Equity Research

Property

Friday,23 June 2023

OVERWEIGHT Property
Maintain Minimal impact from subsidized housing regulation
YTD share price performance The Indonesian government's recent issuance of a regulation to raise the
maximum price limit of subsidized housing in 2023 has the potential to impact
the real estate market. However, the regulation may only have a limited
impact on listed developers due to differences in the price range and the
target market segment. While CTRA could benefit from its lower-end housing
project, Citra Maja, we believe the impact will be minimal.

Higher maximum price limit for subsidized housing. The Indonesian

Property sector discount to RNAV
Source : Bloomberg
x Victor Stefano
(62-21) 5091 4100 ext. 3503
victor.stefano@brids.co.id
government's decision to increase the maximum price limit for subsidized
housing in 2023 follows a pause during the covid-19 pandemic. This regulation
aims to address the demand for affordable housing and presents potential
opportunities for developers operating in this segment. In the new regulation,
the maximum price for subsidized housing, which depends on the region,
ranges between IDR162-234 million representing a 3.5-7.7% increase from the
previous 2020 prices. The increases in the maximum selling prices are also used
to address the matter of higher construction costs amid the covid-19 pandemic.
The Wholesale Price Index for residential and non-residential buildings
increased by 14% amid the covid-19 pandemic.
Minimal impact on listed developers. The listed developers under our
coverage, including CTRA, are unlikely to be significantly affected by the
regulation due to the differences in the price range and the target market
segment. These developers primarily cater to middle to upper-income buyers,
while subsidized housing is aimed at lower-income individuals or families. As a
result, subsidized housing can be considered as a different market segment to
the one in which listed developers operate. In CTRA’s Citra Maja project, with
its affordable pricing and focus on the lower-income segment, there may be
products that match the subsidized housing category. However, due to its low
margins, the company will only offer limited numbers of subsidized houses
which serve as a marketing gimmick.
Maintain overweight on the sector. Despite the recent strong performance
(+18% YTD vs the JCI), we maintain our overweight stance on the sector given
several factors. These include positive sentiment on interest rates, the
anticipated rebound of investment property following the covid19 pandemic,
and the possibility of being included in the LQ45 index. Within the sector, our
top recommendations are PWON, which has underperformed its peers year-to-
date but stands to benefit significantly from the recovery in investment
property, and CTRA, which booked robust marketing sales in 1Q23 and is a
strong contender for inclusion in the LQ45. Risks to our view are potential
negative sentiment stemming from lower marketing sales and shifts in global
economic conditions that could lead the central bank (BI) to raise its benchmark
interest rate once again.

Target Market
Price Cap. P/E (x) P/BV (x) ROE (%)
Company Ticker Rec (Rp) (RpBn) 2022F 2023F 2022F 2023F 2023F
Bumi Serpong Damai BSDE IJ BUY 1,300 23,923.6 11.8 10.5 0.7 0.6 6.1
Pakuwon Jati PWON IJ BUY 610 23,405.6 10.9 10.8 1.2 1.1 10.8
Ciputra Development CTRA IJ BUY 1,600 20,601.9 13.0 10.3 1.0 1.0 9.7
Summarecon Agung SMRA IJ BUY 1,000 11,225.8 19.8 14.6 1.2 1.1 7.8
Alam Sutera ASRI IJ BUY 240 3,595.8 4.9 9.1 0.3 0.3 3.5
bridanareksasekuritas.co.id See important disclosure at the back of this report
 Exhibit 1: Maximum price of subsidized housing (Greater Jakarta) and Wholesale Price
Index of residential and non-residential buildings

Source: BPS, Ministry of Finance, BRIDS

Exhibit 2: Maximum price of subsidized housing in Java (ex. Greater Jakarta) and
Greater Jakarta

Source: Ministry of Finance, BRIDS

bridanareksasekuritas.co.id See important disclosure at the back of this report 2

 Exhibit 3. Property sector discount to RNAV band chart Exhibit 4. ASRI discount to RNAV band chart

Source: Companies, Bloomberg, BRI Danareksa Sekuritas Source: Company, Bloomberg, BRI Danareksa Sekuritas

Exhibit 5. BSDE discount to RNAV band chart Exhibit 6. CTRA discount to RNAV band chart

Source: Companies, Bloomberg, BRI Danareksa Sekuritas Source: Company, Bloomberg, BRI Danareksa Sekuritas

Exhibit 7. PWON discount to RNAV band chart Exhibit 8. SMRA discount to RNAV band chart

Source: Companies, Bloomberg, BRI Danareksa Sekuritas Source: Company, Bloomberg, BRI Danareksa Sekuritas

bridanareksasekuritas.co.id See important disclosure at the back of this report 3

bridanareksasekuritas.co.id See important disclosure at the back of this report 4