represent and warrant that they are a major institutional investor and have not received this report under any express or implied understanding that
they will direct commission income to Mirae Asset Daewoo or its affiliates. Any U.S. recipient of this document wishing to effect a transaction in any
securities discussed herein should contact and place orders with Mirae Asset Securities (USA) Inc., which accepts responsibility for the contents of this report
in the U.S. The securities described in this report may not have been registered under the U.S. Securities Act of 1933, as amended, and, in such case, may not
be offered or sold in the U.S. or to U.S. persons absent registration or an applicable exemption from the registration requirements.
Hong Kong: This document has been approved for distribution in Hong Kong by Mirae Asset Securities (HK) Ltd., which is regulated by the Hong Kong
Securities and Futures Commission. The contents of this report have not been reviewed by any regulatory authority in Hong Kong. This report is for
distribution only to professional investors within the meaning of Part I of Schedule 1 to the Securities and Futures Ordinance of Hong Kong (Cap. 571, Laws
of Hong Kong) and any rules made thereunder and may not be redistributed in whole or in part in Hong Kong to any person.
All Other Jurisdictions: Customers in all other countries who wish to effect a transaction in any securities referenced in this report should contact Mirae Asset
Daewoo or its affiliates only if distribution to or use by such customer of this report would not violate applicable laws and regulations and not subject Mirae
Asset Daewoo and its affiliates to any registration or licensing requirement within such jurisdiction.

Mirae Asset Daewoo International Network

Mirae Asset Daewoo Co., Ltd. (Seoul) Mirae Asset Securities (HK) Ltd. Mirae Asset Securities (UK) Ltd.
Global Equity Sales Team Suites 1109-1114, 11th Floor 41st Floor, Tower 42
Mirae Asset Center 1 Building Two International Finance Centre 25 Old Broad Street,
26 Eulji-ro 5-gil, Jung-gu, Seoul 04539 8 Finance Street, Central London EC2N 1HQ
Korea Hong Kong United Kingdom
China
Tel: 82-2-3774-2124 Tel: 852-2845-6332 Tel: 44-20-7982-8000

Mirae Asset Securities (USA) Inc. Mirae Asset Wealth Management (USA) Inc. Mirae Asset Wealth Management (Brazil) CCTVM
810 Seventh Avenue, 37th Floor 555 S. Flower Street, Suite 4410, Rua Funchal, 418, 18th Floor, E-Tower Building Vila
New York, NY 10019 Los Angeles, California 90071 Olimpia
USA USA Sao Paulo - SP
04551-060
Brasil
Tel: 1-212-407-1000 Tel: 1-213-262-3807 Tel: 55-11-2789-2100

PT. Mirae Asset Sekuritas Indonesia Mirae Asset Securities (Singapore) Pte. Ltd. Mirae Asset Securities (Vietnam) LLC
Equity Tower Building Lt. 50 6 Battery Road, #11-01 7F, Saigon Royal Building
Sudirman Central Business District Singapore 049909 91 Pasteur St.
Jl. Jend. Sudirman, Kav. 52-53 Jakarta Selatan Republic of Singapore District 1, Ben Nghe Ward, Ho Chi Minh City
12190 Vietnam
Indonesia
Tel: 62-21-515-3281 Tel: 65-6671-9845 Tel: 84-8-3911-0633 (ext.110)
Mirae Asset Securities Mongolia UTsK LLC Mirae Asset Investment Advisory (Beijing) Co., Ltd Beijing Representative Office
#406, Blue Sky Tower, Peace Avenue 17 2401B, 24th Floor, East Tower, Twin Towers 2401A, 24th Floor, East Tower, Twin Towers
1 Khoroo, Sukhbaatar District B12 Jianguomenwai Avenue, Chaoyang District B12 Jianguomenwai Avenue, Chaoyang District
Ulaanbaatar 14240 Beijing 100022 Beijing 100022
Mongolia China China

Tel: 976-7011-0806 Tel: 86-10-6567-9699 Tel: 86-10-6567-9699 (ext. 3300)

Shanghai Representative Office Ho Chi Minh Representative Office
38T31, 38F, Shanghai World Financial Center 7F, Saigon Royal Building
100 Century Avenue, Pudong New Area Shanghai 91 Pasteur St.
200120 District 1, Ben Nghe Ward, Ho Chi Minh City
China Vietnam

Tel: 86-21-5013-6392 Tel: 84-8-3910-7715

Mirae Asset Sekuritas Indonesia Research 13