Summarecon Agung (SMRA IJ, BUY, TP IDR1,720) Company Update: A Promising New Landbank - Daily Pack 26 September 2013

Good morning,

We like that ~28% of SMRA’s revenue is recurring and that topline is expected to grow by 16.0% FY12-15F CAGR, providing earnings stability amid an expected property sector slowdown. Its next landbank should serve as a catalyst, given the location and easy access. Maintain BUY, with our new IDR1,720 TP derived by applying a higher 40.0% NAV of IDR2,885 per share, implying 18.1-16.6x FY14-15F P/E

¨       Slowdown expected. Management was forced to postpone the launch of its new apartment project in Kelapa Gading, Jakarta, The Kensington, to next year, due to the temporary moratorium restriction on high-rise buildings imposed by the local Government. This leads us to revise downwards the FY13F pre-sales target to IDR4trn (from IDR4.5trn). Going forward we also expect an easing down in pre-sales growth to 10-15% per annum, given the: i) high base effect, ii) increase in mortgage rates as result of hike in key interest rates, and iii) Government’s regulations on curbing credit growth in the Indonesian property market. 

¨       Hidden values spotted. Based on information gathered from SMRA’s financial statements, we suspect that its undisclosed landbank in Southern Jakarta is located in Bogor, which is accessible through the Jagorawi Toll Road. It is also ringed with one hotel and two golf courses. So far, SMRA has secured around 99ha and a 51% stake in the firm that owns the land and licences in the area. This translates to an investment of ~IDR472bn, or IDR117,000 psm. We have yet to take into account the potential revenue from this new landbank, as the land acquisition is still ongoing. Nonetheless, note that the land’s current market value ranges between IDR300,000 and IDR1m psm. 

¨       Maintain BUY, new TP IDR1,720. We expect easing in FY14F-15F net earnings margins to 28-27%. This is due to a change in sales mix and higher interest expense from SMRA’s increased debt to finance its capex and land acquisitions, which will reach IDR2trn in FY13F. We do expect it to maintain its net cash position over the next 3-4 years, however, with total asset turnover (marketing sales/total assets) of 34-35% for FY14F-15F. SMRA currently trades at a 68% discount to its NAV, implying 9.7-8.9x FY14F-15F P/E and FY14F ROE of 27.6%. By comparison, its peers are trading at 12.5-10.1x FY14F-15F P/E and FY14F ROE of 18.6%. Maintain BUY.  (Lydia Suwandi)

FROM TRADING DESK: JCI today is expected to be traded at 4358.40 and 4442.26.

MEDIA HIGHLIGHTS: 
Mitsubishi eyes 160k car sales in FY13
Bank Indonesia to implement new LTV regulation
SOE firms to be allowed to hedge their forex exposure

Best regards,
RHB OSK Indonesia Research Institute

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Crude Oil Condition

Hi friends, long time no post...

This week I spotted that there's an opportunity for us to earn a bit in Crude Oil, but this is only a short term trade, that we see oil has soared from US$80s to around US$110s, while the main cause is the Syria geo-political condition, but this time due to the price is so high and also the increment of crude oil inventory from predicted -1M but the actual is 2.6M which is a huge difference, then I'm 'bear' on crude oil for this short period.

The reason that this is a short term trade is because this trade is taken based on technical analysis decision, but not fully supported by the fundamental or seasonality of the crude oil itself. Technically, we can see that crude oil has soared too much and now the MACD Signal line is bearish as it goes below 0 line, and also it has just broken the lower Darvas Box which can also be the lower-low creation. Besides that the Commercial is buying the plunge, as they are keeping those as stocks when it is plunging.

So, what I can say is, we can short crude oil for this short period of time, but remember it is only for a very short time 1-2 weeks from this post. Because once it's riped (fully accumulated by the commercial), then the rally might come, as the seasonality of crude oil shows that it will always surge at the end of the year, as winter comes and people are buying heating oil.

Rating: Short, TP: 99-100

Happy Investing^^

Disclaimer ON!!!

Gold in Reality

Recently, together with the growth of Indonesia's economy, the "investment" business also grows especially gold investment, which gives a very great return to the investor, while at the back of the business there's a very big loophole of the business which is unknown by the investor.

I've been quite tired talking to those investors that the Gold's price isn't always going to surge at the end of the day. Shockingly, they stubbornly said that I'm wrong. But let me show my intelligent reader how can I be right.

What is happening globally is the gold isn't surging all the time, but it is surging when people think that it is the safe haven (esp when crisis happen). From the data I gathered, there are two sources at least that can show the price of gold isn't in a very good position currently.

Currently, it has a pattern that happen just like 1980s creating a new high, and after that creating a lower high just like what is currently happening. After that 20 years of hibernation, and starting of the bullish and 5 years later here came the break even point.

What happened at that time was, the economy was doing great at 80s to 2000s before the tech bubble and gold was starting its rally up to the volatile economy since that time. Now, the economy is recovering and I'm afraid that the history repeats again just like when the rally creates the euphoria of the traders before it eventually kills the traders.

Actually if we count using present value of the gold's trade 1981-2001, the BEP should be around 30 years. Just incase we say that there's no discount computed so it's easier to be understood.

Back to Indonesia, people in Indonesia keeps high tone saying that gold never declined, it will always surge at the end of the day. Let's see what actually happen was the IDR devaluated and the inflation was very high. In 80s if I'm not wrong, people still can buy gold with ± IDR5000, what happened was, at that time, IDR5000 people can buy a lot of things, going anywhere by bus only IDR10-20. Come on guys, what happened today??? Gold is IDR500,000, how bout your bus fare??? 1000-2000 at least, which means gold isn't increasing in value, but it's increasing in nominal. Please open your eyes before investing, because GOLD NEVER MAKES YOU RICH, but GOLD PRESERVE YOU VALUE only.

TBIG

Recently in 2012 1st half, this stock has been heavily accumulated. Based on the fundamental data, some of my friends say that this stock is good. But I don't look for it, but I look for the trend.

Technically, the stock is in a bullish trend. While the stock is a heavy duty one as it is not plunged too much with the recent "quake". Currently it is trying to break its resistance at 3400, but its has failed twice. This is the time that it might breakout and let the bull runs.

Rating: Buy on Break, Entry: 3425-3450

Happy Investing^^
Disclaimer ON!!!

The next hero

Hi, my readers, long time no post. Quite busy some time finishing my studies & stock market research and also I've just started my new business so need to learn a lot in that new business, but by the time I still keep my trading running quite well.

Today, a bonus stock pick is given which might give a fresh air for you all my friends. The stock is INTA, which announced that it has just got the trust from Chinese heavy machine producer, Sinotruk to distribute its product, and INTA targeted that it will sell 650 units this year, which means its customer will have more options in heavy machine purchase, which is good for it.

Technically, it's forming an inverted head & shoulder, which might target the stock to 1100 in the short period. The confirmation is at 870 level, so when the price has reached 870, the the pattern is confirmed and it's ready to finish the pattern. The chart can be seen below.

Rating: Buy; TP: 1100-1150, S/L: depends on the favor.

Happy Investing^^

Disclaimer ON!!!