Pembangunan Perumahan On Track For a Solid FY13 Showing

PTPP has indicated 1HFY13 revenue and net profit of ~IDR3.2trn and ~IDR140bn respectively on strong new contract successes. This bottomline represents 38% of its FY13 target, indicating it can achieve ~8% above its IDR370bn FY13 guidance. In light of this positive catalyst amid a weak share price, we call for a BUY with a TP of IDR1,700.

40% of FY13 new contract target achieved; 1H13 guidance hits 38% of official FY13E net profit. PTPP has booked IDR7.8trn in new contracts as at end-1HFY13, triple what it achieved in the same period last year, and representing 40% of its FY13 target. Success was boosted by maiden revenue streams from its New Priok development and joint operations like the Soekarno-Hatta Airport expansion project.

PTPP has indicated ~IDR140bn in 1HFY13 net profit (+115% y-o-y) over ~IDR3.2trn revenue (+60% y-o-y). This puts its 1HFY13 bottomline at 38% of the Company’s full-year target and higher than the past two year’s 22% average. As a result, Management is cautiously optimistic on a robust year-end with ~IDR400bn as target net profit, up from IDR370bn forecasted earlier this year.

6.8% adjustment of FY13F net profit; FY14F topline upped by 9.5% on the back of Sungkono project. We adjusted our FY13F revenue and net profit by 3.7% and 6.8% accordingly on the back of PTPP’s robust 1HFY13. Meanwhile, the company recently tested the market with shophouse and office space sales in Sungkono, Surabaya, with great success (contributing IDR180bn to FY13 revenue).

Its actual IDR5trn, 7ha Surabaya Sungkono multi-use property project is expected to start pre-sales in 1QFY14. It is expected to contribute IDR470bn to total FY14 revenue. As property and realty businesses generally offer ~100bps-220bps higher gross margins, we have upped our FY14F net profit by 9.5% accordingly.

New TP at IDR1,700, BUY on current price weakness. In light of the positive fundamental development amid a weak share price, we call for a BUY on PTPP with a IDR1,700 TP (6.5% above the previous TP). This implies a 17.0x FY14F P/E. PTPP is currently trading at 16.5x FY13F P/E and 13.2x FY14F P/E.