Pembangunan Perumahan Solid 1H13 Showing Ahead

PTPP has guided for IDR140bn net profit in 1H13 (up 115% y-o-y) over IDR3.2trn revenue (up 60% y-o-y). At 38% of its FY13 bottom-line target, PTPP is slated to achieve ~8% above the company’s IDR370bn official guidance for FY13. In light of the positive fundamental catalyst amid a weak share price, we call for a BUY on PTPP for IDR1,700 TP.

40% of FY13 new contract target achieved; 1H13 guidance hits 38% of official FY13E net profit. PTPP has booked IDR7.8trn worth of new contracts as at end of 1H13, accounting for 40% of its FY13 target and triple what it has achieved at the same period last year, boosted by New Priok’s first streams of revenue and joint-operations (JO) such as the Soekarno-Hatta Airport expansion project. PTPP has guided for IDR140bn worth of net profits for 1H13 (up 115% y-o-y) over IDR3.2trn revenue (up 60% y-o-y).

This result puts PTPP’s 1H13 bottom-line at 38% of the company’s FY13 target, much higher than the 22% average for the past two years. As a result, the management has unofficially guided for a robust year-end with ~IDR400bn as target net profit, up from IDR370bn earlier this year.

6.8% adjustment of FY13E net profit; FY14E upped by 9.5% on the back of Sungkono project. We adjusted our FY13E revenue and net profit by 3.7% and 6.8% accordingly on the back of a robust first half. Meanwhile, PTPP has recently tested the market with the sales of its shophouses and office spaces near a busy trade area, Sungkono Surabaya, with great success (ie. contributing IDR180bn worth of revenue in FY13).

Its actual IDR5trn, 7-ha Surabaya Sungkono multi-use property project is expected to start pre-sales in 1Q14, and is expected to contribute IDR470bn of total revenue in FY14, quadruple the current level of property revenue. As property & realty businesses generally offer ~100-220bps higher gross margins, we have upped our FY14E net profit by 9.5% accordingly.

New TP at IDR1,700, raised to BUY on current price weakness. In light of the positive fundamental development amid a weak share price, we call for a BUY on PTPP for IDR1,700 TP (6.5% above previous TP) – implying a 17.0x 2014PER. PTPP is trading at 16.5x & 13.2x 2013E & 2014E P/Es respectively.