Insights Weak Affordability Weighs On Sector

Indonesia Industry Focus
Indonesia Property & Industrial Estate

Refer to important disclosures at the end of this report
DBS Group Research . Equity 5 Jan 2016
On the mend after a major setback JCI : 4,525.92

 Expect demand recovery from subdued 2015 but Analyst
aggregate marketing sales seem to have plateaued Edward Ariadi Tanuwijaya +6221 3003 4932
edward.tanuwijaya@id.dbsvickers.com
 Volatility from regulations to continue
STOCKS
 Prefer exposure to landed residential and retail
malls; avoid office and industrial estate segments Price Mkt Cap Target Performance (%)
Rp US$m Price Rp 3 mth 12 mth Rating

 Maintain Neutral stance with BSDE as top pick
Expect recovery from tough year. Regulation Agung Podomoro 334 494 285 13.2 (0.3) FV
whirlwind and sustained overall macro weakness affected Alam Sutera Realty 331 469 325 7.9 (38.8) HOLD
Bumi Serpong Damai 1,790 2,486 2,100 25.9 (0.3) BUY
property purchases negatively in 2015. We expect Ciputra Development 1,425 1,576 1,350 77.0 18.1 HOLD
aggregate marketing sales to grow 7.5% y-o-y ( driven Lippo Karawaci 1,015 1,690 980 (8.0) 1.5 FV
largely by price appreciation rather than volume) from Pakuwon Jati 496 1,723 490 46.3 (3.7) HOLD
subdued numbers in 2015 and somewhat plateauing for Summarecon Agung 1,575 1,639 1,650 50.7 8.6 HOLD
Bekasi Fajar Industrial 289 201 230 3.5 (59.7) FV
the next two years at 2012/2013 level. As this challenging Lippo Cikarang 7,025 353 7,900 1.8 (30.3) BUY
condition is set to continue in 2016 (weak affordability to Surya Semesta 695 236 765 (4.0) (33.2) HOLD
dampen any potential surge in property purchases), it’s Source: DBS Vickers
crucial for developers to keep their SG&A expenses in
check. In addition, the need to gear up has continued Aggregate marketing sales – plateauing at 2013 level
mostly due to new disbursement scheme (introduced 45,000 Rpbn
plateauing
since Sep 2013) and this has a lasting effect on their 40,000
bottom-line earnings. Developers have to balance their 35,000
capex expansion and tight cashflow conditions. 30,000
Volatility spices from regulations... again. Regulation 25,000
flip-flopping (particularly on property taxes) hoodwinked 20,000
both property developers and buyers in 2015. As the 15,000
property tax issue is now on the back-burner and the 10,000
government looks committed to rejuvenate the property 5,000
sector by revisiting several measures such as easing -
individual foreign ownership, tax incentives for REIT 2009 2010 2011 2012 2013 2014 2015F2016F2017F
structure in Indonesia, corporate tax cut, “one map” Source: Companies, DBS Vickers. Note: Aggregate marketing sales above
policy for spatial and zoning, business and working only include ASRI, APLN, BSDE, CTRA, LPKR, PWON and SMRA
permit simplifications, etc. This looks promising but with a
downside risk that too many new regulation revisions Rough 2015 ride especially for industrial estate stocks
may take some time to implement and hence further 20% 13%
push back the recovery. 10% 5%
1%
Maintain Neutral stance on sector with BSDE as top 0%
pick. As potential catalysts merely hinge on regulation -10%
-2% -4%
-9%
revisions and government measures to rejuvenate the -20%
-13%
property sector rather than strong demand fundamentals -30%

(as affordability remains weak), we maintain our cautious -31%
-40% -37%
outlook on the property sector. We prefer exposure to -41%
-50%
landed residential and retail malls and on the flip side,
recommend investors to avoid office and industrial estate -60%
-60%
segments. We like BSDE for its strong balance sheet to -70%
CTRA SMRA LPKR APLN BSDE PWON JCI LPCK SSIA ASRI BEST
ride out this challenging market, its flexibility on township
Source: DBS Vickers, Bloomberg Finance L.P.
development and decent earnings growth.
ed-TH / sa- MA
Industry Focus
Table of Contents
Recovery expected from tough 2015 3
Property segment outlook 2016 7
Neutral stance on sector 9
Appendix 12
Company Guides 20
Agung Podomoro Land 21
Alam Sutera Realty 28
Bumi Serpong Damai 35
Ciputra Development 42
Lippo Karawaci 49
Pakuwon Jati 56
Summarecon Agung 63
Bekasi Fajar 70
Lippo Cikarang 74
Surya Semesta 84
Page 2
Industry Focus
Recovery expected from tough 2015
Plateauing aggregate marketing sales. Sustained overall macro Price-to-income ratio almost doubled in just five years
weakness and regulation whirlwind slammed a hard brake on 20 x
property purchases in 2015. This has blindsided property 18
developers throughout 2015, whom expected some demand 16
pick-up (although not a surge) after encouraging signs at the 14
end of 2014 (after presidential election’s conclusion on 12
Sep2014). Midway through 1H15, developers started to revise 10
down their full-year targets (ranging from 9% to as deep as 8
46%). 6
4
We believe the subdued aggregrate marketing sales 2
achievement in 2015 (despite being supported by carry-overs 0
from end-of-2014 launchings) shows that aggregate marketing 2009 2010 2011 2012 2013 2014 2015
sales has somewhat plateaued at the 2012-2013 level. Source: Numbeo (data for Greater Jakarta area)
Consistent with our view on the likelihood of banking system This weaker affordability has forced developers to re-think and
loan growth to stagnate until end of 1H16 at the very least (see re-jig their targeted markets in order to suit the so-called sweet
our Indonesian Banks & Multifinance report titled A year of two spot that reflects the buying power of Indonesia’s growing
halves, dated 4 Dec 2015), the tight consumer financing middle class. Therefore, we have witnessed the focus shifting
situation would result in weak marketing sales in 1H16 too. to more high-rise apartment developments in non-prime areas
(i.e. populated suburban townships) with average price and
We expect aggregate marketing sales for property developers size of Rp700m and 35 sqm respectively.
under our coverage to grow 7.5% y-o-y in 2016 (after a 12.5%
y-o-y decline in 2015), driven largely by price appreciation rather The need to gear up impacted bottom line. Property
than volume (in sqm) with a larger portion of marketing sales to developers in our coverage have raised their debt levels quite
be gathered in the 2nd half. significantly since Bank Indonesia (BI) introduced Loan-to-Value
(LTV) restriction on Sep 2012 as part of tightening measures
Aggregate marketing sales – plateauing at 2013 level and followed it up with stricter LTV caps (with the new loan
45,000 Rpbn disbursement scheme) on Sep 2013.
plateauing
40,000
35,000 The impact of new disbursement scheme (which essentially will
30,000 not allow loan facilities to be disbursed to the developer before
25,000 the property as collateral is built to a certain stage/milestone) is
20,000
felt dearly by property developers, especially those with more
high-rise projects in their portfolio. High-rise projects normally
15,000
have lower margins as compared to landed residential ones
10,000
and require significant capex upfront (i.e. hence require
5,000
working capital loan during construction period – between 2.5
-
2009 2010 2011 2012 2013 2014 2015F2016F2017F to 4 years).
Source: Companies, DBS Vickers. Note: Aggregate marketing sales above

This measure eventually shrinked property developers'
only include ASRI, APLN, BSDE, CTRA, LPKR, PWON and SMRA
operating cashflows over time and promptly resulted in
developers taking these two actions: 1) Raising more external
In addition, weaker affordability ratio will dampen any
financing (i.e. loan facilities, bonds, etc) and, 2) Selling ready
potential surge in property purchases. The current property
assets (particularly land banks) to generate cashflow quicker.
price-to-income ratio (affordability indicator) is at all-time high
given the surge in land prices (especially certain pockets in
Greater Jakarta) from 2010 to 2013.
Page 3
Industry Focus
More significant increase in debt seen for high-rise

developers in the past two years Financing expenses as % of revenue
250% 25.0%
FY14 9M15
200% 19.9%
20.0%
16.7%
150%
15.0%
13.0%
100%
10.5%
10.0%
50%
5.0%
0%
-50% 0.0%
PWON SMRA CTRA ASRI LPKR APLN BSDE SSIA LPCK BEST 9M12 9M13 9M14 9M15
Source: Companies’ financial statement, DBS Vickers. Note: an increase Source: Companies’ financial statement, DBS Vickers.
as compared to debt position in the previous year
Developers’ gross gearing trends up.... Keeping SG&A expenses in check is crucial. Property developers
140%
FY12 FY13 FY14 9M15 have still been able to keep their operating expenses in check,
120% despite notable increases in its few key operating expense items;
such as “Salaries & employee benefits” and “Licenses &
100%
professional fees”, by scaling back other expenses such as
80% “Advertisement, promotion & commission”, etc.
60%
Selling, General & Administration (SG&A) expenses have
40% increased at a c.24% CAGR for the past three years (similar
20% growth rate with revenue and hence, SG&A expenses as % of
revenue is maintained), while “Salaries & employee benefits”
0%
ASRI APLN SMRA LPKR BEST PWON SSIA CTRA BSDE LPCK
and “Licenses & professional fees” increased at c.30% and
Source: Companies’ financial statement, DBS Vickers c.40% CAGR in the same time frame.
...and so does net gearing “Advertisement, promotion & commission” expense growth has
140% generally eased-off to just c.7% CAGR in the past 2 years. We
FY12 FY13 FY14 9M15
120% believe that this A&P expenses (which is approximately 4% of
100% revenue in average) will pick up in 2016 to gather more demand
80% for their developments during this still expected challenging
60% market.
40%
20% Regulation stimuli – a double edged knife. Property stocks had a
0% wild roller coaster ride in 2015 due to very strong reaction to
-20% regulatory news. The regulation flip-flopping (particularly on
-40% property taxes) has bamboozled property developers and buyers.
-60%
ASRI SMRA LPKR APLN BEST PWON CTRA SSIA BSDE LPCK
The property taxes issue is now on the back-burner after
Source: Companies’ financial statement, DBS Vickers Ministry of Finance issued two decrees that defined new criterias
for taxable luxury and super luxury goods. These revisions have a
The increase in gearing has resulted in a staggering 41.3% very limited impact given that there are only a small fraction of
CAGR (within three years) in financing expenses (for property units subjected to additional tax under those new
developers under our coverage). Financing (interest) expenses regulations and hence, much ado for nothing.
now represent an average c.20% of developers’ consolidated
operating profit.
Page 4
Industry Focus
Changes in luxury tax criteria – effective since 2nd week  Easing individual foreign ownership of property. The
of Dec 2015 government (as quoted by a few officials in the media) is
Super Luxury Tax - 5% of transaction value committed to revise government regulation no. 41/1996
Current regulation Previous regulation which restricts foreign ownership in Indonesia. At face
No Taxed items (PMK no. (PMK no.
206/PMK.010/2015) 106/PMK.010/2015)
value, this should have immediate implications on the
broader buyer base for luxury high-rise apartment units,
Strata - Apartment & Transaction value > Building area > 150
1 which would benefit/support developers with “premium”
townhouse Rp10bn sqm
Non-strata - Landed apartment projects in their portfolios.

Transaction value > Building area > 350
2 residential &
Rp20bn sqm  Further tax incentives on REIT structure formation and
townhouse
better yield spread than regional peers. The current taxes
Source: Ministry of Finance, DBS Vickers
levied on REIT formation and the associated capital gain tax
are still unattractive for developers. Earlier, the government
Changes in super luxury tax criteria – effective since 30
eliminated tax on dividends and final sales tax for REIT as
May 2015
per Ministry of Finance no.200/PMK.03/2015 issued on 10
Luxury Tax (PPnBM) - 20% of transaction value
Nov 2015. This is also part of current efforts to promote
Current regulation Previous regulation
No Taxed items (PMK no. (PMK no. REIT structure in Indonesia as it is still in infancy stage. Also,
90/PMK.03/2015) 253/PMK.03/2008) the yield spread (with 10-year bonds) has to be more
1). Transaction value > 1). Transaction value >
1
Landed
Rp5bn OR 2). Building Rp10bn AND 2). Building attractive than regional peers (see the case study in the
residential
area > 400 sqm area > 500 sqm APPENDIX section for more details).
Apartment, 1). Transaction value > 1). Transaction value >
2 condominium, Rp5bn OR 2). Building Rp10bn AND/OR 2).
 Corporate tax cut. A discussion is still ongoing on whether
etc area > 150 sqm Building area > 400 sqm the government will reduce the corporate tax rate from
Source: Ministry of Finance, DBS Vickers 25% to 18% (and even to 13% for listed companies with
more than 40% public free float) in 2016. This incentive
Latest revision on LTV caps – on 18 Jun 2015 will only benefit operational investment properties such as
Maximum LTV (new regulation) Maximum LTV (old regulation) hotels and resorts, as both property sales and lease taxes
Category 3 rd mortgage st 3 rd mortgage
1st mortgage 2nd mortgage
onwards
1 mortgage 2nd mortgage
onwards are final (derived directly from sales).

House > 70 sqm 80% 70% 60% 70% 60% 50%
House 22 - 70 sqm - 80% 70% - 70% 60% The much talked about tax amnesty in 2016. The
Apartment > 70 sqm
Apartment 22 - 70 sqm
80%
90%
70%
80%
60%
70%
70%
80%
60%
70%
50%
60%
implementation of automatic exchange of information
Apartment < 21 sqm - 80% 70% - 70% 60% standard between countries by 2017 may encourage
Shophouse - 80% 70% - 70% 60%
people to report their assets overseas and potentially
Source: Bank Indonesia.
repatriate their money from overseas. Given the successful
Note: New regulation (BI ruling no. 17/10/PBI/2015) supersedes old
attempt to implement this, it would provide some potential
regulation (BI circular no. 15/30/DKMP concerning maximum LTV for
for pick-up in property demand as investment.
property categories.
 Defined formula for annual provincial minimum wage
increase. The government has determined the formula
As the government tries to introduce a few measures to
using “inflation” plus “economic growth” in most
rejuvenate the property sector after “blunders” in 2015, we
provinces, except those that have minimum wages below
can expect more regulations to be issued (as part of the
the minimum cost of living. This ruling should provide some
ongoing series of economic stimulus packages – now standing
sense of certainty for businesses/manufacturing facilities to
at no. VIII).
operate in Indonesia. Previously, the annual minimum wage
talks had always led to strong protests from labour unions.
The government has started to act to address slowing loan
Indirect beneficiaries will be industrial estate players.
growth and property demand by introducing measures such as
 Simplifications in bureucratic procedure logjams to obtain
LTV cap relaxation midway through 2015 (see table above on
business and working permits should provide a path for
LTV caps latest revision), although the impact can be said to be
better FDI inflow into Indonesia.
not that significant yet.
 The “one map” policy for spatial and zoning reference to
offer more certainty on land status, licences and zoning,
Few government stimulus measures that could positively affect
which has been elusive so far.
the property (and industrial estate) sector in general are:
Page 5
Industry Focus
In addition, should BI lower interest rate (hence, lower mortgage Our house view for now is that BI will remain cautious and keep
rate), it should help to support property demand, especially the its key benchmark steady at 7.5% despite persistence calls from
landed residential segment which has more significant mortgage Vice President Jusuf Kalla to lower rates to help boost growth. BI
portion than other segments. Mortgage grew slowly (just 7% y- has made clear its position that there is a need to balance
o-y) and is probably no longer considered the main driver for between downside risks to growth and potential volatility in
total banking system loan growth (the portion has declined financial markets due to US Fed rate lift-off.
steadily).
On the one hand, there is further upside risk potential if the
Slumping mortgage portion due to stricter loan government keeps showing its intention and implement
disbursement (introduced since Sep2013) changes to aid the property sector. However, on the flip side,
Mortgage Cash In-house financing
too many regulation revisions and introductions may confuse
100% property developers and buyers. Hence, it may take some time
90%
35%
for them to learn and adapt to new regulations and may
80%
48%
42%
57%
dampen property demand recovery further to 2017.
70% 61%
60% 12%
50% 14% High foreign shareholding in property developer stocks –

11%
40% 10%
volatility spices
9%
30%
53%
Foreign ownership in well-known Indonesian property developers
20% 41% 44%
33% 30%
stocks under our coverage remains high (more than 55% of free
10%
float) despite the heavy capital outflow in 2015.
0%
2011 2012 2013 2014 YTD-2015 Any signs of weak Indonesia macro conditions from foreign
Source: Ciputra Development (CTRA), DBS Vickers investors' point of view will cause Indonesian property stock
prices to drop, given the high-beta nature and generally small- to
Declining mortgage portion on total system loan mid-market cap size.
400 Rptr % 10.0%
350 Foreign ownership (as % of free float) trend

9.5% 80%
300
70% 68.0%
250 9.0% 67.1%
60% 60.1%
59.1%
200 57.6%
55.4%
8.5% 50%
Mortgage (LHS)
150
Mortgage as % of total loan (RHS) 43.0%
40%
100 8.0%
May…
May…
May…
May…
May…
May…
Sep-10
Sep-11
Sep-12
Sep-13
Sep-14
Sep-15
Jan-10
Jan-11
Jan-12
Jan-13
Jan-14
Jan-15
30%
27.3%
22.0%
20%
Source: Ciputra Development (CTRA), DBS Vickers Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15
BSDE LPKR PWON SMRA CTRA ASRI APLN BEST LPCK SSIA
Source: Indonesia Central Securities Depository (KSEI), Bloomberg

Finance L.P., DBS Vickers
Page 6
Industry Focus
Property segment outlook 2016
Burning predictions for property segment in 2016

Sector Outlook Key points
Landed residential Structural long-term demand remains from large backlog and urbanisation trend
Developers to manage supply to maintain steady price appreciation
Less cashflow constraints to developers given considerably higher margins and faster completion
Higher portion on mortgage purchase, hence a prime beneficiary of lower tax
Retail Limited supply condition in Jakarta still remains (due to mall moratorium)
Surge in new supply in suburbs to tap on growing population and spending power
Base rental rate to grow steadily around 8% annually
High-rise residential Flurry of apartment launches in non-prime areas - developers targetting middle class price sweet spot
Higher capex upfront and stricter loan disbursement scheme shrinked developers cashflow
Potential difficulties in securing extended plot ratio to maximise land value
Expect higher units pre-sold mostly small-sized apartments but lower marketing sales growth
Office Abundant office space supply in both CBD and other areas
Downswing in office space demand to continue
Expect base rental rate growth to slow and revert to pre-2009 level
Industrial estate Tight supply for industrial estate land in good location and access to support modest price increase
Demand growth slowdown due to softer domestic economy
Urgent improvement needed in infrastructure to increase competitiveness
Source: DBS Vickers
Landed residential and retail segment remains Jakarta retail mall space occupancy rate
compelling. We like the landed residential segment for its 3.5 m sqm 100%
structural long-term demand (from urbanisation), considerably 3.0

95%
90%
higher margin and better cashflow for developers. Retail space 2.5 85%
lease segment remains attractive given its limited supply in 2.0 80%
Jakarta and huge potential from other areas, with growing 75%
1.5 70%
population and spending power.
1.0 65%
60%
0.5
Retail space rate – Jakarta inner city vs suburbs 55%
600,000 - 50%
Rp psm
9M15
Jakarta Bodetabek
2007
2008
2009
2010
2011
2012
2013
2014
500,000 Demand Supply Occupancy
400,000
Source: Colliers, DBS Vickers
300,000 Land price trend in Greater Jakarta projects

16 Rp m psm 16.0
200,000 Gading Serpong 14.0

Summarecon Bekasi 13.3
BSD City 13.2
12 Alam Sutera 12.6
100,000 Pasar Kemis
CitraRaya Tangerang
CitraIndah Jonggol
CitraGarden City
8
-
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 9M15
Source: Colliers, DBS Vickers 4 3.7
Note: Bodetabek is an abbreviation for Jakarta suburbs (Bogor, Depok, 3.5
Tangerang, and Bekasi) 1.2

0
2009 2010 2011 2012 2013 2014 2015
Source: Companies, DBS Vickers
Page 7
Industry Focus
Avoid office and industrial estate sectors. Industrial land demand (peaked in 2011, with no signs
On the flipside, we hold a negative view on office space due to of recovery for now)
weak demand as the main driver multinational companies are 1,400
ha
still not pouring investments into Indonesia and the oversupply 1,200
situation for the next three years. Industrial estate developers 1,000
will continue to experience weak demand given slow demand
800
from auto-sector and recovering-but-still-low FDI.
600
400
Cumulative office space demand, supply & occ.rate
900 100% 200
ha
800 -
95% 2008 2009 2010 2011 2012 2013 2014 9M15
700
600 90% Source: Colliers, DBS Vickers
500
400
85% 4W manufacturers' utilisation rate trend
2,500,000 units 95%
300 80% 94%
200 89% 90%
75% 2,000,000
100 85%
83%
- 70% 80%
79%
1,500,000 77%
2008
2009
2010
2011
2012
2013
2014
2015
75%
70%
Demand (LHS) Supply (LHS) Take-up rate (RHS) 1,000,000
67%
64% 65%
Source: Colliers, DBS Vickers 500,000 60%
55%
52%
Pre-committed office space absorption in Jakarta CBD 0 50%
2008 2009 2010 2011 2012 2013 2014 2015F
Capacity (LHS) Production (LHS) Utilization rate (RHS)
2018F
Source: Indonesia 4W Association (Gaikindo), various sources.
Real GDP vs investment growth

2017F
Pre-leased Absorbed 6% GFCF growth (LHS) Real GDP growth (LHS) 7.0%
4% 6.5%
2016F
2%
6.0%
0%
5.5%
2015F 8%
sqm 5.0%
6%
- 100,000 200,000 300,000 400,000
4% 4.5%
2% 4.0%
Pre-committed office space absorption outside Jakarta

CBD Source: Worldbank data, Bloomberg Finance L.P., DBS Vickers
Active industries trend to industrial land pre-sales

2018F
Automotive F&B and consumer goods Logistics / Warehousing Others
100%
2017F 90% 20%
26% 27%
Supply Pre-committed 80% 37% 36%
70% 5% 7%
28%
60% 2%
3% 5% 14%
2016F 4%
50%
40%
40%
29%
2015F 30% 58% 55% 55%
sqm 20%
10% 23% 25%
- 50,000 100,000 150,000 200,000 250,000 300,000
0%
2011 2012 2013 2014 9M15
Page 8
Industry Focus
Maintain neutral stance: BSDE as top pick

Indonesian property stocks have been on a wild roller coaster ride Property (incl. Industrial estate) sector discount to RNAV
as investors reacted to bits and pieces of news relating to the 80%
sector (see chart in APPENDIX) and closed the year on apositive 70%
upward momentum. 60%
50%
However, we still maintain our cautious view on property (and Average 42%
40%
negative for industrial estates) as explained in the previous
30%
sections. We see that the potential catalysts are mostly hinged on
20%
revisions on current regulations and without a strong
10%
fundamental support base. On the supply side, developers are
generally facing tight cashflows (due to the stricter disbursement 0%
Aug-08
Aug-09
Aug-10
Aug-11
Aug-12
Aug-13
Aug-14
Aug-15
Dec-07
Apr-08
Dec-08
Apr-09
Dec-09
Apr-10
Dec-10
Apr-11
Dec-11
Apr-12
Dec-12
Apr-13
Dec-13
Apr-14
Dec-14
Apr-15
Dec-15
scheme) and accordingly have to grow at a modest pace, while -10%
on the demand side, housing affordability remains weak as price- -20%

to-income ratio is at an all-time high. Source: DBS Vickers, Bloomberg Finance L.P
Key adjustments on assumptions across developers: Property sector trading at +1SD of mean forward PE
16.0 (x)
 To reflect the project pipelines in the next two years +2 stdev
(including delayed projects in 2015), our cautious
14.0
stance on post-launch demand absorption,
+1 stdev
pessimistic view on industrial estate demand,
12.0
Indonesia’s expected GDP growth recovery (but from
Average
a slow year in 2015) and modest inflation, we
adjusted our FY16/17F marketing sales assumptions 10.0
by an average -4%/1% for property developers and - -1 stdev
16%/-33% for industrial estate developers. 8.0

-2 stdev
 We keep our Risk-Free Rate (RFR) assumptions at 9%,
6.0
in line with our expected 10-year government bond. Jan-11 Jan-12 Jan-13 Jan-14 Jan-15
We adjusted our risk premium to 5.5% (vs 7.3% Source: DBS Vickers, Bloomberg Finance L.P
before) as the gap between equity return to RFR
narrowed in the past few years. Given this challenging period, we prefer developers with
strong balance sheets, flexibility on township developments
 Assumptions for USD/IDR exchange for those with (particularly those with large land banks) and sustainable
forex debt as per latest DBS Group Research. earnings.
The above changes led to revisions to RNAVs, FY16/17F We have only two BUY recommendations in this space:
revenues and net earnings for each developer (refer to changes
in APPENDIX).  Conviction BUY. Our top pick BSDE for its strong balance
sheet (a mere 5% net gearing as compared to peers
The property sector is currently trading at a 33% discount to despite decent expansion), large land bank (good for 30
RNAV, narrower than its 8-year average of 42% and 12.8x years development), flexibility on township development
FY16F PE (around +1SD of mean forward PE). Given the to generate cashflow, growing commercial & investment
modest expected growth on earnings, the valuation is fair and properties in township for unlocking better value and
it should trade within this range. decent earnings growth at 12% CAGR.
Page 9
Industry Focus
 Attractive valuation BUY. LPCK for its niche apartment One of our top picks in 2015 (SMRA & PWON) closed on
demand in industrial areas and cheap valuation (at just 5x positive note for the year
FY16F PE). 20% 13%
10% 5%
1%
We also like PWON’s portfolio mix with the largest share of 0%
-2%
revenue from retail mall operation among peers, and for its -10% -4%
-9%
resilient earnings (from recurring income). However, we have -20%
-13%
to downgrade PWON to HOLD purely because of limited -30%

-31%
upside from current level to our TP. -40% -37%
-41%
-50%
Other changes (RNAV, key assumptions, recommendations and -60%
-60%
TPs) are summarised in the next two tables: -70%
CTRA SMRA LPKR APLN BSDE PWON JCI LPCK SSIA ASRI BEST
Summary of changes to RNAV and key assumptions Source: DBS Vickers, Bloomberg Finance L.P
New Previous
Key assumption We conducted an earnings sensitivity test for each developer to
Company Risk
RNAV RNAV RFR WACC Beta gauge the impact if demand does not recover as per our
premium
expectations and if IDR keeps weakening against USD (beyond
APLN 524 519 9.0% 5.5% 13.7% 1.3
our house view).
ASRI 795 862 9.0% 5.5% 13.0% 1.4
BSDE 3,626 3,183 9.0% 5.5% 13.4% 1.2 Earnings sensitivity to 10% miss in FY16F marketing
CTRA 1,730 1,550 9.0% 5.5% 13.2% 1.2 sales
0%
LPKR 1,411 1,734 9.0% 5.5% 12.3% 1.1
-1%
PWON 570 551 9.0% 5.5% 12.3% 1.1 -1.0% -1.0%
-0.7%
SMRA 2,457 2,854 9.0% 5.5% 12.8% 1.3 -2% -1.7%

-2.1% -2.2%
BEST 440 548 9.0% 5.5% 13.8% 1.5 -3% -2.6%
-3.0% -3.0%
-3.2%
-3.1%
LPCK 19,724 19,766 9.0% 5.5% 16.7% 1.4 -4% -3.6% -3.6%
-3.5%
-4.1%
SSIA 1,529 1,532 9.0% 5.5% 13.7% 1.2 -5% -4.5%
-4.8%
Source: DBS Vickers -6%

-5.9%
-7% -6.8% FY16F FY17F

Summary of changes to TP and recommendation -7.0%
-8%
Company New TP Previous TP Changes New Rec Previous Rec APLN ASRI SMRA BSDE CTRA BEST PWON LPKR SSIA LPCK
APLN 285 280 2% Fully Valued Fully Valued Source: DBS Vickers
ASRI 325 355 -8% Hold Hold
BSDE 2,100 1,595 32% Buy Hold
Earnings sensitivity to 10% drop in IDR against USD
BEST SSIA ASRI LPKR BSDE PWON
CTRA 1,350 980 38% Hold Hold 0.0%
LPKR 980 1,160 -16% Fully Valued Hold -1.0% -0.8% -0.5%
-1.1% -0.7% -0.4%
PWON 490 470 4% Hold Buy -2.0% -1.8%
-2.1% -2.1% -2.1% -1.7%
SMRA 1,650 1,855 -11% Hold Buy -3.0%
BEST 230 285 -19% Fully Valued Hold -4.0%
LPCK 7,900 7,900 0% Buy Buy -5.0%
SSIA 765 765 0% Hold Hold -6.0%
Source: DBS Vickers -7.0% FY16F FY17F
-7.1%
-8.0% -7.4%
Source: DBS Vickers.

Note: Only for developers with forex debt as this only assesses a direct
impact from higher interest expense paid due to forex debt (from
translation to IDR). Other indirect impact not in the calculation will be
from possible higher refinancing or hedging cost.
Page 10
Industry Focus
All of our base-case assumptions above for property (incl.

Industrial estate) developers are driven by recovery in  Developers trading below our estimated worst-case
Indonesia's consumption, modest inflation and clearer RNAV: ASRI, LPCK and SSIA
regulations.  Developer trading near our estimated worst-case
RNAV: BSDE (our top pick)
If there are shock external uncertainties that could trigger  Other developers’ current price levels are seeing 18-
further de-rating of property and industrial estate sectors, we 42% downside to worst-case RNAV.
can consider the asset liquidation value as our worst-case
RNAV scenario (see next chart for easy reference).
Base-Case (Revised) & Worst-Case RNAV vs Current Stock Price
100
90
80
70
60
50
40
30
20
10
0
APLN ASRI BSDE CTRA LPKR PWON SMRA BEST LPCK SSIA
Base Case (Revised) RNAV Worst case RNAV Stock price (as of 30Dec2015 close)
Source: DBS Vickers, Bloomberg Finance L.P. Note: 1) Y-axis 100 Index: Base-Case (Revised) RNAV as 100
2) ASRI, BSDE, LPCK and SSIA are currently trading below their respective RNAVs
Page 11
Industry Focus
APPENDIX
Summary of earnings revision (by developer)
APLN ASRI BSDE CTRA LPKR
FY15F FY16F FY17F FY15F FY16F FY17F FY15F FY16F FY17F FY15F FY16F FY17F FY15F FY16F FY17F
Mktg. Sales Now 3,284 2,933 2,015 3,277 4,314 5,232 6,790 7,305 7,871 9,119 9,403 10,019 3,722 4,050 4,349
in Rpbn Prev 5,035 2,670 1,506 4,723 4,509 5,662 6,995 8,087 9,126 9,283 8,898 9,887 5,622 4,186 3,556
Chg (%) -35% 10% 34% -31% -4% -8% -3% -10% -14% -2% 6% 1% -34% -3% 22%
Revenue Now 5,208 5,882 7,002 3,791 4,027 4,246 6,584 7,288 8,158 7,666 8,876 8,993 9,310 10,167 11,576
in Rpbn Prev 6,027 7,260 7,712 4,081 4,220 5,234 6,974 7,448 8,767 7,750 9,220 9,367 9,882 11,705 13,830
Chg (%) -14% -19% -9% -7% -5% -19% -6% -2% -7% -1% -4% -4% -6% -13% -16%
Net profit Now 545 629 997 1,209 1,138 1,144 2,381 2,561 3,117 1,259 1,367 1,368 1,481 1,392 1,506
in Rpbn Prev 719 872 1,068 1,254 1,388 1,798 2,548 2,721 3,302 1,291 1,481 1,551 1,519 1,529 1,561
Chg (%) -24% -28% -7% -4% -18% -36% -7% -6% -6% -2% -8% -12% -2% -9% -3%
RNAV Now 524 795 3,626 1,730 1,411

in Rp/sh Prev 519 862 3,183 1,550 1,734
Chg (%) 1% -8% 14% 12% -19%
TP Now 285 325 2,100 1,350 980

in Rp/sh Prev 280 355 1,595 980 1,160
Chg (%) 2% -8% 32% 38% -16%
Rec Now Fully Valued Hold Buy Hold Fully Valued

Prev Fully Valued Hold Hold Hold Hold
PWON SMRA BEST LPCK SSIA

FY15F FY16F FY17F FY15F FY16F FY17F FY15F FY16F FY17F FY15F FY16F FY17F FY15F FY16F FY17F
Mktg. Sales Now 3,180 3,481 3,875 4,324 4,729 4,799 277 395 534 2,680 2,360 1,809 304 482 520
in Rpbn Prev 3,674 4,133 4,902 5,186 5,315 5,086 423 673 900 2,464 1,860 1,809 608 711 1,273
Chg (%) -13% -16% -21% -17% -11% -6% -35% -41% -41% 9% 27% 0% -50% -32% -59%
Revenue Now 4,942 5,461 6,415 5,980 6,444 6,552 657 610 581 1,894 2,186 2,443 4,803 4,589 4,932
in Rpbn Prev 5,184 5,848 7,300 5,542 6,184 6,494 777 758 882 1,736 2,395 2,604 4,647 5,024 5,632
Chg (%) -5% -7% -12% 8% 4% 1% -15% -19% -34% 9% -9% -6% 3% -9% -12%
Net profit Now 1,805 1,915 2,199 1,064 1,057 1,057 268 198 194 939 954 1,064 491 477 421
in Rpbn Prev 1,955 2,496 3,046 1,199 1,463 1,623 339 282 429 842 971 1,108 467 442 509
Chg (%) -8% -23% -28% -11% -28% -35% -21% -30% -55% 11% -2% -4% 5% 8% -17%
RNAV Now 570 2,457 440 19,724 1,529

in Rp/sh Prev 551 2,854 548 19,766 1,532
Chg (%) 3% -14% -20% 0% 0%
TP Now 490 1,650 230 7,900 765

in Rp/sh Prev 470 1,855 285 7,900 765
Chg (%) 4% -11% -19% 0% 0%
Rec Now Hold Hold Fully Valued Buy Hold

Prev Buy Buy Hold Buy Hold
Source: DBS Vickers
Page 12
Industry Focus
Indonesia REIT studies. Current government efforts to promote SG 10-Year bond vs REITs' yield
REIT structure in Indonesia are still meeting notable challenges. 7.0%
SG-10YR Gov't bond REITS yield
o First, taxes are still aplenty for asset transfers into REITs 6.0%
and for operations in general. Through the Ministry of 5.0%
Finance no.200/PMK.03/2015 issued on 10 Nov 2015,
4.0%
the government has eliminated tax on dividend and
3.0%
final sales tax for REIT. However, the introduction of
capital gain tax (25% on the gains) has further 2.0%
dampened the attractiveness on the structure. 1.0%
0.0%
Sep-10
Sep-11
Sep-12
Sep-13
Sep-14
Sep-15
Dec-09
Jun-10
Dec-10
Jun-11
Dec-11
Jun-12
Dec-12
Jun-13
Dec-13
Jun-14
Dec-14
Jun-15
Mar-10
Mar-11
Mar-12
Mar-13
Mar-14
Mar-15
REIT taxation
No Taxes Current Previous Remarks
1 Asset transfer fee 5% 5% For buyer Source: DBS Vickers, Bloomberg Finance L.P. Note: REITs' yield is a
2 Sales tax 0% 5% For seller weighted average of Starhill REIT (SGREIT SP), Frasers Centrepoint Trust
Refundable for
(FCT SP), SPH REIT (SPHREIT SP), CapitaMall Land Trust (CT SP), Mapletree
3 Value added tax 10% 10% REIT
Commercial Trust (MCT SP), Suntec Real Estate Investment Trust (SUN
4 Final income tax 10% 10% For rental lease
SP), OUE Hospitality Trust (OUEHT SP) and CapitaLand Commercial Trust
5 Dividend 0% 10-20%
(CCT SP).
6 Capital gain tax 25% 0% For seller's gain
Source: DBS Vickers, Ministry of Finance
o Third, availability of alternatives to raise funds. An
11.5% yield roughly translates into less than 10x PE on
o Second, the need to offer higher yield might put off
investment properties. In a good market (where you can
developers. Just for comparison, we can take a look at
get good valuation), property developers might choose
the spread between REITs' yield and Singapore 10-year
IPO (can get better multiple valuation) or raise bonds
bonds on well established system in Singapore. Based
(corporate bond with +id single A rating has coupon
on historical data, there is on average a 3% spread
rate of 11.25% at this time – a cheaper option).
between them. Theoretically, given that Indonesia's 10-
year bond yield is around 8.5-9%, Indonesia’s REIT has
to offer at least 11.5% to be competitive.
Summary of regulations affecting property sector

No Regulation Reference Dated Remarks
Income Tax article 22 - 5% tax applies for:
1 Super luxury tax Ministry of Finance Decree 30/05/2015 - Landed residential (value > Rp5bn OR building area >400sqm)
No. 90/PMK.03/2015 - High-rise residential units (value > Rp5bn OR building >150sqm)
20% tax applies for:
Ministry of Finance decree
2 Luxury tax 20/11/2015 - Strata - Apartment & townhouse (value > Rp10bn)
no. 206/PMK.010/2015
- Non-strata: Landed residential and townhouse (value > Rp20bn)
Restriction on fund disbursement by banks to
3 BI Circular No. 15/40/DKMP 24/09/2013 Property developers plan to negotiate on revisions to these regulations
property developers
Gov't regulation no. Potential revision to boost market demand (mostly on "premium" high-rise
4 Individual foreign ownership for property -
41/1996 projects)
Ministry of Finance decree
5 Dividend tax elimination on REIT structure 10/11/2015 Part of gov't efforts to promote REITS structure in Indonesia
no. 200/PMK.010/2015
On-going discussion to reduce corporate tax from current 25% to 18% (and
6 Corporate tax cut - -
even 13% for listed companies with more than 40% public free float)
30/10/2013 - 1(luxury):2(middle):3(low cost) ratio for landed residential development
Implementation of balance ratio in housing Permenpera no.7/2013 &
7 & - High-rise developer to build public housing (min. 20% of total area of each
development no.10/2012
30/05/2012 high-rise project)
BI Circular No.
8 Relaxation of LTV regulation 18/06/2015 No significant impact observed
17/10/PBI/2015
Land limit:
Enforcement of Right to Use (HGB) land ownership Ministry of Agrarian and 1). Residential: 1 province: 400ha; nationwide: 4,000ha.
9 28/04/2015
limit Spatial decree no. 5/2015 2). Industrial: 1 province: 400ha; nationwide: 4,000ha.
3) R 1 i 200h i id 4 000h
10 Multi-storey building regulation in Jakarta province Perda Jakarta no.4/1975 06/20/1975 Regarding landplot ratio in Jakarta (on-going changes expected)
Presidential decree no.
11 Negative investment list (DNI) 23/04/2014 The list of restricted sector for foreign investment
39/2014
Source: DBS Vickers
Page 13
Industry Focus
RNAV breakdown by developer

100% 1% 1% 1% 3% 2%
6% 3% 5%
8% 2% 7%
2% 11% 3% 19%
90% 2% 15%
12% 29% 14%
20% 3%
80% 7%
4%
3% 2%
70% 62%
60% 18%
48%
50% 41% 59%
5% 98%
1%
88% 4%
40% 82%
74% 7% 76%
11%
30%
9% 3%
20%
23% 34%
16%
21% 24%
10%
6% 6%
0%
APLN ASRI BSDE CTRA LPKR PWON SMRA BEST LPCK SSIA
Landed residential Apartment Retail Mall Office Hotel Hospital Industrial Others
Source: DBS Vickers
JAKPROP Index – strong reaction to regulatory news but close the year on upward momentum
Developers indicating Below par 1Q15 Potential China More uncertainties
News on bank good YTD overall earnings A-shares inclusion in on the property %
promotional rate marketing sales concerned market MSCI Emerging Index luxury tax
115 8
REIT double
No criteria changes taxation elimination
110 for property as part of economy
luxury tax & stimulus package V
Loan‐to‐Value
105 (LTV) regulation Potential corporate
by BI tax rate cut and more
news on foreign 7.75
100 ownership easing
95 News on potential News on suspension

additional tax of North Jakarta
reclamation project
90 (affecting few developers)
7.5
Another news Super luxury tax
85 on additional tax regulation revision News on strict
(limited impact to implementation of
developers) land limit for
Finally, a decision on
80 each developer
BI rate cut property luxury tax
News of potential asing of External uncertainties
(25bps) (no significant impact
individual foreign ownership from China policies
to developers)
75 7.25
Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15
JCI Index (LHS) JAKPROP Index (LHS) BI Rate (RHS)
Note: JAKPROP Index is a weighted index for stocks involved in property, real estate and construction sectors
Page 14
30%
35%
40%
45%
50%
55%
60%
65%
70%
75%
80%
20%
30%
40%
50%
60%
70%
80%
90%
100%
100%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Jul-11
Jun-08 Dec-07
Apr-08 Oct-11
Dec-08
Aug-08 Jan-12
Jun-09 Dec-08
Apr-09 Apr-12
Dec-09 Aug-09 Jul-12
Average 64%
Dec-09
Average 66%
Jun-10 Oct-12
Apr-10
Dec-10 Aug-10 Jan-13
Dec-10 Apr-13
Jun-11
Apr-11
Jul-13
ASRI: Discount to RNAV trend

Aug-11
BSDE: Discount to RNAV trend

Dec-11
APLN: Discount to RNAV trend
Dec-11 Oct-13
Jun-12 Apr-12 Jan-14
Source: DBS Vickers, Bloomberg Finance L.P

Dec-12 Aug-12
Apr-14
Dec-12
Jun-13 Apr-13 Jul-14
Aug-13 Oct-14
Dec-13
Dec-13
Apr-14 Jan-15
Jun-14
Aug-14 Apr-15
Dec-14 Dec-14 Jul-15
Jun-15 Apr-15
Aug-15 Oct-15
Average 52%
Dec-15 Dec-15 Jan-16
-20%
-10%
10%
20%
30%
40%
50%
60%
70%
80%
0%
-40%
-20%
0%
20%
40%
60%
80%
100%
0%
-80%
-60%
-40%
-20%
20%
40%
60%
80%
Dec-07 Dec-07 Dec-07

Apr-08 Apr-08 Apr-08
Aug-08 Aug-08 Aug-08
Aug-11 Aug-11
LPKR: Discount to RNAV trend
Aug-11
CTRA: Discount to RNAV trend
PWON: Discount to RNAV trend
Average 26%


Average 28%

Average 43%

Page 15
Industry Focus
-40%
-20%
0%
20%
40%
60%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0%
Page 16
Apr-12 Dec-07
Apr-08
Aug-12 Aug-08
Dec-08
Apr-09
Industry Focus
Dec-12
Aug-09
Average 46%
Apr-13 Dec-09
Apr-10
Aug-10
Aug-13
Average 21%
Dec-10
Apr-11
Dec-13
BEST: Discount to RNAV trend

Aug-11
SMRA: Discount to RNAV trend
Dec-11
Apr-14 Apr-12

Aug-12
Aug-14 Dec-12
Apr-13
Dec-14 Aug-13
Dec-13
Apr-14
Apr-15
Aug-14
Dec-14
Aug-15
Apr-15
Aug-15
Dec-15 Dec-15
100%
100%
0%
0%
-40%
-20%
-60%
-40%
-20%
20%
40%
60%
80%
20%
40%
60%
80%
Dec-07 Dec-07
Apr-08 Apr-08
Aug-08 Aug-08
Dec-08 Dec-08
Apr-09 Apr-09
Aug-09 Aug-09
Average 65%
Dec-09 Dec-09
Apr-10 Apr-10
Aug-10 Aug-10
Average 48%
Dec-10 Dec-10
Apr-11 Apr-11
SSIA: Discount to RNAV trend
LPCK: Discount to RNAV trend
Aug-11 Aug-11
Dec-11 Dec-11
Apr-12 Apr-12

Aug-12 Aug-12
Dec-12 Dec-12
Apr-13 Apr-13
Aug-13 Aug-13
Dec-13 Dec-13
Apr-14 Apr-14
Aug-14 Aug-14
Dec-14 Dec-14
Apr-15 Apr-15
Aug-15 Aug-15
Dec-15 Dec-15
Industry Focus
APLN: PE Band CTRA: PE Band

(x) (x)
2 3 .3
1 7 .9
2 1 .3
1 5 .9
+ 2 s d : 1 5 .3 x 1 9 .3
+ 2 s d : 1 8 .5 x
1 3 .9
1 7 .3
+ 1 s d : 1 2 .6 x + 1 s d : 1 6 x
1 1 .9 1 5 .3
9 .9 A v g : 9 .8 x 1 3 .3 A v g : 1 3 .5 x
7 .9 1 1 .3
‐1 s d : 7 .1 x ‐1 s d : 1 1 x
5 .9 9 .3
‐2 s d : 8 .5 x
3 .9 ‐2 s d : 4 .3 x 7 .3
Ja n -1 2 J a n -1 3 J a n -1 4 J a n -1 5 J a n -1 2 J a n -1 3 Ja n -1 4 J a n -1 5
Source: DBS Vickers, Bloomberg Finance L.P. Source: DBS Vickers, Bloomberg Finance L.P.
ASRI: PE Band LPKR: PE Band

(x) (x)
2 5 .1
2 2 .6
2 3 .1 + 2 s d : 2 3 .1 x
2 1 .1
1 7 .6 + 2 s d : 1 8 x + 1 s d : 1 9 .5 x
1 9 .1
+ 1 s d : 1 4 .2 x 1 7 .1
1 2 .6 A v g : 1 5 .9 x
1 5 .1
A v g : 1 0 .5 x 1 3 .1
‐1 s d : 1 2 .3 x
7 .6 1 1 .1
‐1 s d : 6 .7 x
9 .1
‐2 s d : 8 .7 x
2 .6 ‐2 s d : 2 .9 x 7 .1
BSDE: PE Band PWON: PE Band

(x) (x)
1 8 .9
1 7 .7
1 6 .9 + 2 s d : 1 6 .7 x
1 5 .7
1 4 .9 + 2 s d : 1 5 .1 x
+ 1 s d : 1 3 .9 x
1 2 .9 1 3 .7
+ 1 s d : 1 3 .4 x
1 0 .9 A v g : 1 1 .1 x
1 1 .7 A v g : 1 1 .8 x
8 .9
‐1 s d : 8 .3 x ‐1 s d : 1 0 .2 x
9 .7
6 .9
‐2 s d : 8 .6 x
‐2 s d : 5 .5 x
4 .9 7 .7
Page 17
Industry Focus
SMRA: PE Band LPCK: PE Band

(x) (x)
1 1 .4
1 3 .8
1 0 .4
+ 2 s d : 1 2 .4 x
1 1 .8 9 .4
+ 2 s d : 8 .8 x
8 .4
+ 1 s d : 1 0 .5 x
9 .8 7 .4 + 1 s d : 7 .3 x
A v g : 8 .5 x 6 .4
7 .8 A v g : 5 .8 x
5 .4
‐1 s d : 6 .6 x
4 .4 ‐1 s d : 4 .2 x
5 .8
3 .4
‐2 s d : 4 .7 x
3 .8 2 .4 ‐2 s d : 2 .7 x
D e c-1 1 D e c-1 2 D e c -1 3 D e c -1 4 D e c-1 5 J a n -1 2 J a n -1 3 Ja n -1 4 J a n -1 5
BEST: PE Band SSIA: PE Band

(x) (x)
1 4 .2
2 7 .6
+ 2 s d : 2 5 .1 x
1 2 .2 + 2 s d : 1 2 .4 x
2 2 .6
+ 1 s d : 1 9 .8 x + 1 s d : 1 0 .5 x
1 7 .6 1 0 .2
A v g : 1 4 .4 x A v g : 8 .6 x
1 2 .6 8 .2
‐1 s d : 9 x ‐1 s d : 6 .7 x
7 .6 6 .2
‐2 s d : 3 .7 x ‐2 s d : 4 .8 x
2 .6 4 .2
A p r-1 2 A p r -1 3 A p r -1 4 A p r-1 5 J a n -1 2 J a n -1 3 Ja n -1 4 J a n -1 5
Page 18
Industry Focus
Indonesia Property and Industrial Estate Developers: Valuation Summary

Agung Alam Bumi Bekasi Fajar Surya
Ciputra Lippo Pakuwon Summarecon Lippo
Company Podomoro Sutera Serpong Industrial Semesta
Development Karawaci Jati Agung Cikarang
Land Realty Damai Estate Internusa
Ticker APLN IJ ASRI IJ BSDE IJ CTRA IJ LPKR IJ PWON IJ SMRA IJ BEST IJ SSIA IJ LPCK IJ
Market cap (US$m) 492 467 2,473 1,568 1,682 1,715 1,631 200 235 351
Share price 334 331 1,790 1,425 1,015 496 1,575 289 695 7,025
RNAV 524 795 3,626 1,730 1,411 570 2,457 440 1,529 19,724
Disc to RNAV 36% 58% 51% 18% 28% 13% 36% 34% 55% 64%
Rec FULLY VALUED HOLD BUY HOLD FULLY VALUED BUY HOLD FULLY VALUED HOLD BUY
TP 285 325 2,100 1,350 980 490 1,650 230 765 7,900
Upside -15% -2% 17% -5% -3% -1% 5% -20% 10% 12%
PE (x) 2013 8.0 7.4 11.6 22.1 19.1 21.1 20.9 3.7 4.7 8.3
2014 8.0 5.4 8.6 16.3 9.2 9.5 16.4 7.1 7.9 5.8
FY15F 12.6 5.4 14.5 17.2 15.8 13.2 21.4 10.4 6.7 5.2
FY16F 10.9 5.7 13.5 15.8 16.8 13.7 21.5 14.1 7.5 5.1
FY17F 6.9 5.7 11.1 15.7 15.6 11.9 21.5 14.4 8.5 4.6
PB (x) 2013 1.2 1.4 3.1 3.3 2.7 6.2 5.2 1.1 1.4 2.7
2014 1.1 1.2 2.1 2.8 2.0 3.9 4.2 1.0 1.2 1.8
FY15F 1.0 1.0 2.0 2.6 1.8 3.2 3.7 0.9 0.9 1.4
FY16F 0.9 0.9 1.8 2.3 1.7 2.9 3.3 0.9 0.9 1.1
FY17F 0.8 0.8 1.6 2.1 1.6 2.4 3.0 0.8 0.8 0.9
Revenue 2013 4,901.2 3,684.2 5,741.3 5,077.1 6,666.5 3,029.8 4,548.5 1,323.9 4,582.7 1,327.9
(Rpbn) 2014 5,296.6 3,630.9 5,571.9 6,344.2 11,655.0 3,872.3 5,757.3 839.6 4,464.4 1,792.4
FY15F 5,208.4 3,790.6 6,583.7 7,667.7 9,309.8 4,941.5 5,979.7 657.4 4,803.2 1,894.4
FY16F 5,882.3 4,026.5 7,288.0 8,898.3 10,167.2 5,461.1 6,444.1 609.9 4,588.9 2,185.9
FY17F 7,002.3 4,245.6 8,157.8 9,035.7 11,575.6 6,415.0 6,552.5 580.8 4,932.1 2,442.6
Net profit 2013 851.4 876.8 2,691.4 976.7 1,228.5 1,132.8 1,089.8 743.6 691.1 590.6
(Rpbn) 2014 855.9 1,196.4 3,820.6 1,324.9 2,547.3 2,515.5 1,385.1 391.0 415.2 844.1
FY15F 545.1 1,209.3 2,381.1 1,259.6 1,480.6 1,804.8 1,064.1 267.7 490.6 939.1
FY16F 629.0 1,138.2 2,560.9 1,370.2 1,392.3 1,914.7 1,056.8 198.1 476.6 953.8
FY17F 996.9 1,144.2 3,116.7 1,375.3 1,505.9 2,199.4 1,057.0 193.5 421.2 1,064.0
Net profit growth 2014 1% 36% 42% 36% 107% 122% 27% -47% -40% 43%
(%) FY15F -36% 1% -38% -5% -42% -28% -23% -32% 18% 11%
FY16F 15% -6% 8% 9% -6% 6% -1% -26% -3% 2%
FY17F 58% 1% 22% 0% 8% 15% 0% -2% -12% 12%
EBIT margin (%) 2013 26% 42% 51% 31% 23% 50% 36% 67% 19% 48%
2014 27% 55% 47% 35% 28% 49% 36% 56% 12% 51%
FY15F 22% 47% 45% 31% 23% 48% 31% 56% 12% 46%
FY16F 27% 44% 45% 29% 21% 48% 31% 58% 14% 42%
FY17F 30% 42% 45% 29% 21% 48% 32% 57% 12% 44%
Net gearing (%) 2013 24% 38% 0% 0% 30% 7% 0% 0% 0% 0%
2014 20% 46% 4% 9% 27% 18% 29% 5% 3% 0%
FY15F 40% 40% 9% 6% 31% 23% 29% 27% 4% 0%
FY16F 35% 44% 6% 5% 36% 23% 35% 33% 26% 0%
FY17F 28% 45% 1% 8% 33% 20% 36% 37% 25% 0%
ROE (%) 2013 16% 21% 30% 16% 16% 33% 27% 35% 35% 39%
2014 14% 24% 30% 19% 25% 50% 28% 15% 17% 38%
FY15F 8% 20% 15% 16% 12% 27% 18% 9% 16% 30%
FY16F 9% 17% 14% 16% 11% 24% 16% 6% 13% 23%
FY17F 13% 15% 15% 14% 11% 22% 15% 6% 10% 21%
Interest coverage 2013 3.6 13.3 16.6 14.5 15.3 9.0 10.5 26.0 7.5 968.3
(x) 2014 3.2 10.6 11.4 7.2 19.7 8.1 7.3 13.0 6.1 1,622.4
FY15F 3.2 11.4 7.2 5.7 12.9 9.6 4.8 4.7 6.2 1,485.9
FY16F 4.0 8.5 6.0 6.1 12.0 9.3 4.0 2.6 5.4 1,602.1
FY17F 6.0 8.6 9.0 6.5 12.9 9.9 3.9 2.4 4.5 1,850.5
EBITDA margin (%) 2013 35% 43% 57% 33% 28% 56% 39% 67% 22% 48%
2014 37% 57% 79% 38% 32% 64% 39% 57% 18% 52%
FY15F 34% 49% 51% 34% 29% 70% 34% 57% 15% 47%
FY16F 38% 47% 52% 32% 28% 73% 35% 59% 18% 44%
FY17F 40% 45% 52% 32% 28% 73% 36% 59% 17% 45%
Source: DBS Vickers
Page 19
Industry Focus
Company Guides
Page 20
Indonesia Company Guide
Agung Podomoro Land
Edition 2 Version 1 | Bloomberg: APLN IJ | Reuters: APLN.JK Refer to important disclosures at the end of this report
FULLY VALUED Hold Your Dredger

Last Traded Price: Rp334 (JCI : 4,525.92) Maintain FULLY VALUED call. We tweaked our RNAV slightly to
Price Target : Rp285 (15% downside) (Prev Rp280) Rp524/sh (from Rp519/sh previously) to reflect the latest
marketing sales achieved and the revised risk premium (to
Potential Catalyst: Clearer status for North Jakarta reclamation projects 5.5%) for WACC calculation. The slight change in TP to Rp285
Where we differ: The only negative call for the counter still presents 15% downside.
Analyst Status of major projects remains uncertain. Uncertainties over

Edward Ariadi Tanuwijaya +6221 3003 4932 two of its major projects (160ha Pluit City reclamation project
and 9ha superblock development in Klender, East Jakarta)
could force Agung Podomoro Land (APLN) to seek other
projects.
Price Relative Weak marketing sales in 2015. 9M15 marketing sales of

Rp Relative Index Rp1.7tr stands at just 50% of its revised down full year
536.3 209 guidance of c. Rp3tr (down 42% from FY14’s level). We have
189
486.3
436.3
169 adjusted our marketing sales assumptions accordingly to
386.3
149
129
Rp3.2tr/2.9tr/2tr in 2015/16/17F to reflect the current
336.3
286.3
109 achievement (marketing sales assumptions do not include North
89
236.3 69 Jakarta reclamation projects). Our marketing sales estimates
186.3
Dec-11 Dec-12 Dec-13 Dec-14
49
Dec-15 have always been conservative considering our cautious view on
Agung Podomoro Land (LHS) Relative JCI INDEX (RHS) property sector.
Forecasts and Valuation Valuation:

FY Dec (Rpbn) 2014A 2015F 2016F 2017F
Our target price of Rp285 is pegged at a 45% discount to our
Revenue 5,297 5,208 5,882 7,002
EBITDA 1,944 1,752 2,224 2,804 base case RNAV (based on its adjusted 8-years average
Pre-tax Profit 1,230 1,037 1,385 1,991 discount to RNAV). APLN is currently trading at 36% discount
Net Profit 856 545 629 997 to RNAV (much narrower than its 8-year average of 64%) and
Net Pft (Pre Ex.) 856 545 629 997
11x FY16F PE (at +0.5SD of its mean forward PE).
EPS (Rp) 41.8 26.6 30.7 48.6
EPS Pre Ex. (Rp) 41.8 26.6 30.7 48.6 Key Risks to Our View:
EPS Gth Pre Ex (%) 1 (36) 15 58
Net Pft Gth (Pre-ex) (%) 1 (36) 15 58
Clearer status of North Jakarta reclamation project. Despite
Diluted EPS (Rp) 41.8 26.6 30.7 48.6 securing execution permit from local government (through
Net DPS (Rp) 6.00 6.26 3.99 4.60 gubernational decree no 2238 since 23Dec2014) which
BV Per Share (Rp) 313 333 360 404 technically allows APLN to proceed with reclamation, APLN is
PE (X) 8.0 12.6 10.9 6.9
PE Pre Ex. (X) 8.0 12.6 10.9 6.9 currently waiting for urban planning approval from the Jakarta
P/Cash Flow (X) nm 26.1 10.1 6.5 government. The Pluit City – Island “G” project would
EV/EBITDA (X) 5.7 8.7 6.7 5.3 significantly boost its RNAV and marketing sales.
Net Div Yield (%) 1.8 1.9 1.2 1.4
P/Book Value (X) 1.1 1.0 0.9 0.8
At A Glance
Net Debt/Equity (X) 0.3 0.7 0.5 0.4
ROAE (%) 14.1 8.2 8.9 12.7 Issued Capital (m shrs) 20,501
Mkt. Cap (Rpbn/US$m) 6,847 / 494
Earnings Rev (%): (24) (28) (7)
Major Shareholders
Consensus EPS (Rp): 41.5 48.2 46.4
Indofica (%) 47.3
Other Broker Recs: B: 4 S: 3 H: 0
Jaya Lestari Persada (%) 14.7
Source of all data: Company, DBS Vickers, Bloomberg Finance L.P Simfoni Gema Lestari (%) 5.1
Free Float (%) 29.9
3m Avg. Daily Val (US$m) 0.28
ICB Industry : Real Estate / Real Estate Investment & Services
ASIAN INSIGHTS VICKERS SECURITIES

ed: JS / sa: MA
Company Guide
Agung Podomoro Land
Marketing sales
CRITICAL DATA POINTS TO WATCH
6,353
6,400 6,089
5,600
Earnings Drivers:
4,800
Marketing sales achieved
4,000
Property developers recognise non-recurring revenue from 3,284
3,200 2,933
marketing sales in prior years. We expect revenue to grow by
2,400 2,015
c.10% CAGR over 2014-17F given expected slower revenue 1,600
recognition from a few projects. Marketing sales grew by 800
15% CAGR over 2011-14 and expected to grow by mere 0
2% between FY14-17F. 2013A 2014A 2015F 2016F 2017F
Sales Trend
Fast turnover business model has some risks.APLN’s business Rp bn
continuity depends heavily on the successful acquisition of 7,000 30.0%
new projects. APLN has 12 ongoing projects in its portfolio. 6,000 25.0%
The strategy to focus on smaller scale and short-life projects 5,000

20.0%
(normally about 3-5 years) allows for more flexibility and 4,000
15.0%
faster asset monetisation, provided execution goes ahead as 3,000
10.0%
expected. This poses as a threat for future growth as land 2,000
acquisition is getting more difficult and availability of good 1,000 5.0%
projects for acquisition are getting scarcer. 0 0.0%

2013A 2014A 2015F 2016F 2017F
Total Revenue Revenue Growth (%) (YoY)

Recurring revenue from investment properties
APLN generates c. 30% of consolidated revenue from its
Profitability Trend
investment properties such as retail malls, hotel and office Rp bn
leases. Without major additions and even the current 1,945
possibility of streamlining its investment property portfolio 1,745
for generating cash flow, the share of recurring revenue will 1,545
shrink gradually. 1,345
1,145
Product mix affects profitability 945
APLN’s apartment projects have generally generated higher
745
gross profit margins than landed residential & shophouses
545
projects, while recurring revenues from investment 2013A 2014A 2015F 2016F 2017F
properties are generally stable. Therefore, the revenue mix Operating EBIT Pre tax Profit Net Profit
will dictate APLN’s profitability going forward.

Margins Trend
Needs to monitor costs 29.0%

SG&A expenses (as % of revenue) have trended up with
sharp increase in key items (such as commission, wages & 24.0%
allowance and tax & licenses) given the challenges to attract 19.0%
more demand and new projects in its portfolio. Good control
of SG&A expenses is crucial if the developer wants to grow 14.0%
earnings during this challenging period. 9.0%

2013A 2014A 2015F 2016F 2017F
Current roadblocks in its major projects Operating Margin % Net Income Margin %
The central government has halted North Jakarta reclamation

Disc to RNAV trend
projects for further review. APLN is also involved in an 80%
ongoing legal battle to determine the legal status of the land 75%
in Klender (East Jakarta). 70%
65%
60% Average 64%
55%
50%
45%
40%
35%
30%
Jul-11
Jul-12
Jul-13
Jul-14
Jul-15
Oct-11
Oct-12
Oct-13
Oct-14
Oct-15
Jan-12
Jan-13
Jan-14
Jan-15
Jan-16
Apr-12
Apr-13
Apr-14
Apr-15
Source: Company, DBS Vickers

Page 22
Company Guide
Agung Podomoro Land
Leverage & Asset Turnover (x)

Balance Sheet: 0.4
0.80
Relatively high net gearing may limit growth opportunities 0.4
0.70 0.4
APLN’s net gearing has been rising, and has reached pre-IPO 0.60 0.3
level following aggressive capex for expansion over the past 0.50 0.3
four years, and more stringent requirements for loan 0.40

0.3
disbursements to developers. We expect this to continue 0.30

0.3
0.3
given the high portion apartments projects in APLN’s 0.20
0.2
portfolio. As of Sep-15, net gearing has reached 49%. 0.10 0.2
0.00 0.2
Capex to taper off after FY15 2013A 2014A 2015F 2016F 2017F
Gross Debt to Equity (LHS) Asset Turnover (RHS)
We expect capex requirement to taper off after the initial
huge capex allocated for the currently pending north Jakarta Capital Expenditure
reclamation. Rp
5,000.0
4,500.0
Share Price Drivers: 4,000.0
Inorganic growth going forward 3,500.0

3,000.0
Given the nature of APLN’s fast turnover business model, 2,500.0
new project acquisitions or pipeline (depending on the 2,000.0

1,500.0
acquisition value) may create positive sentiment as it 1,000.0
diversifies its revenue sources going forward. 500.0

0.0
2013A 2014A 2015F 2016F 2017F
Marketing sales and pipeline
Capital Expenditure (-)
Marketing sales achieved is a good indicator for all Indonesia
property developers (including APLN) as it gives leading ROE (%)
indication for the revenue generation for the next 2-3 years 14.0%
(depending on the revenue recognition).
12.0%
Key Risks: 10.0%
Increasingly difficult to find strategic acquisition targets. 8.0%
Business continuity depends on successful project 6.0%
acquisitions, especially in Greater Jakarta where residential 4.0%
landbank is diminishing. Hence, earnings may not be 2.0%
sustainable going forward. 0.0%

2013A 2014A 2015F 2016F 2017F
Stricter regulations for high-rise developments. Plot ratio

Forward PE Band (x)
approval and balanced ratio rules, when strictly
(x)
implemented, could potentially slow property demand.
17.9
Liquidity tightening could slow demand further.
15.9
+2sd: 15.3x
Potential interest rate hikes. Property demand is sensitive to 13.9
+1sd: 12.6x
and is negatively correlated to interest rate movements. 11.9
9.9 Avg: 9.8x
Strict implementation on potential revision to housing
7.9
development balance ratio (of low, middle and luxury ‐1sd: 7.1x
5.9
houses). If implemented strictly and retroactively, this could ‐2sd: 4.3x
3.9
potentially mean additional costs for property developers Jan-12 Jan-13 Jan-14 Jan-15
and more complicated property development planning

PB Band (x)
Capital intensive projects require large funding. High-rise 2.3
(x)
and investment properties developments require large 2.1
upfront capital. External financing costs have to be kept in 1.9 +2sd: 1.88x

check. 1.7
+1sd: 1.57x
1.5
Company Background 1.3 Avg: 1.27x

APLN has been focusing on high-rise developments and 1.1
‐1sd: 0.96x
prides itself as a major superblocks developer. Most of its 0.9
0.7
projects are in strategic inner city locations. ‐2sd: 0.65x
0.5
Jan-12 Jan-13 Jan-14 Jan-15

Page 23
Company Guide
Agung Podomoro Land
APLN: RNAV summary

APLN portfolio Stake owned Valuation (Rpbn) RNAV
Investment Properties
Central Park Mall 100% 2,235 2,235
Pocy Extension 100% 558 558
Senayan City Mall 26% 2,161 551
SCTV Tower - Senayan City 26% 289 74
Panin Tower - Senayan City 26% 208 53
Kuningan City Mall 60% 893 536
AXA Tower - Kuningan City 60% 550 330
Green Bay Pluit Mall 100% 652 650
SoHo@MT Haryono 100% 52 52
Festival City Link Bandung 59% 496 292
Emporium Pluit Mall 53% 1,502 792
Lindeteves Trade Center 35% 87 30
Mal Plaza Balikpapan 65% 1,457 947
Pullman Hotel, Central Park 100% 558 558
Harris Hotel - Festival Citylink 59% 155 91
Sofitel, Nusa Dua, Bali 75% 1,059 795
Amaris Hotel - Thamrin City 100% 108 108
POP Hotel - Festival City Link 59% 137 81
Senayan City Apartments 26% 14 4
BnB Hotel, Kelapa Gading 51% 148 76
Mercure, Kelapa Gading 100% 221 221
Pullman Bandung 85% 274 233
IBIS Bandung 85% 263 223
Indigo Hotel Bali 51% 705 359
Pullman Vimala Hills 100% 539 539
Investment Properties Total Surplus/(Deficit) - 1 10,388
Property Developments
Green Bay Coast View 100% 0 0
Green Bay Sea View 100% 117 116
Green Bay Bay View 100% 0 0
Green Bay Kiosk 100% 0 0
Green Lake Sunter - Apartments 100% 0 0
Green Permata 70% 3 2
Grand Taruma - Karawang 90% 291 262
Central Park - Office 100% 0 0
Metro Park Residence 80% 70 56
Vimala Hills. Gadog 100% 719 718
SOHO@Pocy 100% 806 806
Madison Park 100% 165 165
SOHO@MT Haryono 100% 398 398
Garden Shopping Arcade 2 100% 0 0
Simprug (Pakubuwono Residence) 60% 789 473
Balikpapan 65% 338 220
Plaza Kenari Mas 50% 536 268
Makassar 51% 267 136
Batam 80% 359 287
Deli Medan 58% 1,481 859
Harco Glodok 69% 999 690
Klender 85% 359 305
Total PV of future development profits - 2 5,762
FY16F Net Cash (Debt) - Rpbn - 3 -5,413
RNAV (1+2+3) 10,737
Fully Diluted Share base (bn) 21

RNAV per share (Rp) 524
Source: DBS Vickers

Page 24
Company Guide
Agung Podomoro Land
Key Assumptions
FY Dec 2013A 2014A 2015F 2016F 2017F
Marketing sales 6,353 6,089 3,284 2,933 2,015
Segmental Breakdown
FY Dec 2013A 2014A 2015F 2016F 2017F
Revenues (Rpbn)
Apartments 2,632 2,323 1,913 1,975 2,471
Offices 155 132 0.0 0.0 0.0
House & shophouses 1,111 1,466 1,942 2,223 2,578
Rental - Hotel, office, & 1,004 1,376 1,354 1,684 1,953
Total 4,901 5,297 5,208 5,882 7,002

Gross Profit (Rpbn)
Apartments 1,250 1,071 866 1,170 1,696
Offices 78.4 73.1 0.0 0.0 0.0
House & shophouses 386 723 761 886 985
Rental - Hotel, office, & 641 788 820 995 1,186
Total 2,355 2,655 2,447 3,051 3,867

Gross Profit Margins (%)
Apartments 47.5 46.1 45.3 59.2 68.6
Offices 50.6 55.5 N/A N/A N/A More apartments
House & shophouses 34.7 49.3 39.2 39.9 38.2 portion in revenue to
Rental - Hotel, office, & 63.9 57.3 60.6 59.1 60.7 boost margins
Total 48.0 50.1 47.0 51.9 55.2
Income Statement (Rpbn)

FY Dec 2013A 2014A 2015F 2016F 2017F
Revenue 4,901 5,297 5,208 5,882 7,002
Cost of Goods Sold (2,546) (2,642) (2,761) (2,831) (3,135)
Gross Profit 2,355 2,655 2,447 3,051 3,867
Other Opng (Exp)/Inc (1,079) (1,225) (1,302) (1,471) (1,751)
Operating Profit 1,276 1,430 1,145 1,581 2,116
Other Non Opg (Exp)/Inc 136 103 156 176 210
Associates & JV Inc 94.7 90.6 95.1 99.8 105
Net Interest (Exp)/Inc (329) (393) (359) (472) (441)
Exceptional Gain/(Loss) 0.0 0.0 0.0 0.0 0.0
Pre-tax Profit 1,177 1,230 1,037 1,385 1,991
Tax (247) (246) (260) (294) (350)
Minority Interest (78.8) (129) (231) (462) (644)
Preference Dividend 0.0 (1.0) 0.0 0.0 0.0
Net Profit 851 856 545 629 997
Net Profit before Except. 851 856 545 629 997
EBITDA 1,728 1,944 1,752 2,224 2,804
Growth
Revenue Gth (%) 4.5 8.1 (1.7) 12.9 19.0
EBITDA Gth (%) 4.2 12.5 (9.9) 27.0 26.1
Opg Profit Gth (%) 1.2 12.1 (19.9) 38.1 33.9
Net Profit Gth (Pre-ex) (%) 4.9 0.5 (36.3) 15.4 58.5
Margins & Ratio
Gross Margins (%) 48.0 50.1 47.0 51.9 55.2
Opg Profit Margin (%) 26.0 27.0 22.0 26.9 30.2
Net Profit Margin (%) 17.4 16.2 10.5 10.7 14.2
ROAE (%) 15.8 14.1 8.2 8.9 12.7
ROA (%) 4.9 3.9 2.5 3.1 4.8
ROCE (%) 8.5 8.2 5.5 7.8 10.6
Div Payout Ratio (%) 15.2 14.4 15.0 15.0 15.0
Net Interest Cover (x) 3.9 3.6 3.2 3.4 4.8

Page 25
Company Guide
Agung Podomoro Land
Quarterly / Interim Income Statement (Rpbn)

FY Dec 3Q2014 4Q2014 1Q2015 2Q2015 3Q2015
Revenue 1,215 1,787 995 1,781 1,144

Cost of Goods Sold (549) (887) (456) (878) (604)
Gross Profit 666 899 539 903 540
Other Oper. (Exp)/Inc (382) (339) (342) (346) (374)
Operating Profit 284 561 198 557 166
Other Non Opg (Exp)/Inc 84.7 (14.3) 29.9 20.7 57.6
Associates & JV Inc 24.5 27.8 41.7 23.8 16.9
Net Interest (Exp)/Inc (135) (85.4) (65.3) (147) (131)
Pre-tax Profit 259 489 204 454 110
Tax (64.1) (60.3) (52.9) (90.1) (55.8)
Minority Interest (44.9) (80.3) (49.5) (114) (37.0)
Net Profit 150 348 101 250 17.0
Net profit bef Except. 150 348 101 250 17.0
EBITDA 393 574 269 602 240
Lowest quarterly earnings
ever
Growth
Revenue Gth (%) 7.6 47.0 (44.3) 78.9 (35.8)
EBITDA Gth (%) 72.0 46.1 (53.2) 123.6 (60.1)
Opg Profit Gth (%) 54.3 97.4 (64.8) 182.0 (70.2)
Net Profit Gth (Pre-ex) (%) 144.8 133.0 (70.9) 146.4 (93.2)
Margins
Gross Margins (%) 54.8 50.3 54.2 50.7 47.2
Opg Profit Margins (%) 23.4 31.4 19.8 31.3 14.5
Net Profit Margins (%) 12.3 19.5 10.2 14.0 1.5
Balance Sheet (Rpbn)

FY Dec 2013A 2014A 2015F 2016F 2017F
Net Fixed Assets 2,756 3,169 3,157 3,039 2,918

Invts in Associates & JVs 350 206 206 206 206
Other LT Assets 5,761 6,018 5,974 5,875 5,773
Cash & ST Invts 3,177 4,336 512 270 583
Inventory 5,045 7,480 7,730 7,880 7,980
Debtors 1,406 1,240 1,494 1,688 2,009
Other Current Assets 1,185 1,237 1,381 1,393 1,460
Total Assets 19,680 23,686 20,454 20,351 20,928
ST Debt 824 442 426 400 1,095

Creditor 1,141 1,242 1,181 1,210 1,357
Other Current Liab 5,699 7,318 3,396 3,156 2,546
LT Debt 4,635 6,042 6,158 5,283 4,083
Other LT Liabilities 168 212 212 212 212
Shareholder’s Equity 5,756 6,411 6,831 7,378 8,281
Minority Interests 1,457 2,018 2,250 2,712 3,355
Total Cap. & Liab. 19,680 23,686 20,454 20,351 20,928
Non-Cash Wkg. Capital 796 1,398 6,028 6,596 7,547

Net Cash/(Debt) (2,282) (2,148) (6,072) (5,413) (4,595)
Debtors Turn (avg days) 114.2 91.2 95.8 98.7 96.3
Creditors Turn (avg days) 149.4 195.3 179.2 179.2 179.2
Inventory Turn (avg days) 609.7 1,176.3 1,173.0 1,167.5 1,054.4 Increasing net gearing
Asset Turnover (x) 0.3 0.2 0.2 0.3 0.3 given aggresive capex
Current Ratio (x) 1.4 1.6 2.2 2.4 2.4 for major projects
Quick Ratio (x) 0.6 0.6 0.4 0.4 0.5
Net Debt/Equity (X) 0.3 0.3 0.7 0.5 0.4
Net Debt/Equity ex MI (X) 0.4 0.3 0.9 0.7 0.6
Capex to Debt (%) 1.3 (15.6) 65.2 7.0 15.3
Z-Score (X) 1.2 1.1 1.4 1.8 1.9

Page 26
Company Guide
Agung Podomoro Land
Cash Flow Statement (Rpbn)

FY Dec 2013A 2014A 2015F 2016F 2017F
Pre-Tax Profit 1,177 1,230 1,037 1,385 1,991

Dep. & Amort. 222 321 356 367 373
Tax Paid (247) (246) (260) (294) (350)
Assoc. & JV Inc/(loss) 0.0 0.0 0.0 0.0 0.0
Chg in Wkg.Cap. (1,203) (2,558) (639) (321) (308)
Other Operating CF (78.8) (129) (231) (462) (644)
Net Operating CF (130) (1,383) 262 675 1,061
Capital Exp.(net) (73.0) 1,010 (4,292) (396) (793)
Other Invts.(net) 142 144 0.0 0.0 0.0 Aggressive capex for
Invts in Assoc. & JV 0.0 0.0 0.0 0.0 0.0 major projects (i.e. Pluit
City reclamation
Div from Assoc & JV 0.0 0.0 0.0 0.0 0.0
project)
Other Investing CF 0.0 0.0 0.0 0.0 0.0
Net Investing CF 69.2 1,155 (4,292) (396) (793)
Div Paid (123) (123) (128) (81.8) (94.4)
Chg in Gross Debt 964 1,025 99.4 (901) (505)
Capital Issues 1.70 (73.9) 0.0 0.0 0.0
Other Financing CF 134 561 231 462 644
Net Financing CF 976 1,390 203 (521) 44.0
Currency Adjustments 0.0 0.0 0.0 0.0 0.0
Chg in Cash 915 1,162 (3,827) (241) 312
Opg CFPS (Rp) 52.4 57.3 43.9 48.6 66.8
Target Price & Ratings History
487 Rp
Closing T arget
S.No. Dat e Rat ing
2 Pric e Price
1: 26 J an 15 413 345 HOLD
437
4 2: 30 Mar 15 440 345 HOLD
3
3: 27 Apr 15 435 380 F ULLY V ALUED
387
1 4: 04 May 15 411 380 F ULLY V ALUED
5: 13 J ul 15 372 330 F ULLY V ALUED
5 6 6: 10 Aug 15 338 330 F ULLY V ALUED
337 7: 03 Sep 15 325 280 F ULLY V ALUED
8: 30 Oct 15 276 280 F ULLY V ALUED
7
287 8
237
Jan-15 May-15 Sep-15 Jan-16
Not e : Share price and Target price are adjusted for corporate actions.
Source: DBS Vickers

Page 27
Alam Sutera Realty
Edition 2 Version 1 | Bloomberg: ASRI IJ | Reuters: ASRI.JK Refer to important disclosures at the end of this report
HOLD Keeping Heads Above Water

Last Traded Price: Rp331 (JCI : 4,525.92) Maintain HOLD call with lower TP. We lowered our RNAV
Price Target : Rp325 (2% downside) (Prev Rp355) assumptions by 8% to Rp795/sh (from Rp862/sh previously) to
reflect the latest marketing sales achievement, sustained high
Potential Catalyst: Better demand for Pasar Kemis township net debt and the revised risk premium (to 5.5%) for WACC
Where we differ: We are one of few brokers with a neutral call on the calculation. Subsequently, our TP is cut to Rp325, implying no
stock upside to current level.
Analyst Dependency in commercial land pre-sales to continue.
Edward Ariadi Tanuwijaya +6221 3003 4932 Our marketing sales forecast is quite conservative with just 5%
edward.tanuwijaya@id.dbsvickers.com CAGR between 2014-2017F. ASRI still has around 167ha of
commercial land bank to support its marketing sales. In
addition, we expect better marketing sales for The Tower office
space in CBD area as deals with a few multinational companies
Price Relative are getting closer to conclusion. The two MoUs with separate
Rp Relative Index
investors to co-develop 20ha of land in Serpong and 300ha in
214
Pasar Kemis will be a bonus if they materialise. ASRI plans to
1,184.4
1,084.4 194
984.4
884.4
174
154
take minority stakes (25-30%) in those JVs. The sale of the land
784.4
684.4
134 will reap about Rp10.6tn in marketing sales.
Balance sheet to remain strectched. Despite completing the
114
584.4
484.4 94
384.4 74
buyback of US$150m high-yield bonds, the large capex
284.4 54
Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 required for its existing high-rise projects means that ASRI has
Alam Sutera Realty (LHS) Relative JCI INDEX (RHS) to draw down more loan facilities. As of 9M15, ASRI’s net
Forecasts and Valuation
gearing was 111% and it is expected to remain high.
FY Dec (Rpbn) 2014A 2015F 2016F 2017F Valuation:
Revenue 3,631 3,791 4,027 4,246 Our target price of Rp325 is at a 59% discount to our base-
EBITDA 2,077 1,845 1,874 1,907 case RNAV (based on its adjusted 8-year average discount to
Pre-tax Profit 1,485 1,551 1,489 1,509 RNAV). ASRI is currently trading at a 58% discount to RNAV
Net Profit 1,196 1,209 1,138 1,144
Net Pft (Pre Ex.) 1,196 1,209 1,138 1,144 (narrower than its 8-year average of 66%) and only 5.7x FY16F
EPS (Rp) 60.9 61.5 57.9 58.2 PE (at -1.5SD of mean forward PE).
EPS Pre Ex. (Rp) 60.9 61.5 57.9 58.2 Key Risks to Our View:
EPS Gth Pre Ex (%) 36 1 (6) 1 Better news and execution from Pasar Kemis development.
Net Pft Gth (Pre-ex) (%) 36 1 (6) 1
Diluted EPS (Rp) 60.9 61.5 57.9 58.2 The MoU with Glory Fund Management Group to form a JV
Net DPS (Rp) 7.00 12.2 12.3 11.6 (with ASRI holding a minority stake) and co-develop 300ha in
BV Per Share (Rp) 281 324 376 423 Pasar Kemis is positive news for ASRI’s Pasar Kemis project
PE (X) 5.4 5.4 5.7 5.7
(stalled by weak demand since launch in Sep 2013). If the deal
PE Pre Ex. (X) 5.4 5.4 5.7 5.7
P/Cash Flow (X) nm 4.7 81.3 nm is successful, ASRI’s marketing sales from Pasar Kemis will
EV/EBITDA (X) 6.1 6.7 7.5 8.1 surge in the near term and could exceed our expectations, and
Net Div Yield (%) 2.1 3.7 3.7 3.5 over the long term, land value could appreciate faster than we
P/Book Value (X) 1.2 1.0 0.9 0.8
Net Debt/Equity (X) 0.8 0.7 0.8 0.8 currently expect.
ROAE (%) 23.7 20.3 16.5 14.6 At A Glance
Issued Capital (m shrs) 19,649
Earnings Rev (%): (4) (18) (36)
Consensus EPS (Rp): 62.1 67.3 76.1 Mkt. Cap (Rpbn/US$m) 6,504 / 469
Other Broker Recs: B: 12 S: 2 H: 8 Major Shareholders
Tangerang Fajar (%) 16.7
Source of all data: Company, DBS Vickers, Bloomberg Finance L.P. Manunggal Prime Develop. (%) 11.9
Selaras Citamanunggal (%) 11.4
Free Float (%) 50.1

ed: xxx / sa: MA
Company Guide
Alam Sutera Realty
Marketing sales
5,232
4,821
4,900
CRITICAL DATA POINTS TO WATCH 4,256 4,314
4,200
3,500 3,277
Earnings Drivers: 2,800
Marketing sales achievement 2,100
Property developers recognise non-recurring revenue from 1,400
marketing sales in the prevailing years. We expect revenue to 700
grow slowly at 5% over 2014-17F, although marketing sales 0
expanded at a 15% CAGR over 2011-14 and are expected to 2013A 2014A 2015F 2016F 2017F
grow by a 7% CAGR over 2014-17F.

Sales Trend
Rp bn
New township Pasar Kemis (about thrice the size of its 60.0%
4,000
maturing Serpong township in West Jakarta, located 17km 3,500 50.0%
from Serpong) will be the key growth driver going forward, 3,000 40.0%
after stumbling since launch on 15 Sep 2013. 2,500
2,000 30.0%
Limited growth of recurring revenues from investment 1,500 20.0%

properties 1,000
10.0%
ASRI generated c.10% of consolidated revenue from 500
0 0.0%
investment properties such as retail malls, office leases and 2013A 2014A 2015F 2016F 2017F
cultural park. Despite expected strong growth of cultural park Total Revenue Revenue Growth (%) (YoY)
revenue from Garuda Wisnu Kencana (GWK) in Bali, we see
limited upside to recurring revenues from current levels. Profitability Trend
Rp bn
Reliant on land sales to generate cashflow

1,876
ASRI’s marketing sales have been mainly driven by the sale of
commercial block land in the Serpong township. This trend 1,676
should continue as ASRI has to generate more cashflow to 1,476
serve its current debt. Its new frontier township, the Pasar
Kemis development, is not doing as well as expected. 1,276
Therefore, the current high gross profit margins will not be 1,076
sustainable going forward.

876
2013A 2014A 2015F 2016F 2017F
Need to monitor costs
Operating EBIT Pre tax Profit Net Profit
SG&A expenses (as % of revenue) have trended up with
sharp increase in key components (such as commission and Margins Trend
salaries, and wages & allowance). Good control of SG&A 57.0%
expenses is crucial if the developer wants to grow earnings 52.0%
during this challenging period. 47.0%
42.0%
Potential value from Bali cultural park development
37.0%
ASRI acquired Garuda Wisnu Kencana (GWK) in 2012. ASRI is
32.0%
still working on the master plan for GWK because it has to
27.0%
first complete the huge statue inside the cultural park. There
22.0%
is potential upside from ~30-ha area surrounding the cultural 2013A 2014A 2015F 2016F 2017F
park. Currently, we are assigning minimum value to this Operating Margin % Net Income Margin %
development in our RNAV calculation.

Disc to RNAV trend
Non-cash accounting forex loss to wipe out net earnings on 100%
paper 90%
Although the US$ global bonds are hedged to maturity, ASRI 80%
70%
faces a staggering non-cash outflow accounting forex loss Average 66%
60%
which practically flushed most of it operating income. FY15 50%
net loss (without excluding the forex effect) is inevitable if IDR 40%
continues to weaken against US$. 30%
20%
10%
Aug-08
Aug-09
Aug-10
Aug-11
Aug-12
Aug-13
Aug-14
Aug-15
Dec-07
Apr-08
Dec-08
Apr-09
Dec-09
Apr-10
Dec-10
Apr-11
Dec-11
Apr-12
Dec-12
Apr-13
Dec-13
Apr-14
Dec-14
Apr-15
Dec-15

Page 29
Company Guide
Alam Sutera Realty

0.3
Balance Sheet: 1.00
Net gearing to remain at high level 0.3
ASRI has been gearing up since 2012, when it decided to 0.80
raise USD bonds at high coupon rate for aggressive 0.60 0.2
acquisitions (i.e. Pasar Kemis township and cultural park 0.40

Garuda Wisnu Kencana in Bali). Despite completing the 0.2
0.20
buyback of US$150m high-yield bonds, large capex required
for its existing high-rise projects means that ASRI has to draw 0.00 0.1
2013A 2014A 2015F 2016F 2017F
down more loan facilities. Therefore, net gearing will still Gross Debt to Equity (LHS) Asset Turnover (RHS)
hover close to 100% for the next few years. As of 9M15,
Capital Expenditure
ASRI’s net gearing was 111%.
Rp
3,500.0
Marketing sales achievement and pipeline 2,500.0
Marketing sales achievement is a good indicator for all 2,000.0
Indonesian property developers (including ASRI) as it gives 1,500.0
leading indication for the revenue generation for the next 2-3 1,000.0
years (depending on the revenue recognition). 500.0
0.0
2013A 2014A 2015F 2016F 2017F
Possible increase in hedging cost from US$ debt Capital Expenditure (-)
ASRI is exposed to IDR weakness due to its global US$ bonds.

ROE (%)
Despite recent efforts to trim its expensive debt and existing
hedging instruments, ASRI still has US$460m worth of bonds
20.0%
on its balance sheet; it has hedged the principal through call
spreads. Hedging cost could rise to beyond reasonable levels 15.0%
if the USD/IDR exchange rate breaches the call spread.

10.0%
Key Risks:
5.0%
approval and balanced ratio rules, when strictly 0.0%
implemented, could potentially slow property demand. 2013A 2014A 2015F 2016F 2017F
Liquidity tightening could dampen demand further.

Forward PE Band (x)
(x)
Potential interest rate hike. Property demand is sensitive to
22.6
and is negatively correlated to interest rate movements.
17.6 +2sd: 18x
Exposure to US$, both financially (i.e. debt in balance sheet) +1sd: 14.2x
and operationally (i.e. higher material cost especially for 12.6
Avg: 10.5x
high-rise projects with higher US$-linked items) is a risk amid
7.6
the weak IDR environment. ‐1sd: 6.7x
2.6 ‐2sd: 2.9x
Strict implementation on potential revision to housing Jan-12 Jan-13 Jan-14 Jan-15
development balance ratio (of low, middle and luxury PB Band (x)
houses). If implemented strictly and retroactively, this could (x)
potentially mean additional costs for property developers 5.5
and more complicated property development planning.

4.5 +2sd: 4.52x
Company Background 3.5 +1sd: 3.54x
Upscale township developer in Serpong and Pasar Kemis 2.5 Avg: 2.57x

(west Jakarta suburb). ASRI is diversifying its revenue base
‐1sd: 1.59x
with more commercial properties such as retail malls and 1.5
office towers. 0.5 ‐2sd: 0.61x


Page 30
Company Guide
Alam Sutera Realty
ASRI: RNAV summary
Portfolio Value (Rpbn) % of total Landbank (ha)
Investment Property 842 4%

Mall @ Alam Sutera 487 2%
Office for lease (CBD) 354 2%
Garuda Wisnu Kencana (Bali) 0 0%
Development properties & Landbank 20,002 96%

Serpong + North Serpong 10,502 47% 624
Pasar Kemis 8,908 40% 1,621
Strata office (CBD) 1,332 6%
Kota Ayodhya 420 2% 2
Cianjur 96 0% 79
Tanjung Pinang (Riau) 28 0% 75
Puncak (South Jakarta suburb) 45 0% 9
22,236
Net Debt 6,548
RNAV 15,624
Fully Diluted Share base (bn) 19.649

Fully Diluted RNAV per share 795
Source: DBS Vickers

Page 31
Company Guide
Alam Sutera Realty
Key Assumptions
FY Dec 2013A 2014A 2015F 2016F 2017F
Marketing sales 4,821 4,256 3,277 4,314 5,232
Segmental Breakdown
FY Dec 2013A 2014A 2015F 2016F 2017F
Revenues (Rpbn)
Land plots 1,579 1,616 2,357 1,974 2,286
Houses 1,452 1,694 1,012 1,387 1,019
Office Tower 422 2.68 38.3 258 520
Commercial 54.7 52.4 55.0 57.7 60.6 Large portion of revenue
Others 176 266 329 350 360 will continue to come
from township
Total 3,684 3,631 3,791 4,027 4,246
development
Gross Profit (Rpbn)
Land plots 740 1,259 1,650 1,283 1,371
Houses 817 968 556 763 561
Office Tower 222 1.49 21.0 142 286
Commercial 40.5 40.1 41.2 43.3 45.5
Others 19.0 137 49.4 53.0 53.9
Total 1,837 2,406 2,318 2,284 2,317
Land plots 46.8 77.9 70.0 65.0 60.0
Houses 56.2 57.1 55.0 55.0 55.0
Office Tower 52.5 55.6 55.0 55.0 55.0
Commercial 74.0 76.5 75.0 75.0 75.0
Others 10.8 51.6 15.0 15.1 14.9
Total 49.9 66.3 61.1 56.7 54.6

FY Dec 2013A 2014A 2015F 2016F 2017F
Revenue 3,684 3,631 3,791 4,027 4,246
Gross Profit 1,837 2,406 2,318 2,284 2,317
Other Opng (Exp)/Inc (304) (399) (550) (503) (531)
Other Non Opg (Exp)/Inc (363) (375) (87.4) (96.2) (96.2)
Net Interest (Exp)/Inc (88.4) (147) (129) (196) (181)
Pre-tax Profit 1,082 1,485 1,551 1,489 1,509
Tax (192) (209) (218) (232) (244)
Interest expense to stay high
Minority Interest (12.8) (79.5) (124) (119) (121)
despite having shaved-off
Preference Dividend 0.0 0.0 0.0 0.0 0.0 US$150m of high-coupon
Net Profit 877 1,196 1,209 1,138 1,144 global bonds in April 2015 as
Net Profit before Except. 877 1,196 1,209 1,138 1,144 ASRI is expected to
EBITDA 1,593 2,077 1,845 1,874 1,907 drawdown more loan
Growth facilities for high rise
Revenue Gth (%) 50.6 (1.4) 4.4 6.2 5.4 development
EBITDA Gth (%) 25.8 30.4 (11.1) 1.6 1.8
Opg Profit Gth (%) 22.3 30.9 (11.9) 0.7 0.3
Net Profit Gth (Pre-ex) (%) (26.5) 36.4 1.1 (5.9) 0.5
Margins & Ratio
Gross Margins (%) 49.9 66.3 61.1 56.7 54.6
ROAE (%) 20.5 23.7 20.3 16.5 14.6
ROA (%) 6.9 7.6 6.5 5.3 4.9
ROCE (%) 14.9 15.0 10.9 9.5 8.5
Div Payout Ratio (%) 24.1 15.7 20.0 20.0 20.0

Page 32
Company Guide
Alam Sutera Realty

FY Dec 3Q2014 4Q2014 1Q2015 2Q2015 3Q2015
Revenue 879 807 991 742 437

Gross Profit 628 700 766 606 299
Other Oper. (Exp)/Inc (111) (107) (111) (128) (95.6)
Other Non Opg (Exp)/Inc (160) 80.0 (248) (136) (473)
Net Interest (Exp)/Inc (32.8) (31.1) (40.5) (23.3) (30.8)
Exceptional Gain/(Loss) (17.8) (141) (20.1) (21.9) (23.7)
Pre-tax Profit 307 500 347 296 (325)
Tax (48.2) (63.2) (26.7) (80.6) (55.1)
Minority Interest (6.4) (8.3) (39.5) (41.8) (12.0)
Net Profit 252 429 280 174 (392)
Net profit bef Except. 270 570 301 196 (368)
EBITDA 517 593 655 478 203
Growth
Revenue Gth (%) (18.2) (8.1) 22.7 (25.1) (41.1)
EBITDA Gth (%) (8.0) 14.6 10.5 (27.1) (57.5)
Opg Profit Gth (%) (8.0) 14.6 10.5 (27.1) (57.5)
Net Profit Gth (Pre-ex) (%) 12.8 111.3 (47.3) (34.9) (288.0)
Margins
Gross Margins (%) 71.5 86.7 77.3 81.7 68.3
Net Profit Margins (%) 28.7 53.1 28.3 23.4 (89.6)

FY Dec 2013A 2014A 2015F 2016F 2017F
Net Fixed Assets 1,888 2,036 2,345 3,001 3,531

Invts in Associates & JVs 0.0 0.0 0.0 0.0 0.0
Other LT Assets 7,439 8,879 9,172 10,181 10,367
Cash & ST Invts 1,337 1,261 2,489 1,842 750
Inventory 3,237 3,751 5,186 6,636 8,358
Debtors 82.2 130 13.1 13.9 14.7
Other Current Assets 444 867 867 867 867
Total Assets 14,428 16,924 20,072 22,543 23,888
ST Debt 0.0 0.0 0.0 0.0 0.0

Creditor 165 161 53.2 63.0 69.7
LT Debt 4,587 6,606 7,360 8,390 8,426
Other LT Liabilities 60.1 107 107 107 107
Minority Interests 174 253 377 496 617
Total Cap. & Liab. 14,428 16,924 20,072 22,543 23,888
Non-Cash Wkg. Capital (686) 908 801 1,953 3,402

Net Cash/(Debt) (3,249) (5,346) (4,871) (6,548) (7,675)
Inventory Turn (avg days) 627.8 1,185.2 1,356.2 1,468.8 1,687.4
Asset Turnover (x) 0.3 0.2 0.2 0.2 0.2 Net gearing to remain
Current Ratio (x) 1.1 1.6 1.6 1.7 1.7 high at current levels
Quick Ratio (x) 0.3 0.4 0.5 0.3 0.1 despite the reduction
Net Debt/Equity (X) 0.6 0.8 0.7 0.8 0.8 in global bonds
Capex to Debt (%) 66.1 26.3 9.2 21.0 9.9
Z-Score (X) 1.4 1.4 1.4 1.4 1.5

Page 33
Company Guide
Alam Sutera Realty

FY Dec 2013A 2014A 2015F 2016F 2017F
Pre-Tax Profit 1,082 1,485 1,551 1,489 1,509

Dep. & Amort. 59.3 69.9 77.1 93.4 121
Tax Paid (192) (209) (218) (232) (244)
Assoc. & JV Inc/(loss) 0.0 0.0 0.0 0.0 0.0
Chg in Wkg.Cap. (166) (1,595) 107 (1,152) (1,450)
Other Operating CF (12.8) (79.5) (124) (119) (121)
Net Operating CF 770 (329) 1,394 80.0 (185)
Capital Exp.(net) (3,034) (1,739) (679) (1,759) (836)
Other Invts.(net) 0.0 0.0 0.0 0.0 0.0
Invts in Assoc. & JV 10.0 (19.5) 124 119 121
Div from Assoc & JV 0.0 0.0 0.0 0.0 0.0
Other Investing CF (541) 128 0.0 0.0 0.0
Net Investing CF (3,564) (1,630) (554) (1,640) (715)
Div Paid (287) (138) (239) (242) (228)
Chg in Gross Debt 2,406 2,020 754 1,030 35.4
Capital Issues 0.0 0.0 0.0 0.0 0.0
Other Financing CF 0.0 0.0 (125) 125 0.0
Net Financing CF 2,119 1,882 390 913 (192)
Chg in Cash (675) (76.7) 1,229 (647) (1,092)
Opg CFPS (Rp) 47.6 64.4 65.5 62.7 64.4
700 Rp
Closing T arget
S.No. Dat e Rat ing
4 Pric e Price
650
1: 20 J an 15 580 490 F ULLY V ALUED
2 5
600 2: 26 J an 15 595 490 F ULLY V ALUED
6 3: 30 Mar 15 555 490 F ULLY V ALUED
550 1 4: 27 Apr 15 640 560 F ULLY V ALUED
3 5: 04 May 15 650 560 F ULLY V ALUED
500 6: 13 J ul 15 560 570 HOLD
7 7: 10 Aug 15 505 570 HOLD
450
8: 03 Sep 15 344 355 HOLD
9: 02 Nov 15 376 355 HOLD
400
8
350 9
300
Source: DBS Vickers

Page 34
Bumi Serpong Damai
Edition 2 Version 1 | Bloomberg: BSDE IJ | Reuters: BSDE.JK Refer to important disclosures at the end of this report
BUY (Upgrade from HOLD) Large Yet Flexible

Last Traded Price: Rp1,790 (JCI : 4,525.92) Upgrade to BUY as our top pick with sizeable upside. We raised
Price Target : Rp2,100 (17% upside) (Prev Rp1,595) our RNAV assumptions by 14% to Rp3,626/sh (from Rp3,183/sh
previously) to reflect the latest marketing sales achievement,
Potential Catalyst: Venturing outside Greater Jakarta expected gearing and the revised risk premium (to 5.5%) for
Where we differ: Our top pick in property sector WACC calculation. Subsequently, our TP is boosted to Rp2,100,
offering a sizeable upside from current level. BSDE is our top pick
Analyst
Edward Ariadi Tanuwijaya +6221 3003 4932 in the sector.
Huge land bank offers flexibility. BSDE’s main project BSD City is
still the main driver for marketing sales with more than 60%
contribution going forward. Its huge land bank (at c.3,000ha)
offers flexibility as BSDE can assess property market segment
Price Relative (given the still expected challenging property market), select the
Rp Relative Index
222 appropriate segment and develop townships accordingly.
2,255.0
Decent marketing sales growth and reasonably strong balance
202
2,055.0
182
1,855.0
162 sheet for future expansion.
1,655.0
1,455.0
142
Our marketing sales forecast is still decent and conservative with
122
1,255.0
1,055.0 102
6.5%/7.6%/7.7% growth in FY15/16/17F. This should translate
855.0 82 into decent sustainable earnings growth beyond 2017 too. BSDE
Dec-11 Dec-12 Dec-13 Dec-14 Dec-15
also possesses a reasonably strong balance sheet (with just 4% net
Bumi Serpong Damai (LHS) Relative JCI INDEX (RHS)
gearing as of 9M15 aided by rich cash position) despite being
Forecasts and Valuation aggressive in fund raising (both debt and equity) for the past two
FY Dec (Rpbn) 2014A 2015F 2016F 2017F years. This is mainly due to BSDE’s intention to make several
Revenue 5,572 6,584 7,288 8,158
EBITDA 4,397 3,359 3,755 4,204
project or stake acquisitions when the opportunities arise.
Pre-tax Profit 4,306 2,964 3,200 3,855 Valuation:
Net Profit 3,821 2,381 2,561 3,117
Net Pft (Pre Ex.) 3,681 2,381 2,561 3,117 Our target price of Rp2,100 is at a 44% discount to our base-case
EPS (Rp) 208 124 133 162 RNAV (based on its adjusted 8-year average discount to RNAV).
EPS Pre Ex. (Rp) 200 124 133 162 BSDE is currently trading at a 51% discount to RNAV (close to 8-
EPS Gth Pre Ex (%) 35 (41) 8 22
year average of 52%) and 13.5x FY16F PE (at around +1SD of its
Net Pft Gth (Pre-ex) (%) 35 (38) 8 22
Diluted EPS (Rp) 208 124 133 162 mean forward PE).
Net DPS (Rp) 15.0 15.0 24.7 26.6
Key Risks to Our View:
BV Per Share (Rp) 835 906 1,015 1,150
PE (X) 8.6 14.5 13.5 11.1 Slower take-up at BSDE’s launches. Weaker property affordability,
PE Pre Ex. (X) 8.9 14.5 13.5 11.1 potential increase in interest rate and stricter implementations of
P/Cash Flow (X) 10.9 12.3 10.0 7.9 high-rise developments could prompt delays in launching pipeline
EV/EBITDA (X) 8.3 11.8 10.5 9.1
Net Div Yield (%) 0.8 0.8 1.4 1.5 and cause marketing sales to miss our expectations..
P/Book Value (X) 2.1 2.0 1.8 1.6
Net Debt/Equity (X) 0.0 0.1 0.1 0.0 At A Glance
Earnings Rev (%): (7) (6) (6) Mkt. Cap (Rpbn/US$m) 34,452 / 2,486
Consensus EPS (Rp): 139 150 167 Major Shareholders
Other Broker Recs: B: 24 S: 1 H: 5 Paraga Artamida (%) 25.3
Ekacentra Usahamaju (%) 25.2
Source of all data: Company, DBS Vickers, Bloomberg Finance L.P. Warner Invest. Bhd (%) 10.2
Free Float (%) 26.1

ed: TH / sa: MA
Company Guide
Bumi Serpong Damai
Marketing sales
7,871
7,000 6,790
6,377
6,000
Earnings Drivers:
5,000
Marketing sales achievement
4,000
Property developers recognise non-recurring revenue from
3,000
marketing sales in the prevailing years. We expect revenue to
2,000
grow by a 14% CAGR over 2014-17F given that marketing 1,000
sales grew by a 23% CAGR over 2011-14, and are expected 0
to grow by a 7.2% CAGR over 2014-17F.. 2013A 2014A 2015F 2016F 2017F
Sales Trend
BSD City still has 3,000ha of land bank (good for another
Rp bn
25-30 years of development), and that will remain the major 8,000 60.0%
driver of marketing sales going forward. We expect BSD City 7,000 50.0%
to continue to contribute more than 60% of total marketing 6,000
40.0%
5,000
sales, albeit slipping going forward with the emergence of
4,000 30.0%
other projects.
3,000 20.0%
2,000
BSDE has also started to expand outside Greater Jakarta with 1,000
10.0%
ventures in East of Indonesia cities such as Benowo (East 0 0.0%

2013A 2014A 2015F 2016F 2017F
Java), Balikpapan and Samarinda (East Kalimantan).
Growing recurring revenue from investment properties

Profitability Trend
BSDE generated c.15% of its consolidated revenue from its Rp bn
investment properties such as retail malls, hotel and office 4,181
leases. The recent addition of several investment properties 3,981
suggests BSDE intention to beef up the portion to c.20% 3,781
3,581
over the long term to ensure earnings sustainability. 3,381
3,181
Better product mix leads to better margins 2,981
BSDE’s revenues are still heavily reliant on the sale of landed 2,781
residential houses which had commanded high gross profit 2,581
2,381
margins (>70%) in the past two years. But, with more high- 2013A 2014A 2015F 2016F 2017F
rise projects in its portfolio, we have to monitor revenue mix Operating EBIT Pre tax Profit Net Profit
and profitability going forward.

Margins Trend
Good control of operating costs 68.0%

BSDE has been able to keep SG&A expenses (as % of 63.0%
revenue) under control, despite the more-than-average 58.0%
increase in its two key items in SG&A expenses; “advertising 53.0%
& promotion” for the purpose of attracting more property 48.0%
43.0%
demand during this challenging period and “salaries” for
38.0%
both existing and new employees to run projects in its
33.0%
portfolios. 2013A 2014A 2015F 2016F 2017F
Operating Margin % Net Income Margin %
Disc to RNAV trend

100%
90%
80%
70%
60%
Average 52%
50%
40%
30%
20%
Jun-08
Jun-09
Jun-10
Jun-11
Jun-12
Jun-13
Jun-14
Jun-15
Dec-08
Dec-09
Dec-10
Dec-11
Dec-12
Dec-13
Dec-14
Dec-15

Page 36
Company Guide
Bumi Serpong Damai

Balance Sheet: 0.45 0.3
Healthy balance sheet despite gearing up 0.40

0.3
BSDE had been in a net cash position from 2008 to 2013 as 0.35
strong cash generation outpaced annual capex requirements. 0.30

0.3
0.25
The aggressive fund-raising (for the opportunistic purpose of 0.20
either project or stake acquisitions) has pushed its balance 0.15
0.2
sheet to a small net debt position (4% net gearing as of 0.10 0.2
9M15). 0.05
0.00 0.2
2013A 2014A 2015F 2016F 2017F
Exposure to US$ debt balanced by US$ holding Gross Debt to Equity (LHS) Asset Turnover (RHS)
BSDE’s balance sheet is exposed to USD/IDR volatility after the

Capital Expenditure
issuance of 5-year US$225m bonds (at 6.75% annual coupon Rp
rate), which represents 50% of its interest-bearing debt. 4,500.0
4,000.0
However, BSDE’s large cash position enables it to have 3,500.0
sufficient US$ in cash balance to lessen accounting non-cash 3,000.0
forex accounting difference. 2,500.0

2,000.0
1,500.0
Marketing sales achievement and pipeline 500.0

0.0
Marketing sales achievement is a good indicator for all 2013A 2014A 2015F 2016F 2017F
Indonesia property developers (including BSDE) as it gives Capital Expenditure (-)
leading indication for the revenue generation for the next 2-3 ROE (%)
years (depending on the revenue recognition). 30.0%
25.0%
Key Risks:
20.0%
implemented, could potentially slow property demand. 10.0%

5.0%
Potential interest rate hike. Property demand is sensitive to 0.0%

2013A 2014A 2015F 2016F 2017F
and is negatively correlated to interest rate movements.
Forward PE Band (x)
Exposure to US$, both financially (i.e. debt in balance sheet) (x)
18.9
and operationally (i.e. higher material cost especially for
high-rise projects with higher US$-linked items) is a risk amid 16.9 +2sd: 16.7x
the weak IDR environment. 14.9

+1sd: 13.9x
12.9
Strict implementation on potential revision to housing 10.9 Avg: 11.1x
development balance ratio (of low, middle and luxury 8.9

‐1sd: 8.3x
houses). If implemented strictly and retroactively, this could 6.9

‐2sd: 5.5x
and more complicated property development planning.
PB Band (x)
Company Background 4.8
(x)
BSDE is Indonesia's largest landed residential property 4.3
developer. Its core project is the development of an
3.8
integrated satellite city 15km west of Jakarta. BSDE enlarged +2sd: 3.53x
3.3
its investment property portfolio after consolidating DUTI, +1sd: 3.03x
2.8
SMT, & SMW. Avg: 2.53x
2.3
‐1sd: 2.04x
1.8
‐2sd: 1.54x
1.3

Page 37
Company Guide
Bumi Serpong Damai
BSDE: RNAV summary
BSDE portfolio Stake owned Land bank area (ha) RNAV
Investment properties
Wisma BII Jakarta, Surabaya, Medan 60% 604
Plaza BII Tower II & III Jakarta 63% 1,430
Le Grandeur Mangga Dua 85% 514
Le Grandeur Balikpapan 85% 168
DP Semarang Mall 100% 268
Rasuna Epicentrum Walk 100% 297
Stakes in Plaza Indonesia 34% 5,133
Commercial (ITCs) 89% 2,186
Investment & Commercial Properties Total Surplus/(Deficit) (Rpbn) - 1 10,600
Planned development
BSD City 100% 1,750 26,321
Grand Wisata, Bekasi 46% 580 499
Legenda Wisata, Cibubur 85% 15 14
Kota Bunga, Cipanas 85% 16 5
Banjar Wijaya, Tangerang 89% 40 259
Taman Permana Buana, West Jakarta 68% 10 83
Kota Wisata 85% 147 552
Grand City, Balikpapan 100% 217 982
High-rise developments
Kuningan Apartment 100% 3 2,407
Raw land bank

BSD City - Phase 3 100% 1,674 28,267
Benowo, Surabaya 68% 287 604
Duri Pulo, Central Jakarta 85% 15 668
Lenteng Agung, South Jakarta 85% 5 24
MT Haryono, South Jakarta 36% 1 29
Land bank surplus value (Rpbn) - 2 50,554
FY16F Net cash (debt) - in Rpbn - 3 (1,525)
RNAV (1+2+3) (Rpbn) 69,789

Fully diluted share base (bn) 19.247
RNAV per share (Rp) 3,626
Source: DBS Vickers

Page 38
Company Guide
Bumi Serpong Damai
Key Assumptions
FY Dec 2013A 2014A 2015F 2016F 2017F
Marketing sales 7,101 6,377 6,790 7,305 7,871
Segmental Breakdown
FY Dec 2013A 2014A 2015F 2016F 2017F
Revenues (Rpbn)
Land, house, shophouses, 4,903 4,265 5,967 6,471 7,290
Land and strata title 1.30 356 0.0 0.0 0.0 Land, houses, shophouses
Rental 461 581 217 375 404 remain the revenue driver
Hotel 121 102 119 147 154 with more than 90%
Others 91.8 102 108 113 119 contribution
Total 5,741 5,572 6,584 7,288 8,158
Gross Profit (Rpbn)
Land, house, shophouses, 3,413 3,145 4,177 4,530 5,103
Land and strata title 1.06 146 0.0 0.0 0.0
Generating high
Rental 419 510 190 329 355 margins consistently
Hotel 78.2 63.6 65.6 80.7 84.8
Others 91.8 102 108 113 119
Total 4,166 4,132 4,713 5,235 5,852
Land, house, shophouses, 69.6 73.7 70.0 70.0 70.0
Land and strata title 81.7 40.9 N/A N/A N/A
Rental 90.9 87.7 87.7 87.7 87.7
Hotel 64.5 62.1 55.0 55.0 55.0
Others 100.0 100.0 100.0 100.0 100.0
Total 72.6 74.1 71.6 71.8 71.7

FY Dec 2013A 2014A 2015F 2016F 2017F
Revenue 5,741 5,572 6,584 7,288 8,158
Gross Profit 4,166 4,132 4,713 5,235 5,852
Other Opng (Exp)/Inc (1,256) (1,500) (1,744) (1,931) (2,162)
Other Non Opg (Exp)/Inc 219 (32.6) 165 182 204
Associates & JV Inc 47.1 1,667 47.1 47.1 47.1
Net Interest (Exp)/Inc 7.44 (99.2) (216) (333) (86.6)
Exceptional Gain/(Loss) 96.1 140 0.0 0.0 0.0
Pre-tax Profit 3,279 4,306 2,964 3,200 3,855
Tax (373) (310) (362) (401) (449)
Minority Interest (214) (176) (221) (238) (290)
Preference Dividend 0.0 0.0 0.0 0.0 0.0
Net Profit 2,691 3,821 2,381 2,561 3,117
Net Profit before Except. 2,595 3,681 2,381 2,561 3,117
EBITDA 3,301 4,397 3,359 3,755 4,204
Growth
Revenue Gth (%) 54.0 (3.0) 18.2 10.7 11.9
EBITDA Gth (%) 96.6 33.2 (23.6) 11.8 11.9
Opg Profit Gth (%) 103.3 (9.6) 12.8 11.3 11.7
Margins & Ratio
Gross Margins (%) 72.6 74.1 71.6 71.8 71.7
ROAE (%) 29.7 29.9 14.5 13.9 15.0
ROA (%) 13.7 15.0 7.6 7.3 8.3
ROCE (%) 17.2 11.9 10.0 9.9 10.5
Div Payout Ratio (%) 20.4 10.2 7.6 20.0 20.0
Net Interest Cover (x) NM 26.5 13.7 9.9 42.6

Page 39
Company Guide
Bumi Serpong Damai

FY Dec 3Q2014 4Q2014 1Q2015 2Q2015 3Q2015
Revenue 1,483 1,666 1,624 1,743 1,266

Gross Profit 1,165 1,174 1,281 1,230 948
Other Non Opg (Exp)/Inc 9.79 (152) 58.8 11.6 64.7
Associates & JV Inc 28.8 1,614 3.86 (3.4) 37.1
Net Interest (Exp)/Inc (23.2) (34.1) (61.6) (24.2) (111)
Exceptional Gain/(Loss) 0.0 (1,418) 10.6 10.9 (10.6)
Pre-tax Profit 758 755 936 776 446
Tax (83.6) (84.9) (91.1) (97.5) (73.8)
Net Profit 642 613 795 620 314
Net profit bef Except. 642 2,031 785 609 324
EBITDA 781 2,207 987 789 567
Growth
Revenue Gth (%) 27.7 12.3 (2.5) 7.3 (27.3)
EBITDA Gth (%) 21.7 182.4 (55.3) (20.1) (28.1)
Opg Profit Gth (%) 40.8 0.3 24.1 (15.6) (40.4)
Margins
Gross Margins (%) 78.6 70.5 78.9 70.6 74.9

FY Dec 2013A 2014A 2015F 2016F 2017F
Net Fixed Assets 2,941 3,323 4,236 5,014 5,752

Invts in Associates & JVs 523 5,332 5,332 5,332 5,332
Other LT Assets 7,258 8,384 11,216 13,024 14,796
Cash & ST Invts 5,461 3,521 5,621 4,546 5,934
Inventory 3,797 5,016 5,217 5,067 4,708
Debtors 106 109 122 135 151
Total Assets 22,572 28,207 34,268 35,642 39,197
ST Debt 1,330 1,506 1,650 0.0 0.0

Creditor 95.7 156 112 121 135
LT Debt 2,763 2,752 5,903 6,071 6,069
Shareholder’s Equity 10,224 15,349 17,441 19,526 22,130 Significant increase in
Minority Interests 3,191 3,091 3,313 3,550 3,840 long-term debt from
Total Cap. & Liab. 22,572 28,207 34,268 35,642 39,197 USD bond issuance....
Non-Cash Wkg. Capital 1,720 2,649 2,412 1,742 735

Net Cash/(Debt) 1,368 (737) (1,931) (1,525) (134) But net gearing level is
Debtors Turn (avg days) 5.7 7.0 6.4 6.4 6.4 still low
Inventory Turn (avg days) 902.8 1,399.0 1,125.6 1,010.0 840.9
Asset Turnover (x) 0.3 0.2 0.2 0.2 0.2
Current Ratio (x) 2.0 1.7 1.9 2.1 2.0
Quick Ratio (x) 0.9 0.6 0.8 0.8 0.9
Net Debt/Equity (X) CASH 0.0 0.1 0.1 0.0
Net Debt/Equity ex MI (X) CASH 0.0 0.1 0.1 0.0
Capex to Debt (%) 65.9 30.6 51.9 46.3 45.7
Z-Score (X) 3.3 3.3 2.9 2.9 2.9

Page 40
Company Guide
Bumi Serpong Damai

FY Dec 2013A 2014A 2015F 2016F 2017F
Pre-Tax Profit 3,279 4,306 2,964 3,200 3,855

Dep. & Amort. 126 132 178 222 262
Tax Paid (373) (310) (362) (401) (449)
Assoc. & JV Inc/(loss) (47.1) (1,667) (47.1) (47.1) (47.1)
Chg in Wkg.Cap. (2,047) (930) 237 670 1,007
Other Operating CF (214) (176) (221) (238) (290)
Net Operating CF 770 3,022 2,797 3,453 4,385
Capital Exp.(net) (2,698) (1,304) (3,924) (2,809) (2,772)
Other Invts.(net) 0.0 0.0 0.0 0.0 0.0 Strong operating cash
Invts in Assoc. & JV 146 (4,809) 0.0 0.0 0.0 flow enables capex
Div from Assoc & JV 576 (99.8) 221 238 290 expansion going
Other Investing CF (22.7) (218) 0.0 0.0 0.0 forward
Net Investing CF (1,999) (6,431) (3,702) (2,571) (2,482)
Div Paid (262) (276) (289) (476) (512)
Chg in Gross Debt 3,012 164 3,295 (1,482) (2.3)
Capital Issues (126) 1,729 0.0 0.0 0.0
Other Financing CF 4.49 (116) 0.0 0.0 0.0
Net Financing CF 2,628 1,501 3,006 (1,958) (514)
Chg in Cash 1,399 (1,908) 2,101 (1,076) 1,388
Opg CFPS (Rp) 161 215 133 145 176
Rp
2249 Closing T arget
S.No. Dat e Rat ing
Pric e Pric e
2 1: 26 J an 15 2065 1980 BUY
2049 2: 18 Mar 15 2050 1950 BUY
1 3: 27 Apr 15 2035 2150 HOLD
3 4 6
4: 03 J un 15 1885 2150 HOLD
1849 5 5: 05 J un 15 1920 2150 HOLD
6: 13 J ul 15 1865 1850 HOLD
7 7: 10 Aug 15 1745 1850 HOLD
1649 8
8: 03 Sep 15 1585 1595 HOLD
9 9: 30 Oct 15 1620 1595 HOLD
1449
1249
Source: DBS Vickers

Page 41
Ciputra Development
Edition 2 Version 1 | Bloomberg: CTRA IJ | Reuters: CTRA.JK Refer to important disclosures at the end of this report
HOLD Strong Presence in Indonesian Cities

Last Traded Price: Rp1,425 (JCI : 4,525.92) Maintain HOLD call with higher TP of Rp1,350. We raised our
Price Target : Rp1,350 (5% downside) (Prev Rp980) RNAV assumptions by 11% to Rp1,730/sh (from Rp1,550/sh
previously) to reflect expected FY16F gearing and the revised risk
Potential Catalyst: JO projects premium (to 5.5%) for WACC calculation. Subsequently, our TP
Where we differ: Earnings are much lower than consensus estimates and is boosted to Rp1,350. However, with limited upside from the
guidance current level, we maintain our HOLD recommendation.
Joint Operation (JO) projects remain a catalyst. Marketing sales
Analyst
contribution from JO projects is expected to keep growing to a
Edward Ariadi Tanuwijaya +6221 3003 4932 record high of 57% next year, with 8-15 new projects in the
edward.tanuwijaya@id.dbsvickers.com pipeline next year. Ciputra Development (CTRA) has been able to
consistently secure new projects in new cities by leveraging on its
established reputation and brand. As the preferred JO partner for
land owners in new cities, CTRA has an advantage over other
developers in securing projects.
Price Relative
Rp Relative Index
Subsidiary CTRS remains as better play than parent, but is illiquid.
Ciputra Surya (CTRS), with its large landbank for development in
1,680.8 249
229
Surabaya will remain as a significant contributor to marketing

1,480.8
209
1,280.8
1,080.8
189
169
sales given the potential jump in land prices from CitraLand
880.8
149 North Surabaya township (as the flyover project which will pass
680.8
129
109
close to its development) and its track record for
480.8 89 outperformance. On the other hand, contribution from its other
subsidiary Ciputra Property (CTRP) , which specialises in mixed-
Ciputra Development (LHS) Relative JCI INDEX (RHS)

used projects, will remain small unless demand in the luxury
Forecasts and Valuation apartment segment takes off.
FY Dec (Rpbn) 2014A 2015F 2016F 2017F
Valuation:
Revenue 6,344 7,668 8,898 9,036
EBITDA 2,403 2,618 2,859 2,921 Our target price of Rp1,350 represents a 23% discount to our
Pre-tax Profit 2,147 2,162 2,388 2,404 base-case RNAV (based on its adjusted 8-year average discount
Net Profit 1,325 1,260 1,370 1,375 to RNAV). CTRA is currently trading at a 18% discount to RNAV
Net Pft (Pre Ex.) 1,325 1,260 1,370 1,375
(narrower than its 8-year average of 32%) and 15.8x FY16F PE
EPS (Rp) 87.4 83.1 90.4 90.7
EPS Pre Ex. (Rp) 87.4 83.1 90.4 90.7 (at +1SD of its mean forward PE).
EPS Gth Pre Ex (%) 36 (5) 9 0
Key Risks to Our View:
Net Pft Gth (Pre-ex) (%) 36 (5) 9 0
Diluted EPS (Rp) 87.4 83.1 90.4 90.7 Slower take-up at existing and new projects. Weaker property
Net DPS (Rp) 18.8 26.2 24.9 27.1 affordability, potential increase in interest rates and stricter
BV Per Share (Rp) 504 543 608 672 implementation of requirements for high-rise developments
PE (X) 16.3 17.2 15.8 15.7
PE Pre Ex. (X) 16.3 17.2 15.8 15.7 could prompt delays in launching its project pipeline, resulting in
P/Cash Flow (X) nm 7.0 6.8 12.0 lower than expected marketing sales. Weak commodity prices
EV/EBITDA (X) 11.1 10.3 9.6 9.8 will also affect new JO projects in rural areas.
Net Div Yield (%) 1.3 1.8 1.7 1.9
P/Book Value (X) 2.8 2.6 2.3 2.1 At A Glance
Net Debt/Equity (X) 0.1 0.1 0.1 0.1 Issued Capital (m shrs) 15,331
ROAE (%) 18.7 15.9 15.7 14.2 Mkt. Cap (Rpbn/US$m) 21,846 / 1,576
Earnings Rev (%): (2) (8) (11) Major Shareholders
Consensus EPS (Rp): 88.5 98.9 111 Sang Pelopor (%) 30.6
Other Broker Recs: B: 11 S: 1 H: 9 Credit Suisse Singapore (%) 8.1
Free Float (%) 61.3
Source of all data: Company, DBS Vickers, Bloomberg Finance L.P

ed: JS / sa: MA
Company Guide
Ciputra Development
Marketing sales
10,076
8,941 8,631
9,100
7,800
Earnings Drivers:
6,500
Marketing sales achieved
5,200
Property developers recognise non-recurring revenue from
3,900
marketing sales in prior years. We expect revenue to expand
2,600
at 12% CAGR over 2014-17F given that marketing sales had 1,300
grown by 43% CAGR over 2011-14, but is expected to 0
register an anaemic 5% CAGR over the next three years 2013A 2014A 2015F 2016F 2017F
given the challenging environment.

Sales Trend
Rp bn
Huge presence in over 30 cities in Indonesia 9,000 60.0%
CTRA currently has a presence in 35 cities with 76 projects in 8,000

50.0%
7,000
its portfolio to tap demand in different regions. In addition, 6,000 40.0%
its wide range of products caters to several customer 5,000
30.0%
segments. With a track record of over 30 years, CTRA is the 4,000
3,000 20.0%
preferred JO partner for land owners in new cities.
2,000
Therefore, it has an advantage over other developers in 1,000
10.0%
securing a continuous stream of projects. CTRA targets to 0 0.0%

2013A 2014A 2015F 2016F 2017F
have between 8-15 new projects every year.
Stable and stagnant recurring revenue from investment

Profitability Trend
properties Rp bn
CTRA has been generating 15% of consolidated revenues 2,576
from investment properties such as retail malls, hotel and 2,376
office leases. The retail malls and hotels are considered 2,176
mature, which means there is limited growth in contribution 1,976
from these assets.

1,776
1,576
1,376
Better product mix leads to better margins
1,176
CTRA’s revenues are still heavily reliant on its townships, and
976
this segment has booked high gross profit margins (c.60%) 2013A 2014A 2015F 2016F 2017F
in the past two years. Given more high-rise projects in its Operating EBIT Pre tax Profit Net Profit
portfolio, we will monitor revenue mix to track CTRA’s

Margins Trend
profitability going forward.
34.0%
Good control of operating costs
CTRA has been able to keep SG&A expenses (as % of 29.0%
revenue) under control, despite the higher-than-average

24.0%
increase in its key items in SG&A expenses such as sales
commissions, salaries and employee benefits, and taxes & 19.0%
licenses for the purpose of attracting more property demand

14.0%
during this challenging period and for its ever expanding 2013A 2014A 2015F 2016F 2017F
number of JO projects. Operating Margin % Net Income Margin %
Disc to RNAV
100%
80%
60%
Average 28%
40%
20%
0%
Aug-08
Aug-09
Aug-10
Aug-11
Aug-12
Aug-13
Aug-14
Aug-15
Dec-07
Apr-08
Dec-08
Apr-09
Dec-09
Apr-10
Dec-10
Apr-11
Dec-11
Apr-12
Dec-12
Apr-13
Dec-13
Apr-14
Dec-14
Apr-15
Dec-15
-20%
-40%
-60%
-80%

Page 43
Company Guide
Ciputra Development

Balance Sheet: 0.4
Healthy balance sheet with reasonably low net gearing 0.50 0.4
0.4
CTRA had been in net cash position from 2008 to 2013 as 0.40 0.3
strong cash generation outpaced annual capex requirements. 0.3
0.30
But, the accelerated progress of its superblock developments 0.3
required more capex, and therefore, net gearing shot up to 0.20

0.3
0.3
15% at end 2014. However, good cash generation and 0.10 0.2
stalled high-rise development onwards will help to reduce 0.2
CTRA’s net gearing to below 10% from 2015 onwards. 0.00

2013A 2014A 2015F 2016F 2017F
0.2
Share Price Drivers:

Capital Expenditure
Marketing sales achieved and pipeline Rp
Marketing sales is a good indicator for all Indonesia property 3,500.0
developers (including CTRA) as it gives leading indication for 3,000.0
the revenue generation for the next 2-3 years (depending on 2,500.0
2,000.0
the revenue recognition).
1,500.0
1,000.0
Key Risks:
500.0
0.0
approval and balanced ratio rules, when strictly 2013A 2014A 2015F 2016F 2017F
implemented, could potentially slow property demand. Capital Expenditure (-)
Liquidity tightening could dampen demand further. ROE (%)

18.0%
Potential interest rate hikes. Property demand is sensitive to 16.0%
and is negatively correlated to interest rate movements. 14.0%
12.0%
Strict implementation on potential revision to housing 10.0%
8.0%
development balance ratio (of low, middle and luxury
6.0%
houses). If implemented strictly and retroactively, this could 4.0%
potentially mean additional costs for property developers 2.0%
and more complicated property development planning 0.0%

2013A 2014A 2015F 2016F 2017F
process.
Forward PE Band (x)
Company Background 23.3
(x)
CTRA is a large scale residential and commercial developer, 21.3
with a presence in 20 major cities throughout Indonesia, and 19.3
+2sd: 18.5x
has the most diversified product and customer range. 17.3
Established since 1981, it also has two listed subsidiaries - 15.3

+1sd: 16x
Ciputra Surya (CTRS) and Ciputra Property (CTRP). 13.3 Avg: 13.5x
11.3 ‐1sd: 11x
9.3
‐2sd: 8.5x
7.3
PB Band (x)
(x)
4.2
3.7
3.2 +2sd: 3.2x
2.7 +1sd: 2.75x
2.2 Avg: 2.3x
‐1sd: 1.85x
1.7
‐2sd: 1.4x
1.2

Page 44
Company Guide
Ciputra Development
CTRA: RNAV summary

Value Full Value Landbank
Portfolio City Category Stakes % of total
(Rpbn) (Rpbn) (ha)
Ciputra Property (CTRP IJ)
Ciputra Sentra Jakarta Mall Jakarta Retail mall 607 73% 835 7.1%
Ciputra Jakarta Hotel Jakarta Hotel 210 73% 289 2.5%
Ciputra Semarang Mall Jakarta Retail mall 473 99% 477 5.5%
Ciputra Semarang Hotel Jakarta Hotel 115 99% 116 1.3%
Ciputra World Jakarta 1 Jakarta Mixed-use
Lotte Shopping Avenue Retail mall 1,988 94% 2,105 23.3%
My Home Apartment & Ascott Service Apartment 344 94% 364 4.0%
Raffles Hotel & Raffles Residence Hotel & 620 94% 657 7.3%
DBS Tower Office 461 94% 488 5.4%
Office building Office 355 94% 376 4.2%
The Residence & Frasers Serviced Apartment Apartment 288 100% 288 3.4%
Orchard Satrio Apartment 0 100% 0 0.0%
W Hotel & The Suites Condo Hotel & 761 100% 762 8.9%
Office building Office 448 100% 449 5.2%
Vacant lot 399 100% 400 4.7% 1.6
Vacant lot 324 100% 325 3.8% 1.3
Somerset Grand Citra Jakarta Jakarta Serviced 77 34% 226 0.9%
Ciputra International Jakarta Mixed-use
Phase 1 development 303 55% 551 3.5%
Vacant lot 242 55% 440 2.8% 5
Ciputra Beach Resort Bali Resort 528 60% 880 6.2% 80
Net Debt 900
RNAV 7,644
Fully Diluted Share base (m) 6.150
Fully Diluted RNAV per share 1,243
Ciputra Surya (CTRS IJ)

Development properties & Landbank
Ciputra World Surabaya Surabaya Mixed-use 501 53% 945 4.5%
Citraland Surabaya Surabaya Landed 6,792 100% 6,792 60.6% 239.4
Citraland North Surabaya Surabaya Landed 2,070 100% 2,070 18.5% 199.0
CitraHarmoni Sidoarjo Sidoarjo Landed 318 99% 323 2.8% 31.3
Citra Garden Lampung Lampung Landed 0 100% 0 0.0% 1.9
CitraGarden Sidoarjo Sidoarjo Landed 0 60% 0 0.0% 3.3
Taman Dayu Pandaan - JO Pandaan Landed 453 JO 453 4.0%
CitraLand Bagya City - JO Medan Landed 137 JO 137 1.2%
CitraGrand Semarang - JO Semarang Landed 101 JO 101 0.9%
Citraland Greenlake Surabaya - JO Surabaya Landed 150 JO 150 1.3%
Other JO projects Landed 383 JO 383 3.4%
Others (Golf, Club & Hotel and Waterpark) Surabaya Miscellaneous 295 99% 298 2.6%
Net Debt -1,200
RNAV 12,399
Ciputra Development (CTRA IJ)

Development properties & Landbank
CitraRaya Tangerang Jakarta Landed 3,826 100% 3,830 14.2% 696.2
CitraIndah Jonggol Jakarta Landed 1,021 100% 1,021 3.8% 251.5
CitraGarden City Jakarta Jakarta Landed 2,566 100% 2,569 9.5% 111.7
CitraLand Pekanbaru Pekanbaru Landed 141 100% 141 0.5% 20
CitraGrand City Palembang - JO Palembang Landed 317 JO 317 1.2%
CitraLand City Samarinda - JO Samarinda Landed 252 JO 252 0.9%
CitraGarden + Land Banjarmasin - JO Banjarmasi Landed 57 JO 57 0.2%
CitraLand Celebes Makassar - JO Makassar Landed 8 JO 8 0.0%
CitraGreen Dago Bandung - JO Bandung Landed 44 JO 44 0.2%
Other JO projects Landed 5279 JO 5,279 19.6%
Ciputra Property (CTRP IJ) 4,959 58% 8,544 18.4%

Ciputra Surya (CTRS IJ) 8,521 63% 13,599 31.6%
Net Debt 786
RNAV 26,206
Source: DBS Vickers

Page 45
Company Guide
Ciputra Development
Key Assumptions
FY Dec 2013A 2014A 2015F 2016F 2017F
Marketing sales 8,941 8,631 9,174 9,455 10,076
Segmental Breakdown
FY Dec 2013A 2014A 2015F 2016F 2017F
Revenues (Rpbn)
Land lots 275 164 1,457 1,150 995 Township development
Office and Condo sales 932 1,181 1,507 1,784 1,474 remains largest revenue
Residential+shophouse 3,033 3,875 3,562 4,656 5,159 contributor
Recurring 837 1,124 1,141 1,309 1,408
Total 5,077 6,344 7,668 8,898 9,036

Gross Profit (Rpbn)
Land lots 64.7 122 1,020 805 697
Office and Condo sales 429 572 603 713 590
Residential+shophouse 1,584 1,974 1,603 2,095 2,321
Recurring 468 666 566 647 693
Total 2,546 3,334 3,792 4,260 4,301

Land lots 23.5 73.9 70.0 70.0 70.0
Office and Condo sales 46.1 48.4 40.0 40.0 40.0
Steady margins with a
Residential+shophouse 52.2 51.0 45.0 45.0 45.0
stable revenue mix as
Recurring 55.9 59.2 49.6 49.4 49.2 projects are spread
across Indonesia
Total 50.2 52.5 49.5 47.9 47.6

FY Dec 2013A 2014A 2015F 2016F 2017F
Revenue 5,077 6,344 7,668 8,898 9,036
Gross Profit 2,546 3,334 3,792 4,260 4,301
Other Opng (Exp)/Inc (994) (1,130) (1,380) (1,646) (1,672)
Other Non Opg (Exp)/Inc 98.7 43.6 (0.4) (0.5) (0.3)
Net Interest (Exp)/Inc 52.7 (104) (255) (230) (230)
Pre-tax Profit 1,709 2,147 2,162 2,388 2,404
Tax (296) (353) (383) (445) (452)
Net Profit 977 1,325 1,260 1,370 1,375
Net Profit before Except. 977 1,325 1,260 1,370 1,375
EBITDA 1,699 2,403 2,618 2,859 2,921
Growth
Revenue Gth (%) 52.8 25.0 20.9 16.0 1.5
EBITDA Gth (%) 61.7 41.5 9.0 9.2 2.2
Opg Profit Gth (%) 62.7 41.9 9.4 8.4 0.6
Margins & Ratio
Gross Margins (%) 50.2 52.5 49.5 47.9 47.6
ROAE (%) 16.2 18.7 15.9 15.7 14.2
ROA (%) 5.5 6.1 5.0 4.8 4.5
ROCE (%) 11.2 12.8 11.7 11.2 10.5
Div Payout Ratio (%) 30.9 29.2 30.0 30.0 30.0
Net Interest Cover (x) NM 21.2 9.5 11.4 11.4

Page 46
Company Guide
Ciputra Development

FY Dec 3Q2014 4Q2014 1Q2015 2Q2015 3Q2015
Revenue 1,419 2,117 1,424 1,666 2,284

Cost of Goods Sold (691) (976) (678) (785) (1,198)
Gross Profit 728 1,141 747 881 1,086
Other Non Opg (Exp)/Inc 9.07 22.4 9.11 14.5 23.0
Pre-tax Profit 467 736 414 435 713
Tax (78.2) (128) (77.0) (89.0) (112)
Minority Interest (107) (165) (109) (95.0) (145)
Net Profit 282 443 228 251 456
Net profit bef Except. 282 443 228 251 456
EBITDA 490 762 459 488 768
Growth
Revenue Gth (%) (11.6) 49.2 (32.7) 17.0 37.1
EBITDA Gth (%) (14.6) 55.5 (39.8) 6.4 57.4
Opg Profit Gth (%) (14.6) 55.5 (39.8) 6.4 57.4
Net Profit Gth (Pre-ex) (%) (24.5) 57.1 (48.5) 10.2 81.7
Margins
Gross Margins (%) 51.3 53.9 52.4 52.9 47.6

FY Dec 2013A 2014A 2015F 2016F 2017F
Net Fixed Assets 5,356 6,555 7,781 9,273 10,270

Other LT Assets 5,216 5,810 6,996 8,599 9,821
Cash & ST Invts 3,476 2,889 4,330 4,380 3,636
Inventory 4,879 6,429 5,566 4,434 3,213
Debtors 541 765 786 912 926
Other Current Assets 776 1,091 1,636 2,454 3,681
Total Assets 20,245 23,539 27,095 30,052 31,547
ST Debt 629 804 800 800 800

Creditor 663 773 515 617 630
LT Debt 2,099 3,217 4,342 4,366 4,166
Minority Interests 3,388 4,007 4,526 5,099 5,676
Total Cap. & Liab. 20,245 23,539 27,095 30,052 31,547
Non-Cash Wkg. Capital (1,232) 664 (961) (2,515) (2,650)

Net Cash/(Debt) 748 (1,132) (812) (787) (1,329)
Inventory Turn (avg days) 626.7 734.0 553.6 368.4 263.9
Asset Turnover (x) 0.3 0.3 0.3 0.3 0.3 Healthy balance sheet
Current Ratio (x) 1.2 1.3 1.3 1.1 1.0 with low net gearing
Quick Ratio (x) 0.5 0.4 0.5 0.5 0.4
Capex to Debt (%) 86.6 44.0 47.2 60.5 45.9
Z-Score (X) 2.1 2.1 2.0 1.8 1.8

Page 47
Company Guide
Ciputra Development

FY Dec 2013A 2014A 2015F 2016F 2017F
Pre-Tax Profit 1,709 2,147 2,162 2,388 2,404

Dep. & Amort. 146 199 206 245 292
Tax Paid (296) (353) (383) (445) (452)
Assoc. & JV Inc/(loss) 0.0 0.0 0.0 0.0 0.0
Chg in Wkg.Cap. 626 (1,895) 1,625 1,554 135
Net Operating CF 1,741 (374) 3,090 3,169 1,802
Capital Exp.(net) (2,363) (1,769) (2,426) (3,128) (2,279)
Other Invts.(net) 0.0 0.0 0.0 0.0 0.0
Higher capex because
Invts in Assoc. & JV 497 619 519 573 577 of high-rise projects
Div from Assoc & JV 0.0 0.0 0.0 0.0 0.0
Other Investing CF (692) (190) (192) (211) (232)
Net Investing CF (2,557) (1,341) (2,100) (2,766) (1,934)
Div Paid (182) (285) (397) (378) (411)
Chg in Gross Debt 1,257 1,293 1,121 24.5 (200)
Capital Issues 0.0 0.0 (86.5) 0.0 0.0
Other Financing CF 116 119 (187) 0.0 0.0
Net Financing CF 1,191 1,126 450 (353) (612)
Chg in Cash 375 (588) 1,441 49.6 (743)
Opg CFPS (Rp) 73.5 100 96.6 106 110
Rp
1533 2 Closing T arget
S.No. Dat e Rat ing
Pric e Price
1433 1: 26 J an 15 1415 1113 F ULLY V ALUED
4 2: 01 Apr 15 1479 1113 F ULLY V ALUED
1333 1 3
3: 27 Apr 15 1420 1326 HOLD
4: 04 May 15 1345 1326 HOLD
1233
5: 13 J ul 15 1246 1227 HOLD
5
1133 6 8 6: 10 Aug 15 1078 1227 HOLD
7: 03 Sep 15 811 969 HOLD
1033 8: 02 Nov 15 1070 980 HOLD
933
833
733 7
Source: DBS Vickers

Page 48
Lippo Karawaci
Edition 2 Version 1 | Bloomberg: LPKR IJ | Reuters: LPKR.JK Refer to important disclosures at the end of this report
FULLY VALUED (Downgrade from HOLD) Rebound from Cleansing Year?

Last Traded Price: Rp1,015 (JCI : 4,525.92) Downgrade to FULLY VALUED mainly due to slash in hospital
Price Target : Rp980 (3% downside) (Prev Rp1,160) valuation. We lowered our RNAV assumptions by 19% to
Rp1,411/sh (from Rp1,734/sh previously) to reflect our recent
Potential Catalyst: Faster monetisation of high-rise projects slash in LPKR’s subsidiary Siloam International Hospitals (SILO)’s
Where we differ: One of the negative calls amid BUY recommendations valuation and other assumptions changes (i.e. marketing sales, net
debt level and risk premium for WACC calculation). Subsequently,
Analyst
Edward Ariadi Tanuwijaya +6221 3003 4932 our TP is cut to Rp980, implying 10% downside to current price.
edward.tanuwijaya@id.dbsvickers.com Slashed valuation in SILO due to expansion timeline concern. As
per our report on 26 Nov 2015, SILO cited difficulties in finalising
licences and administration as the main culprit behind its
shortcoming in executing new hospital expansions. This has
Price Relative tempered expectation on SILO to deliver its intended expansion
Rp Relative Index
and therefore severely affected its future value. SILO’s value (after
1,985.0 228
1,785.0 208
adjusting for 70% ownership) make up 18% of LPKR’s RNAV.
1,585.0 188 Increasing dependency on subsidiary Lippo Cikarang (LPCK) for
marketing sales. Despite having three urban developments, two
1,385.0 168
1,185.0 148
985.0 128 large-scale mixed-used developments and a few smaller residential

785.0 108
and commercial projects in its portfolio, LPKR’s marketing sales for
585.0 88
Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 the next two years will still much depend on LPCK’s Orange
Lippo Karawaci (LHS) Relative JCI INDEX (RHS) County Business District (OCBD) development given its niche
apartment demand in industrial area. As of 9M15, LPCK's
FY Dec (Rpbn) 2014A 2015F 2016F 2017F marketing sales contributed 70% of LPKR’s total marketing sales.
Revenue 11,655 9,310 10,167 11,576 Valuation:
EBITDA 3,686 2,694 2,883 3,242 Our target price of Rp980 is at a 31% discount to our base-case
Pre-tax Profit 3,695 2,495 2,437 2,673 RNAV (based on its adjusted 8-year average discount to RNAV).
Net Profit 2,547 1,481 1,392 1,506
Net Pft (Pre Ex.) 2,547 1,481 1,392 1,506 LPKR is currently trading at a 28% discount to RNAV (narrower
EPS (Rp) 110 64.2 60.3 65.3 than its 8-year average of 43%) and 16.8x FY16F PE (premium
EPS Pre Ex. (Rp) 110 64.2 60.3 65.3 because of high valuation for the healthcare unit and at +0.5SD
EPS Gth Pre Ex (%) 107 (42) (6) 8
of its mean forward PE).
Net Pft Gth (Pre-ex) (%) 107 (42) (6) 8
Diluted EPS (Rp) 110 64.2 60.3 65.3 Key Risks to Our View:
Net DPS (Rp) 13.9 14.4 16.0 15.1 Slower take-up for launches. Weaker property affordability,
BV Per Share (Rp) 499 549 593 644 potential increase in interest rate and stricter implementations of
PE (X) 9.2 15.8 16.8 15.6 high-rise developments could prompt delays in launching pipeline
PE Pre Ex. (X) 9.2 15.8 16.8 15.6
P/Cash Flow (X) nm nm nm 8.9 and cause marketing sales to miss our expectations.
EV/EBITDA (X) 9.8 14.4 14.7 13.1 Slower-than-expected growth of investment properties.
Net Div Yield (%) 1.4 1.4 1.6 1.5 Despite more conservative forecasts than guidance, there may still
P/Book Value (X) 2.0 1.8 1.7 1.6
Net Debt/Equity (X) 0.4 0.5 0.6 0.5
be downside to our estimates as LPKR (under its asset-light
ROAE (%) 25.2 12.2 10.6 10.6 strategy) is dependent on its two Singapore-listed REITs to expand
Earnings Rev (%): (3) (9) (3) its retail mall and hospital segments.
Consensus EPS (Rp): 72.0 76.2 84.5 At A Glance
Other Broker Recs: B: 6 S: 5 H: 10 Issued Capital (m shrs) 23,078
Mkt. Cap (Rpbn/US$m) 23,424 / 1,690
Source of all data: Company, DBS Vickers, Bloomberg Finance L.P. Major Shareholders
Pacific Asia Holdings (%) 17.9
Free Float (%) 82.1

ed: TH / sa: MA
Company Guide
Lippo Karawaci
Marketing sales
5,185
4,349
4,200 4,049
3,722
Property developer recognises non-recurring revenue from 2,100
marketing sales in the prevailing years. We expect revenue to 1,400
expand at 12% CAGR over 2014-17F (excluding one-off 700
asset sales) given the current project pipeline and that 0
marketing sales grew at 19% CAGR over 2011-14. However, 2013A 2014A 2015F 2016F 2017F
we foresee marketing sales for its existing developments to

Sales Trend
be slow for the next three years.
Rp bn
80.0%
Despite having three urban developments, two large-scale 10,000
mixed-used developments and a few smaller residential and 8,000

60.0%
commercial projects in the pipeline, marketing sales in the 40.0%

6,000
next two years will still much depend on its subsidiary project
4,000 20.0%
Lippo Cikarang (given its good take-up and niche market).
2,000 0.0%
More dependent on healthcare revenue going forward 0 -20.0%

2013A 2014A 2015F 2016F 2017F
Revenue from healthcare segment has surged to contribute
45% of LPKR’s consolidated revenues, following aggressive Total Revenue Revenue Growth (%) (YoY)
expansion (+38% CAGR) over 2011-14. We expect the

Profitability Trend
segment to contribute more as other segments continue to Rp bn
moderate.
3,228
LPKR is unique and ahead of other developers in tapping on

healthcare needs in Indonesia, which is under-penetrated
2,728
relative to the regional countries. 2,228
Lower profitability as a result of entry into healthcare 1,728
segment
1,228
Property development (both landed and high-rise) had been 2013A 2014A 2015F 2016F 2017F
generating high gross margins (over 50%) in the past three Operating EBIT Pre tax Profit Net Profit
years. But revenue contribution has slipped over the years

Margins Trend
due to aggressive expansion into the healthcare segment
30.0%
(which book lower GP margins). We expect healthcare to 28.0%
contribution more to LPKR’s consolidated revenue in the next 26.0%
few years, which means margins will continue to slide. 24.0%

22.0%
20.0%
Non-cash accounting forex loss to wipe out net earnings on 18.0%
paper 16.0%
14.0%
Although the US$ global bonds are fully hedged, LPKR faces
12.0%
a staggering non-cash outflow accounting forex loss which 2013A 2014A 2015F 2016F 2017F
may practically wipe out more than half of its EBIT on paper. Operating Margin % Net Income Margin %
FY15 net loss (without excluding the forex effect) is inevitable

Disc to RNAV trend
if IDR continues to weaken against US$.
80%
Company Background 60%

LPKR operates five businesses, namely township, healthcare, Average 43%
retail mall, hospitality and portfolio management. It has 40%
listed subsidiaries in Lippo Cikarang (LPCK) and Gowa 20%

Makassar Tourism Development (GMTD), and stakes in First
REIT & LMIRT (both listed in Singapore). 0%
Aug-08
Aug-09
Aug-10
Aug-11
Aug-12
Aug-13
Aug-14
Aug-15
Dec-07
Apr-08
Dec-08
Apr-09
Dec-09
Apr-10
Dec-10
Apr-11
Dec-11
Apr-12
Dec-12
Apr-13
Dec-13
Apr-14
Dec-14
Apr-15
Dec-15
-20%
-40%

Page 50
Company Guide
Lippo Karawaci

Balance Sheet: 0.4
0.70
Net gearing to increase from current level given expansion 0.4
0.60 0.4
plan for investment properties.
0.3
LPKR started its transformation into a high-rise developer a 0.50
0.3
few years ago, and therefore, net gearing has been rising and 0.40
0.3
will hover at more than 65% ahead. 0.30 0.3

0.3
0.20
Asset-light strategy for investment property segment. The 0.10
0.2
0.2
investment properties include retail malls and hospitals. LPKR 0.00 0.2
recycles capital by divesting assets to its Singapore-listed REITs 2013A 2014A 2015F 2016F 2017F
(i.e. hospitals to First REIT and retail malls to Lippo Malls
Indonesia Retail Trust). Capital Expenditure
Rp
2,000.0
1,600.0
Marketing sales achievement and pipeline 1,400.0
Marketing sales achievement is a good indicator for all 1,200.0
1,000.0
Indonesian property developers (including LPKR) as it gives 800.0
leading indication for the revenue generation for the next 2-3 600.0
400.0
years (depending on the revenue recognition). 200.0
0.0
Execution of aggressive healthcare 2013A 2014A 2015F 2016F 2017F
The hospital segment, under subsidiary Siloam (SILO), has to Capital Expenditure (-)
catch up with its aggressive plan to open 10 new hospitals ROE (%)
and clinics this year. 25.0%
Possible increase in hedging cost from US$ debt 20.0%
LPKR is exposed to IDR weakness due to its global US$ bonds.

LPKR has US$803m bonds on its balance sheet and has fully- 15.0%
hedged the principal through call spreads. Hedging cost may 10.0%
increase beyond reasonable levels if the USD/IDR exchange
rate breaches the existing call spreads. 5.0%
0.0%
Key Risks: 2013A 2014A 2015F 2016F 2017F

Forward PE Band (x)
approval and balanced ratio rules, when strictly
(x)
implemented, could potentially slow property demand. 25.1
Liquidity tightening could slow demand further. 23.1 +2sd: 23.1x
21.1
Potential interest rate hike. Property demand is sensitive to 19.1 +1sd: 19.5x
Avg: 15.9x
15.1
Exposure to US$, both financially (i.e. debt in balance sheet) 13.1
‐1sd: 12.3x
and operationally (i.e. higher material cost especially for 11.1
high-rise projects with higher US$-linked items) is a risk amid 9.1

‐2sd: 8.7x
7.1
the weak IDR environment. Jan-12 Jan-13 Jan-14 Jan-15
Strict implementation on potential revision to housing PB Band (x)

(x)
houses). If implemented strictly and retroactively, this could
and more complicated property development planning. 4.2

+2sd: 4.4x
Capital-intensive projects require large funding. High-rise +1sd: 3.66x

3.2
and hospital developments require large upfront capital. Avg: 2.92x
External financing costs have to be kept in check. 2.2 ‐1sd: 2.18x
‐2sd: 1.44x
1.2

Page 51
Company Guide
Lippo Karawaci
LPKR: RNAV summary

Value Full Value % of Landbank
Portfolio City Category Stakes
(Rpbn) (Rpbn) total (ha)
Urban Developments
Lippo Village (incl. Millenium Village) West Jakarta Residential 11,793 100% 11,793 26.5% 153
Lippo Cikarang (incl. Orange County
East Jakarta Industrial 7,467 54% 13,828 16.8% 509
development)
Tanjung Bunga Makassar Makassar Residential 1,439 50% 2,878 3.2% 315
Memorial
San Diego Hills East Jakarta 1,248 100% 1,248 2.8% 97
Park
21,948
Subtotal
Large Scale Integrated Development

South
Kemang Village Mixed-use 1,643 90% 1,826 3.7% 6.2
Jakarta
St. Moritz West Jakarta Mixed-use 2,006 100% 2,006 4.5%
St. Moritz Makassar Mixed-use 281 100% 281 0.6%
City of Tomorrow Surabaya Mixed-use 616 85% 725 1.4%
Residential &
New projects (Apartment & Office) Jakarta 552 100% 552 1.2%
Office
Others (land, retail space inv. & other dev) 800 100% 800 1.8%
Subtotal 5,899
Hospitals
Subtotal 8,079 70% 11,508 18.2%
Retail malls
Retail space inventory 700 100% 700 1.6%
Subtotal 700
Hotels
Aryaduta Lippo Village 681 FREIT 681 1.5%
Aryaduta Jakarta, Medan and Pekanbaru 1,674 100% 1,674 3.8%
Subtotal 2,355
FREIT &
REIT units 5,451 5,451 12.3%
LMIRT
50,433
Net Debt 11,858

RNAV 32,578
Source: DBS Vickers

Page 52
Company Guide
Lippo Karawaci
Key Assumptions
FY Dec 2013A 2014A 2015F 2016F 2017F
Marketing sales 4,718 5,185 3,722 4,049 4,349
Segmental Breakdown
FY Dec 2013A 2014A 2015F 2016F 2017F
Revenues (Rpbn)
Land lots 862 792 1,189 997 1,416 More revenues from
Residential+shophouse 852 1,288 402 450 374 apartments and hospitals
Memorial Park 134 154 178 191 215 (recurring revenue) going
forward
Apartment 1,098 1,317 1,851 1,795 1,582
Others 3,720 8,104 5,690 6,734 7,989
Total 6,666 11,655 9,310 10,167 11,576
Gross Profit (Rpbn)
Land lots 424 475 773 648 920
Residential+shophouse 501 753 221 247 206
Memorial Park 112 126 145 156 175
Apartment 578 695 925 897 791
Others 1,432 3,349 2,205 2,524 2,905
Total 3,047 5,397 4,269 4,473 4,997
Land lots 49.1 59.9 65.0 65.0 65.0
Residential+shophouse 58.8 58.5 55.0 55.0 55.0
Memorial Park 83.4 81.7 81.7 81.7 81.7
Apartment 52.6 52.8 50.0 50.0 50.0
Others 38.5 41.3 38.7 37.5 36.4
Total 45.7 46.3 45.9 44.0 43.2

FY Dec 2013A 2014A 2015F 2016F 2017F
Revenue 6,666 11,655 9,310 10,167 11,576
Gross Profit 3,047 5,397 4,269 4,473 4,997 Revenue surged because
Other Opng (Exp)/Inc (1,534) (2,121) (2,095) (2,288) (2,605) of proceeds from one-off
Operating Profit 1,513 3,277 2,175 2,185 2,393 asset sale (Rp3.3tn) to
Other Non Opg (Exp)/Inc 431 532 454 448 500 REITs
Pre-tax Profit 1,925 3,695 2,495 2,437 2,673
Tax (332) (560) (465) (508) (579)
Net Profit 1,229 2,547 1,481 1,392 1,506
EBITDA 1,837 3,686 2,694 2,883 3,242
Growth
Revenue Gth (%) 8.2 74.8 (20.1) 9.2 13.9
EBITDA Gth (%) 10.4 100.7 (26.9) 7.0 12.5
Opg Profit Gth (%) 2.4 116.6 (33.6) 0.5 9.5
Net Profit Gth (Pre-ex) (%) 15.9 107.3 (41.9) (6.0) 8.2
Margins & Ratio
Gross Margins (%) 45.7 46.3 45.9 44.0 43.2
ROAE (%) 16.0 25.2 12.2 10.6 10.6
ROA (%) 4.4 7.4 3.7 3.1 3.1
ROCE (%) 5.9 10.6 5.7 5.1 5.1
Div Payout Ratio (%) 25.5 26.0 13.1 25.0 25.0

Page 53
Company Guide
Lippo Karawaci

FY Dec 3Q2014 4Q2014 1Q2015 2Q2015 3Q2015
Revenue 2,012 5,534 2,447 2,300 2,012

Gross Profit 946 2,530 1,200 1,057 967
Operating Profit 398 1,845 627 577 273
Other Non Opg (Exp)/Inc 219 233 63.5 80.1 (799)
Pre-tax Profit 585 2,042 661 634 (564)
Tax (65.5) (324) (101) (137) (48.6)
Minority Interest (139) (224) (143) (139) (96.1)
Net Profit 381 1,494 417 358 (708)
Net profit bef Except. 381 1,494 417 358 (708)
EBITDA 398 1,845 627 577 273
Burned by non-cash-outflow
accounting forex loss. This
Growth
should continue in 4Q15
Revenue Gth (%) (4.0) 175.0 (55.8) (6.0) (12.5)
EBITDA Gth (%) (23.7) 363.9 (66.0) (8.0) (52.7)
Opg Profit Gth (%) (23.7) 363.9 (66.0) (8.0) (52.7)
Margins
Gross Margins (%) 47.0 45.7 49.1 46.0 48.0

FY Dec 2013A 2014A 2015F 2016F 2017F
Net Fixed Assets 3,117 3,519 4,979 5,872 6,567

Other LT Assets 4,172 4,291 4,932 5,875 6,974
Cash & ST Invts 1,855 3,529 2,798 977 1,492
Inventory 13,894 16,553 20,447 24,347 25,388
Debtors 772 951 954 1,042 1,186
Total Assets 31,303 37,773 43,039 47,041 50,536
ST Debt 16.7 186 400 400 400

Creditor 398 395 678 766 885
LT Debt 7,791 9,811 11,205 12,435 12,427 Rising net gearing as more
capex is required for hospital
Other LT Liabilities 1,549 1,502 1,727 1,986 2,284
expansion and its continuing
Shareholder’s Equity 12,784 15,588 16,735 17,757 18,915 transformation into more of a
Minority Interests 1,377 2,033 2,582 3,118 3,706 high-rise developer
Total Cap. & Liab. 31,303 37,773 43,039 47,041 50,536
Non-Cash Wkg. Capital 14,372 17,780 19,940 22,973 22,700

Net Cash/(Debt) (5,952) (6,468) (8,807) (11,858) (11,335)
Inventory Turn (avg days) 1,351.2 950.1 1,650.6 1,778.6 1,617.5
Asset Turnover (x) 0.2 0.3 0.2 0.2 0.2
Current Ratio (x) 3.1 3.4 3.1 3.0 2.8
Quick Ratio (x) 0.3 0.5 0.3 0.2 0.2
Net Debt/Equity (X) 0.4 0.4 0.5 0.6 0.5
Capex to Debt (%) 20.3 3.3 16.0 11.7 10.2
Z-Score (X) 2.0 2.2 1.9 1.8 1.7

Page 54
Company Guide
Lippo Karawaci

FY Dec 2013A 2014A 2015F 2016F 2017F
Pre-Tax Profit 1,925 3,695 2,495 2,437 2,673

Dep. & Amort. 324 409 519 698 850
Tax Paid (332) (560) (465) (508) (579)
Assoc. & JV Inc/(loss) 0.0 0.0 0.0 0.0 0.0
Chg in Wkg.Cap. (4,499) (3,409) (2,159) (3,034) 274
Net Operating CF (2,946) (452) (160) (944) 2,629
Capital Exp.(net) (1,588) (333) (1,857) (1,506) (1,310)
Other Invts.(net) 0.0 0.0 0.0 0.0 0.0
Invts in Assoc. & JV 563 657 549 536 588
Div from Assoc & JV 0.0 0.0 0.0 0.0 0.0
Other Investing CF (203) (644) (537) (768) (1,037)
Net Investing CF (1,229) (320) (1,846) (1,738) (1,758)
Div Paid (270) (320) (333) (370) (348)
Chg in Gross Debt 1,793 2,190 1,607 1,231 (8.0)
Capital Issues 0.0 0.0 0.0 0.0 0.0
Other Financing CF 1,150 568 0.0 0.0 0.0
Net Financing CF 2,673 2,437 1,274 860 (356)
Chg in Cash (1,501) 1,665 (731) (1,821) 515
Opg CFPS (Rp) 67.3 128 86.6 90.6 102
1526
Rp
Closing T arget
S.No. Dat e Rat ing
Pric e Pric e
1426
8 1: 20 J an 15 1030 1200 HOLD
2: 30 Mar 15 1305 1200 HOLD
2
1326 3: 27 Apr 15 1305 1360 HOLD
4: 30 Apr 15 1185 1360 HOLD
3 5: 13 J ul 15 1190 1300 HOLD
1226 4
6: 10 Aug 15 1110 1300 HOLD
7: 03 Sep 15 1055 1160 HOLD
5 6
1126 8: 01 Dec 15 1360 1160 HOLD
1026
7
1
926
Source: DBS Vickers

Page 55
Pakuwon Jati
Edition 2 Version 1 | Bloomberg: PWON IJ | Reuters: PWON.JK Refer to important disclosures at the end of this report
HOLD (Downgrade from BUY) Covering All Bases

Last Traded Price: Rp496 (JCI : 4,525.92) Downgrade to HOLD after recent rally, still our preferred pick in
Price Target : Rp490 (1% downside) (Prev Rp470) the sector. We tweaked our RNAV assumptions slightly to
Rp570/sh (from Rp551/sh) to reflect Pakuwon Jati (PWON)’s latest
Potential Catalyst: Upside to RNAV from T.B. Simatupang project launch marketing sales achieved, expected gearing and the revised risk
Where we differ: One of the neutral call amid BUY recommendations premium (to 5.5%) for WACC calculation. There is only a slight
change in TP (to Rp490) given minimal adjustments to RNAV.
Analyst
Edward Ariadi Tanuwijaya +6221 3003 4932 However, despite being our preferred pick for its strong recurring
edward.tanuwijaya@id.dbsvickers.com earnings to ride-out any slowdown in property sales, we
downgrade PWON to HOLD after the recent rally (+15% in a
month) that has wiped out most of the upside.
Sizeable recurring income base and decent marketing sales

Price Relative
Rp Relative Index
growth. Our marketing sales forecast growth is conservative at
605.7 2.4%/9.5%/11.3% in FY15/16/17F. This, plus the sizeable
555.7 223
505.7 203 recurring revenue base (currently 48% of consolidated revenue)
should translate into decent sustainable earnings growth beyond
455.7 183
405.7
163
355.7
305.7
143 2017 too.
255.7 123
205.7 103 Strong bargaining power in retail mall space. Armed with 512k
155.7 83
Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 sqm of net leasable area (NLA) in retail malls with over 90%
Pakuwon Jati (LHS) Relative JCI INDEX (RHS) occupancy rate, PWON is the largest retail space owner and
operator in both Jakarta and Surabaya. PWON benefits from
FY Dec (Rpbn) 2014A 2015F 2016F 2017F limited retail space supply in good areas, and strong demand from
Revenue 3,872 4,941 5,461 6,415 both foreign and local retailers.
EBITDA 2,471 3,464 4,013 4,669
Pre-tax Profit 2,859 2,238 2,389 2,754 Valuation:
Net Profit 2,516 1,805 1,915 2,199 Our target price of Rp490 is pegged to a 13% discount to our
Net Pft (Pre Ex.) 1,395 1,805 1,915 2,199 base-case RNAV (based on its adjusted 8-year average discount
EPS (Rp) 52.2 37.5 36.1 41.5
to RNAV). PWON is currently trading at a 13% discount to
EPS Pre Ex. (Rp) 29.0 37.5 36.1 41.5
EPS Gth Pre Ex (%) 122 (28) (4) 15 RNAV (much narrower to its 8-year average of 26%) and 13.7x
Net Pft Gth (Pre-ex) (%) 23 29 (4) 15 FY16F PE (at +1SD of its mean forward PE).
Diluted EPS (Rp) 52.2 37.5 36.1 41.5
Net DPS (Rp) 4.50 5.80 6.81 7.23 Key Risks to Our View:
BV Per Share (Rp) 128 153 168 203 Slower take-up at launches
PE (X) 9.5 13.2 13.7 11.9 Weaker property affordability, potential increase in interest
PE Pre Ex. (X) 17.1 13.2 13.7 11.9
P/Cash Flow (X) 6.7 8.8 7.6 6.3 rates and stricter implementation of requirements for high-rise
EV/EBITDA (X) 11.2 8.4 8.0 6.9 developments could prompt delays in launching its project
Net Div Yield (%) 0.9 1.2 1.4 1.5 pipeline, resulting in lower than expected marketing sales.
P/Book Value (X) 3.9 3.2 2.9 2.4
Net Debt/Equity (X) 0.2 0.3 0.3 0.2 Slower economy and rising competition
ROAE (%) 50.1 26.7 23.5 22.4
This could indirectly reduce PWON’s ability to raise rents and
Earnings Rev (%): (8) (23) (28) maintain the profitability of its investment property portfolio.
Consensus EPS (Rp): 39.9 50.6 58.3 At A Glance
Other Broker Recs: B: 11 S: 0 H: 4 Issued Capital (m shrs) 48,160
Source of all data: Company, DBS Vickers, Bloomberg Finance L.P Mkt. Cap (Rpbn/US$m) 23,887 / 1,723
Major Shareholders
Pakuwon family related (%) 52.0
Free Float (%) 48.0

ed: JS / sa: MA
Company Guide
Pakuwon Jati
Marketing sales
3,875
3,481
3,500
CRITICAL DATA POINTS TO WATCH 3,000
3,137 3,180
3,000
2,500
Earnings Drivers:
2,000
Large portion of recurring revenue from investment
1,500
properties
1,000
PWON generated 48% of its consolidated revenue from 500
investment properties, mostly retail malls. We expect this 0
proportion to be stable for the next few years as PWON has 2013A 2014A 2015F 2016F 2017F
a balanced property portfolio. The large component of

Sales Trend
recurring revenue should provide PWON with a buffer
Rp bn
against slower marketing sales in this challenging property 50.0%
6,000 45.0%
market. PWON’s long term target is a 50-50 mix of recurring 40.0%
5,000
and non-recurring revenues. 35.0%
4,000 30.0%
Marketing sales achieved 3,000
25.0%
20.0%
Property developer recognises non-recurring revenue from 2,000 15.0%
marketing sales achieved in the prior 2-3 years. We expect 1,000
10.0%
5.0%
revenue to grow by 18% CAGR over 2014-17F given that
0 0.0%
marketing sales grew at 41% CAGR over 2011-14. 2013A 2014A 2015F 2016F 2017F

We estimate marketing sales can still grow at moderate 8%
CAGR over the next three years, supported by its existing Profitability Trend
residential townships and high-rise developments in Rp bn
Indonesia’s two largest cities - Jakarta and Surabaya. 2,932
2,732
Product mix 2,532
2,332
About 70% of PWON’s non-recurring revenue comes from 2,132
high-rise projects, and this segment has been generating 1,932
stable gross profit margins (c.50%). Plus, given the large 1,732
share of recurring revenue and stable sustainable margins, 1,532
we expect overall gross profit margins to remain steady. 1,332
1,132
2013A 2014A 2015F 2016F 2017F
Good control of operating costs Operating EBIT Pre tax Profit Net Profit
PWON has been able to keep SG&A expenses (as % of

revenue) under control, despite the larger-than-average Margins Trend
increase in two key items in SG&A expenses; “advertising, 67.0%
promotion and events” for the purpose of attracting more 62.0%
demand for its developments during this challenging period 57.0%
and “salaries and allowances” given new substantial 52.0%
projects in its portfolios. 47.0%
42.0%
Strong bargaining power for retail mall operators 37.0%
Given the limited supply of retail space supply in good areas, 32.0%
PWON (as one of the largest retail space owner and 2013A 2014A 2015F 2016F 2017F
operator in Jakarta and Surabaya) should benefit from Operating Margin % Net Income Margin %
strong demand for retail space from both foreign and local Disc to RNAV trend
brands. 80%
70%
Company Background 60%
Mixed-use property and residential township developer with 50%
assets in Jakarta and Surabaya. PWON has a balanced 40%

Average 26%
portfolio with a large share of recurring revenues from retail 30%
malls 20%
10%
0%
Aug-08
Aug-09
Aug-10
Aug-11
Aug-12
Aug-13
Aug-14
Aug-15
Dec-07
Apr-08
Dec-08
Apr-09
Dec-09
Apr-10
Dec-10
Apr-11
Dec-11
Apr-12
Dec-12
Apr-13
Dec-13
Apr-14
Dec-14
Apr-15
Dec-15
-10%
-20%

Page 57
Company Guide
Pakuwon Jati

Balance Sheet: 0.4
0.70
Net gearing level is reasonable 0.4
0.60 0.4
As a superblock developer, PWON’s gearing has been higher
0.3
than other developers. Net gearing has improved 0.50
0.3
significantly since 2008. And, with the current strong cash 0.40
0.3
generation from asset monetisation, PWON’s net gearing 0.30 0.3

0.3
should stay at a reasonable level of c.37% in the next few 0.20
0.2
years. 0.10
0.2
0.00 0.2
2013A 2014A 2015F 2016F 2017F
Mandatory Convertible Notes (MCN) will be paid off before Gross Debt to Equity (LHS) Asset Turnover (RHS)
maturity
Capital Expenditure
PWON will redeem the US$58m MCN issued to UOB Kay Rp
Hian which will mature on 31st July 2016, to prevent the 8,000.0
7,000.0
dilution of its stake in the Gandaria City project.
6,000.0
5,000.0
Capex to normalise 4,000.0
We project capex will normalise going forward at around 3,000.0
FY15’s level, after the spike in 2014 from major acquisitions 2,000.0
1,000.0
(bought 67% stake in Pakuwon Permai project and 4.2ha
0.0
landbank in T.B. Simatupang, South Jakarta). 2013A 2014A 2015F 2016F 2017F
Share Price Drivers: ROE (%)

Marketing sales achieved and pipeline 50.0%
Marketing sales achieved is a good indicator for all Indonesia

40.0%
property developers (including PWON) as it gives a leading
indication for revenue generation for the next 2-3 years 30.0%
(depending on the revenue recognition).
20.0%
Key Risks:
10.0%
2013A 2014A 2015F 2016F 2017F
Liquidity tightening could dampen demand further. Forward PE Band (x)
(x)
Potential interest rate hike. Property demand is sensitive to 17.7

+2sd: 15.1x
Exposure to US$, both in terms of financials (debt in balance 13.7

+1sd: 13.4x
sheet) and operations (i.e. higher material cost especially for 11.7 Avg: 11.8x
high-rise projects with higher US$-linked items) is a risk amid ‐1sd: 10.2x
9.7
the weak IDR environment. ‐2sd: 8.6x
7.7
Strict implementation on potential revision to housing
development balance ratio (of low, middle and luxury PB Band (x)
houses). If implemented strictly and retroactively, this could 7.0
(x)
potentially mean additional costs for property developers
+2sd: 5.41x
5.0
Capital-intensive projects require large funding. High-rise +1sd: 4.66x
and retail mall developments require large upfront capital. 4.0 Avg: 3.9x
Cost of external financing has to be kept in check. ‐1sd: 3.15x
3.0
‐2sd: 2.4x
2.0

Page 58
Company Guide
Pakuwon Jati
PWON: RNAV summary

Value (Rpbn) - Full Value % of
Portfolio City Category Stakes
adjusted (Rpbn) total
Investment Property 20,752 24,093 62%

East Coast Center Surabaya Retail Mall 151 100% 151 0%
Tunjungan Plaza (I-IV) mall Surabaya Retail Mall 4,284 100% 4,284 13%
Tunjungan Plaza V mall Surabaya Retail Mall 703 100% 703 2%
Tunjungan Plaza VI mall Surabaya Retail Mall 807 100% 807 2%
Sheraton Hotel Surabaya Hotel 835 100% 835 2%
Tunjungan Plaza 4-star hotel Surabaya Hotel 397 100% 397 1%
Gandaria City Jakarta Retail Mall 2,456 83% 2,960 7%
Kota Kasablanka Jakarta Retail Mall 3,422 100% 3,422 10%
Gandaria 8 Office Jakarta Office 366 83% 441 1%
Kota Kasablanka Office 88 - Tower A (part leased) Jakarta Office 960 100% 960 3%
Kota Kasablanka Office 88 - Tower B (all leased) Jakarta Office 792 100% 792 2%
Gandaria 5-star hotel Jakarta Hotel 728 83% 877 2%
Supermal Pakuwon Indah - Phase 1 & Trade Center Surabaya Retail Mall 1,724 67% 2,568 5%
Supermal Pakuwon Indah - Phase 2 & 3 Surabaya Retail Mall 1,182 67% 1,760 4%
Supermal Pakuwon Indah - Phase 4 Surabaya Retail Mall 156 67% 232 0%
Royal Plaza Mall Surabaya Retail Mall 475 50% 943 1%
Somerset Berlian Jakarta Serviced Apartment 238 67% 355 1%
Blok M Plaza Jakarta Retail Mall 583 67% 869 2%
Ascott Residence Surabaya Serviced Apartment 185 67% 276 1%
Pullman 5 star hotel Surabaya Hotel 177 67% 264 1%
Ibis 3-star hotel Surabaya Hotel 134 67% 200 0%
Development properties & Landbank 12,729 13,456 38%

Educity Condominium (Twin tower 1) Surabaya Apartment 0 100% 0 0%
Educity Condominium (Twin tower 2) Surabaya Apartment 23 100% 23 0%
Tunjungan V - The Peak Surabaya Apartment 210 100% 210 1%
Tunjungan VI - Apartment Surabaya Apartment 404 100% 404 1%
Tunjungan V - Pakuwon Center Surabaya Office 184 100% 184 1%
Tunjungan VI - Office Surabaya Office 249 100% 249 1%
Pakuwon City - Palm Beach Surabaya Landed Residential 1,029 100% 1,029 3%
Pakuwon City - Community 1 Surabaya Landed Residential 1,531 100% 1,531 5%
Pakuwon City - Community 2 Surabaya Landed Residential 2,011 100% 2,011 6%
Pakuwon New Town 1 Surabaya Landed Residential 985 100% 985 3%
Pakuwon New Town 2 Surabaya Landed Residential 1,580 100% 1,580 5%
Kota Kasablanka tower 3 Jakarta Apartment 256 100% 256 1%
Gandaria office - expansion Jakarta Office 980 83% 1,180 3%
Kota Kasablanka office - expansion Jakarta Office 1,186 100% 1,186 4%
4.2ha landbank in TB Simatupang Jakarta Mixed-use 473 70% 675 1%
Pakuwon Indah - 6 apartments Surabaya Apartment 661 67% 984 2%
32,186
Net Debt 3,308
RNAV 30,172
Fully Diluted RNAV per share 570
Source: DBS Vickers

Page 59
Company Guide
Pakuwon Jati
Key Assumptions
FY Dec 2013A 2014A 2015F 2016F 2017F
Marketing sales 3,000 3,137 3,180 3,481 3,875
Segmental Breakdown
FY Dec 2013A 2014A 2015F 2016F 2017F
Revenues (Rpbn)
Apartment & Office 1,217 1,588 1,729 1,329 1,274
Kavling & Building 373 493 859 1,289 1,535
Hotel 154 163 250 422 730
Rental & Maintenance 1,286 1,629 2,104 2,421 2,876 Recurring revenue
portion will remain high
Total 3,030 3,872 4,941 5,461 6,415
Gross Profit (Rpbn)
Apartment & Office 755 846 951 731 701
Kavling & Building 271 394 644 967 1,151 Stable margins going
Hotel 63.7 68.3 103 173 299 forward given stable
Rental & Maintenance 676 851 1,094 1,259 1,495 revenue mix
Total 1,765 2,158 2,791 3,130 3,647

Apartment & Office 62.0 53.3 55.0 55.0 55.0
Kavling & Building 72.5 79.9 75.0 75.0 75.0
Hotel 41.3 41.9 41.0 41.0 41.0
Rental & Maintenance 52.6 52.2 52.0 52.0 52.0
Total 58.3 55.7 56.5 57.3 56.8

FY Dec 2013A 2014A 2015F 2016F 2017F
Revenue 3,030 3,872 4,941 5,461 6,415
Gross Profit 1,765 2,158 2,791 3,130 3,647
Other Non Opg (Exp)/Inc (97.3) (57.6) 0.0 0.0 0.0
Associates & JV Inc (10.2) (5.9) 0.0 0.0 0.0
Net Interest (Exp)/Inc (73.2) (86.9) (158) (249) (315)
Exceptional Gain/(Loss) 0.0 1,120 0.0 0.0 0.0
Pre-tax Profit 1,331 2,859 2,238 2,389 2,754
Tax (195) (260) (321) (355) (417)
Minority Interest (3.7) (83.6) (112) (119) (138)
Net Profit 1,133 2,516 1,805 1,915 2,199
Impressive revenue growth
Net Profit before Except. 1,133 1,395 1,805 1,915 2,199 estimated at 24% CAGR
EBITDA 1,700 2,471 3,464 4,013 4,669 (from 2012-2017F)
Growth
Revenue Gth (%) 39.9 27.8 27.6 10.5 17.5
EBITDA Gth (%) 49.0 45.3 40.2 15.9 16.3
Opg Profit Gth (%) 42.3 25.0 26.8 10.1 16.3
Net Profit Gth (Pre-ex) (%) 51.5 23.2 29.3 6.1 14.9
Margins & Ratio
Gross Margins (%) 58.3 55.7 56.5 57.3 56.8
ROAE (%) 33.4 50.1 26.7 23.5 22.4
ROA (%) 13.4 19.3 9.9 9.5 10.0
ROCE (%) 20.7 17.2 14.0 13.6 14.7
Div Payout Ratio (%) 22.6 19.1 11.1 20.0 20.0

Page 60
Company Guide
Pakuwon Jati

FY Dec 3Q2014 4Q2014 1Q2015 2Q2015 3Q2015
Revenue 836 1,156 1,168 1,258 1,137

Gross Profit 465 533 687 748 658
Other Oper. (Exp)/Inc (53.0) (87.2) (71.0) (93.9) (89.0)
Other Non Opg (Exp)/Inc (3.0) (69.1) (126) (28.2) 10.8
Associates & JV Inc (2.7) (3.0) 1.47 (0.9) (0.8)
Exceptional Gain/(Loss) 98.7 1,021 0.0 0.0 0.0
Pre-tax Profit 470 1,349 440 565 508
Tax (55.6) (86.8) (82.0) (95.9) (74.2)
Net Profit 410 1,200 329 427 413
EBITDA 412 445 616 654 569
Growth
Revenue Gth (%) (20.7) 38.2 1.0 7.8 (9.6)
EBITDA Gth (%) (32.0) 8.1 38.2 6.2 (12.9)
Opg Profit Gth (%) (32.0) 8.1 38.2 6.2 (12.9)
Net Profit Gth (Pre-ex) (%) (39.7) (42.6) 84.1 29.8 (3.3)
Margins
Gross Margins (%) 55.6 46.1 58.8 59.4 57.9

FY Dec 2013A 2014A 2015F 2016F 2017F
Net Fixed Assets 4,376 9,120 11,131 12,001 12,367

Other LT Assets 2,259 3,809 4,031 5,433 7,359
Cash & ST Invts 2,126 2,809 3,327 1,936 1,725
Inventory 4.52 6.57 6.57 6.57 6.57
Debtors 149 263 226 250 293
Other Current Assets 384 763 916 1,099 1,319
Total Assets 9,298 16,771 19,636 20,725 23,070
ST Debt 374 514 516 459 499

Creditor 54.8 134 75.4 81.7 97.0
Reasonable net gearing
LT Debt 2,041 4,082 5,670 4,785 4,473 level, in line with
Other LT Liabilities 220 363 363 363 363 future expansion plans
Minority Interests 226 2,110 2,222 2,341 2,479
Total Cap. & Liab. 9,298 16,771 19,637 20,725 23,070
Non-Cash Wkg. Capital (2,021) (2,505) (2,357) (2,507) (2,907)

Net Cash/(Debt) (288) (1,787) (2,859) (3,308) (3,248)
Asset Turnover (x) 0.4 0.3 0.3 0.3 0.3
Current Ratio (x) 0.9 0.9 1.1 0.8 0.7
Quick Ratio (x) 0.8 0.8 0.9 0.5 0.4
Net Debt/Equity (X) 0.1 0.2 0.3 0.3 0.2
Capex to Debt (%) 24.2 151.6 53.3 69.6 78.3
Z-Score (X) 3.8 2.6 2.8 3.2 3.2

Page 61
Company Guide
Pakuwon Jati

FY Dec 2013A 2014A 2015F 2016F 2017F
Pre-Tax Profit 1,331 2,859 2,238 2,389 2,754

Dep. & Amort. 188 581 1,067 1,375 1,600
Tax Paid (195) (260) (321) (355) (417)
Assoc. & JV Inc/(loss) 0.0 0.0 0.0 0.0 0.0
Chg in Wkg.Cap. 638 484 (148) 150 399
Other Operating CF (3.3) (83.6) (112) (119) (138)
Net Operating CF 1,960 3,581 2,724 3,440 4,199
Capital Exp.(net) (584) (6,967) (3,300) (3,648) (3,892)
Other Invts.(net) 0.0 0.0 0.0 0.0 0.0 Capex (including land
Invts in Assoc. & JV 3.76 1,884 112 119 138 acquisition) to
Div from Assoc & JV 0.0 0.0 0.0 0.0 0.0 normalise after flurry of
Other Investing CF (392) 235 0.0 0.0 0.0 project acquisitions in
Net Investing CF (972) (4,849) (3,188) (3,528) (3,755) 2014
Div Paid (169) (217) (279) (361) (383)
Chg in Gross Debt (11.0) 2,182 1,590 (942) (272)
Capital Issues 0.0 0.0 0.0 0.0 0.0
Other Financing CF 0.0 (15.0) (330) 0.0 0.0
Net Financing CF (180) 1,950 981 (1,303) (655)
Chg in Cash 808 683 518 (1,391) (211)
Opg CFPS (Rp) 27.4 64.3 59.6 62.1 71.7
Rp
564 Closing T arget
S.No. Dat e Rat ing
Pric e Pric e
1: 26 Mar 15 491 530 HOLD
514 2 2: 27 Apr 15 493 550 HOLD
3: 30 Apr 15 438 550 HOLD
1 4: 13 J ul 15 421 550 BUY
464
5: 10 Aug 15 404 550 BUY
4 6: 03 Sep 15 365 470 BUY
3 7: 30 Oct 15 426 470 BUY
414
7
5 6
364
314
Source: DBS Vickers

Page 62
Summarecon Agung
Edition 2 Version 1 | Bloomberg: SMRA IJ | Reuters: SMRA.JK Refer to important disclosures at the end of this report
HOLD (Downgrade from BUY) A Gear Too Fast?

Last Traded Price: Rp1,575 (JCI : 4,525.92) Downgrade to HOLD on slow earnings growth. We lowered
Price Target : Rp1,650 (5% upside) (Prev Rp1,855) our RNAV assumptions by 14% to Rp2,457/sh (from Rp2,854/sh
previously) to reflect the latest marketing sales achievement,
Potential Catalyst: Better price from spinning-off investment properties expected high net debt and the revised risk premium (to 5.5%)
Where we differ: Neutral call amid most BUY recommendations for WACC calculation. Subsequently, our TP is cut to Rp1,650,
presenting limited upside to current price.
Analyst
Edward Ariadi Tanuwijaya +6221 3003 4932
edward.tanuwijaya@id.dbsvickers.com Shifting focus to high-rise developments. SMRA's development
focus has shifted to more high-rise buildings to target middle-
class housing price range as housing affordability starts to
weaken (due to lower spending power and massive surge in
Price Relative property prices in the past four years). Annual marketing sales
Rp Relative Index from high-rise apartments has surged fourfolds from 2012 and
2,113.0
1,913.0
239 now represents c.60% of SMRA’s consolidated marketing sales.
219
1,713.0
199
1,513.0
1,313.0
179 Gearing up to pressure bottom line. Due to the shift to more
159
1,113.0 139 high-rise developments, SMRA needs much higher capex. This
913.0
has led SMRA to gear up significantly (net gearing of 60% as
119
713.0 99
513.0
Dec-11 Dec-12 Dec-13 Dec-14
79
Dec-15
at 9M15 is the level last seen at the end of 2008). We forecast
Summarecon Agung (LHS) Relative JCI INDEX (RHS)
net profit to have flat growth from FY15-17F despite moderate
forecasted revenue growth (5% CAGR from 2014-17F) during
Forecasts and Valuation the same period.
FY Dec (Rpbn) 2014A 2015F 2016F 2017F
Revenue 5,757 5,980 6,444 6,552
EBITDA 2,236 2,012 2,233 2,382
Valuation:
Pre-tax Profit 1,936 1,550 1,571 1,578 Our target price of Rp1,650 is at a 34% discount to our base-
Net Profit 1,385 1,064 1,057 1,057 case RNAV (based on its adjusted 8-year average discount to
Net Pft (Pre Ex.) 1,385 1,064 1,057 1,057 RNAV). SMRA is currently trading at a 36% discount to its
EPS (Rp) 96.0 73.8 73.3 73.3
EPS Pre Ex. (Rp) 96.0 73.8 73.3 73.3 RNAV (narrower than its 8-year average of 46%) and at a
EPS Gth Pre Ex (%) 27 (23) (1) 0 premium 21.5x FY16F PE (at +1SD of mean forward PE).
Net Pft Gth (Pre-ex) (%) 27 (23) (1) 0
Diluted EPS (Rp) 96.0 73.8 73.3 73.3 Key Risks to Our View:
Net DPS (Rp) 23.0 22.5 22.3 22.3
BV Per Share (Rp) 376 427 478 529 Slower take-up at SMRA’s launches. Weaker property
PE (X) 16.4 21.4 21.5 21.5 affordability, potential increase in interest rate and stricter
PE Pre Ex. (X) 16.4 21.4 21.5 21.5 implementations of high-rise developments could prompt
P/Cash Flow (X) nm 8.2 26.3 48.4
delays in launching pipeline and cause marketing sales to miss
EV/EBITDA (X) 11.8 13.3 12.7 12.3
Net Div Yield (%) 1.5 1.4 1.4 1.4 our expectations.
P/Book Value (X) 4.2 3.7 3.3 3.0
Earnings Rev (%): (12) (28) (35) Mkt. Cap (Rpbn/US$m) 22,722 / 1,639
Consensus EPS (Rp): 87.3 96.5 113 Major Shareholders
Other Broker Recs: B: 22 S: 1 H: 6 Semarop Agung (%) 26.2
Sinarmegah Jaya (%) 8.6
Source of all data: Company, DBS Vickers, Bloomberg Finance L.P
Free Float (%) 65.2
ICB Industry : Real Estate / Real Estate

ed: TH / sa: MA
Company Guide
Summarecon Agung
Marketing sales
4,729 4,799
4,800 4,601
4,324
4,200
3,000
Property developer recognises non-recurring revenue from
2,400
marketing sales in the prevailing years. We expect revenue to
1,800
grow by an anaemic 5% CAGR over 2014-17F given that 1,200
marketing sales expanded by 17% CAGR over 2011-14, and 600
is expected be flat over 2014-2017F. 0
2013A 2014A 2015F 2016F 2017F
SMRA has three existing townships in three different regions Sales Trend
of Greater Jakarta and one recent newly launched township Rp bn
in Bandung (West Java). All the projects have been successful 30.0%
6,000
considering the reception during launches. Going forward, 25.0%
5,000
marketing sales will be mostly supported by Serpong and 20.0%
4,000
Bekasi townships given that the Kelapa Gading township is 15.0%
3,000
matured.
2,000 10.0%
SMRA also plans to launch two more townships in the future; 1,000 5.0%
1) Bogor (South Jakarta suburb) - following the acquisition of 0 0.0%

2013A 2014A 2015F 2016F 2017F
a 40.8% stake in the company that owns a 250-ha land bank
in 2014, and 2) Makassar (South Sulawesi) – a 51-49 JV
project with local developer Mutiara Property group to
Profitability Trend
develop a 170-ha township (similar concept with recently Rp bn
launched Bandung township) . 2,056
1,856
Focus shifts to more high-rise developments

SMRA’s non-recurring revenue mix is balanced between 1,656
housing, shophouses and apartment & offices. Landplots and 1,456

shophouses churn better gross profit margins (more than
60%) than other segments. Given the launch of more high- 1,256
rise projects recently (as SMRA is targeting middle-class

1,056
housing price range), we will monitor revenue mix and 2013A 2014A 2015F 2016F 2017F
profitability going forward. Meanwhile, recurring revenue Operating EBIT Pre tax Profit Net Profit
portion should remain stable at c.20% going forward and

Margins Trend
generate stable margins.
35.0%
SMRA has been able to keep SG&A expenses (as % of 30.0%
revenue) under control, despite the more-than-average 25.0%

increase in its two key items in SG&A expenses; “advertising
& promotion” for the purpose of attracting more property 20.0%
demand during this challenging period and “salaries” for

15.0%
both existing and new employees to run projects in its 2013A 2014A 2015F 2016F 2017F
portfolios. Operating Margin % Net Income Margin %
Disc to RNAV trend

Significant increase in debt to affect bottom line 100%
Shift to more high-rise developments has led to higher capex 90%
needs. SMRA has since geared up significantly (by securing 80%
70%
more loan facilities and issuing IDR bonds). As a
60%
consequence, higher interest expense is expected to affect 50%
SMRA’s bottom line. We forecast net profit to have flat 40% Average 46%
growth from FY15-17F. 30%

20%
10%
0%
Aug-08
Aug-09
Aug-10
Aug-11
Aug-12
Aug-13
Aug-14
Aug-15
Dec-07
Apr-08
Dec-08
Apr-09
Dec-09
Apr-10
Dec-10
Apr-11
Dec-11
Apr-12
Dec-12
Apr-13
Dec-13
Apr-14
Dec-14
Apr-15
Dec-15

Page 64
Company Guide
Summarecon Agung

Balance Sheet: 0.4
0.90
Geared up for more high-rise projects and potential 0.80
0.4
0.4
acquisitions – not in net cash position anymore 0.70
0.3
SMRA had been in net cash position from 2010 to 2013 as 0.60
0.3
strong cash generation outpaced annual capex requirements. 0.50 0.3

0.40
However, the launch of more high-rise projects and projected 0.30
0.3
0.3
land acquisitions have lifted gearing significantly. As of 9M15, 0.20 0.2
net gearing reached 60%, a level not seen since end-2008. 0.10 0.2
0.00 0.2
2013A 2014A 2015F 2016F 2017F
Share Price Drivers: Gross Debt to Equity (LHS) Asset Turnover (RHS)
Marketing sales achievement and pipeline

Capital Expenditure
Marketing sales achievement is a good indicator for all Rp
Indonesia property developers (including SMRA) as it gives 3,500.0
leading indication for the revenue generation for the next 2-3 3,000.0
years (depending on the revenue recognition). 2,500.0
2,000.0
1,500.0
Investment property spin-offs
1,000.0
SMRA shelved its investment property spin-off plan in late
500.0
2015 due to slow equity market and potential tax benefit on
0.0
asset transfers (under discussion as part of gov’t plans to 2013A 2014A 2015F 2016F 2017F
revise regulation on REITs structure in Indonesia). We value Capital Expenditure (-)
the investment property unit at c.Rp7tn (c.17% of SMRA’s ROE (%)

total RNAV). A higher value from investment property spin-
offs (if happens) could be a re-rating catalyst. 25.0%
20.0%
Key Risks:
Stricter regulations for high-rise developments. Plot ratio 15.0%

5.0%
0.0%
2013A 2014A 2015F 2016F 2017F
Potential interest rate hike. Property demand is sensitive to
and is negatively correlated to interest rate movements. Forward PE Band (x)
(x)
Strict implementation on potential revision to housing 27.7
+2sd: 25.6x
houses). If implemented strictly and retroactively, this could +1sd: 20x

Avg: 14.3x
7.7
‐1sd: 8.7x
Company Background
SMRA is one of Indonesia's most established property 2.7 ‐2sd: 3.1x
developers. It has three existing township developments and
several investment properties in its portfolio which generates PB Band (x)
sizeable recurring income, c.20% of revenues. (x)
5.4
4.9 +2sd: 4.91x
4.4
3.9 +1sd: 3.95x
3.4
2.9 Avg: 2.99x
2.4
1.9 ‐1sd: 2.04x
1.4
‐2sd: 1.08x
0.9

Page 65
Company Guide
Summarecon Agung
SMRA: RNAV summary

Gross floor/land
SMRA portfolio Stake owned RNAV
area (ha)
Investment Properties
Mal Kelapa Gading 100% 3,174
La Piazza 100% 258
Gading Food City 100% 47
Summarecon Mal Serpong - Phase 1 100% 552
Plaza Summarecon 100% 12
Plaza Summarecon Serpong 100% 31
Menara Satu Office 100% 93
Summarecon Mal Serpong - Phase 2 100% 731
Summarecon Mall Bekasi 100% 1,052
Harris Hotel Kelapa Gading 100% 361
POP Hotel, Kelapa Gading 100% 163
Harris Hotel Bekasi 100% 493
Investment Properties Total Surplus/(Deficit) - 1 6,966
Township developments
Kelapa Gading 100% 389
The Springs - Serpong 54% 247
Scientia Garden - Serpong 69% 920
Summarecon Bekasi 100% 5,131
Summarecon Bandung 100% 1,334
Total PV of future development profits - 2 8,022
High-rise developments
Kensington Apartments 100% 1,280
Midtown Apartment - Serpong 69% 614
Springlake Apartment - Bekasi 100% 791
High-rise development surplus value (Rpbn) - 3 2,685
Remaining landbank (still untilized for planned future developments)
Serpong 100% 270.0 10,044

Bekasi - JV with DSA 51% 230.0 3,660
Gedebage 100% 180.0 7,769
Bogor 51% 260.0 354
Makassar 51% 150.0 311
Remaining landbank surplus value - 4 22,138
FY16F Net Cash (Debt) - 5 (4,368)
Total asset surplus value - 1+2+3+4+5 35,442

RNAV per share 2,457
Source: DBS Vickers

Page 66
Company Guide
Summarecon Agung
Key Assumptions
FY Dec 2013A 2014A 2015F 2016F 2017F
Marketing sales 3,725 4,601 4,324 4,729 4,799
Segmental Breakdown
FY Dec 2013A 2014A 2015F 2016F 2017F
Revenues (Rpbn)
Houses 918 1,987 2,067 1,371 1,198
Shophouses 929 1,478 532 390 477
Landplots 961 625 26.0 138 226
Apartments & Offices 528 116 1,702 2,817 2,833 Increasing portion of
Others 1,212 1,552 1,652 1,727 1,817 high-rise developments
Total 4,549 5,757 5,980 6,444 6,552 as SMRA’s shifted its
Gross Profit (Rpbn) development focus
Houses 336 1,029 1,137 754 659
Shophouses 576 999 373 273 334
Landplots 814 390 19.5 104 170
Apartments & Offices 239 59.3 851 1,409 1,473
Others 476 580 643 671 706
Total 2,441 3,057 3,023 3,210 3,342
Houses 36.6 51.8 55.0 55.0 55.0 Consolidated GP margin
Shophouses 62.0 67.6 70.0 70.0 70.0 is lower than before due
Landplots 84.7 62.5 75.0 75.0 75.0 to higher proportion of
Apartments & Offices 45.3 51.1 50.0 50.0 52.0 high-rise developments
Others 39.3 37.4 38.9 38.8 38.8 (with lower margin)
Total 53.7 53.1 50.6 49.8 51.0

FY Dec 2013A 2014A 2015F 2016F 2017F
Revenue 4,549 5,757 5,980 6,444 6,552
Gross Profit 2,441 3,057 3,023 3,210 3,342
Other Opng (Exp)/Inc (818) (980) (1,196) (1,224) (1,245)
Associates & JV Inc (0.5) (0.9) 0.0 0.0 0.0
Pre-tax Profit 1,615 1,936 1,550 1,571 1,578
Tax (247) (319) (331) (357) (363)
Despite increase in
Net Profit 1,090 1,385 1,064 1,057 1,057
revenue, net profit to
stay around the same
EBITDA 1,780 2,236 2,012 2,233 2,382 level due to increasing
Growth interest expense
Revenue Gth (%) 18.1 26.6 3.9 7.8 1.7
EBITDA Gth (%) 35.0 25.6 (10.0) 11.0 6.6
Opg Profit Gth (%) 37.5 27.9 (12.0) 8.7 5.6
Net Profit Gth (Pre-ex) (%) 35.4 27.1 (23.2) (0.7) 0.0
Margins & Ratio
Gross Margins (%) 53.7 53.1 50.6 49.8 51.0
ROAE (%) 27.3 28.2 18.4 16.2 14.6
ROA (%) 8.5 9.2 5.7 4.8 4.5
ROCE (%) 17.4 15.7 10.4 9.9 9.8
Div Payout Ratio (%) 38.5 30.4 23.4 30.2 30.5

Page 67
Company Guide
Summarecon Agung

FY Dec 3Q2014 4Q2014 1Q2015 2Q2015 3Q2015
Revenue 1,799 1,865 942 1,655 1,900

Gross Profit 907 1,076 579 814 930
Other Non Opg (Exp)/Inc (3.2) 20.1 0.89 3.44 2.98
Net Interest (Exp)/Inc (43.0) (75.6) (91.6) (73.9) (121)
Pre-tax Profit 495 706 296 372 549
Tax (103) (97.1) (53.6) (89.2) (103)
Minority Interest (62.5) (96.6) 4.59 (0.5) (168)
Net Profit 329 513 247 282 278
EBITDA 538 782 421 446 670
Best quarter by far
Growth
Revenue Gth (%) 55.9 3.7 (49.5) 75.6 14.8
EBITDA Gth (%) 27.6 45.4 (46.1) 5.8 50.5
Opg Profit Gth (%) 28.2 40.8 (49.2) 14.3 51.0
Net Profit Gth (Pre-ex) (%) 23.0 55.6 (51.8) 14.1 (1.4)
Margins
Gross Margins (%) 50.4 57.7 61.5 49.2 49.0

FY Dec 2013A 2014A 2015F 2016F 2017F
Net Fixed Assets 3,486 4,387 6,143 7,056 6,931

Invts in Associates & JVs 284 0.0 0.0 0.0 0.0
Other LT Assets 3,482 5,630 6,639 7,619 8,578
Cash & ST Invts 2,819 1,771 2,939 1,567 616
Inventory 3,264 3,341 4,399 5,257 6,214
Debtors 182 77.2 240 258 263
Other Current Assets 738 666 1,100 1,100 1,100
Total Assets 14,255 15,872 21,460 22,857 23,702
ST Debt 244 506 217 159 307

Creditor 69.6 71.0 98.9 107 104
LT Debt 2,257 3,876 5,661 5,777 5,480
Other LT Liabilities 1,896 1,886 1,886 1,886 1,886
Minority Interests 606 993 1,148 1,305 1,463
Total Cap. & Liab. 14,253 15,871 21,459 22,856 23,701
Non-Cash Wkg. Capital (675) 896 (646) (218) 644

Net Cash/(Debt) 318 (2,612) (2,938) (4,368) (5,171)
Asset Turnover (x) 0.4 0.4 0.3 0.3 0.3 Gearing up due to
Current Ratio (x) 1.4 1.6 1.3 1.2 1.1 higher working capital
requirement for high-
Quick Ratio (x) 0.6 0.5 0.5 0.3 0.1
rise projects
Capex to Debt (%) 68.9 57.2 50.0 35.9 19.2
Z-Score (X) 2.7 2.9 2.3 2.3 2.4

Page 68
Company Guide
Summarecon Agung

FY Dec 2013A 2014A 2015F 2016F 2017F
Pre-Tax Profit 1,615 1,936 1,550 1,571 1,578

Dep. & Amort. 151 141 174 237 274
Tax Paid (247) (319) (331) (357) (363)
Assoc. & JV Inc/(loss) 0.0 0.0 0.0 0.0 0.0
Chg in Wkg.Cap. (943) (1,571) 1,542 (429) (862)
Net Operating CF 297 (45.3) 2,781 865 470
Capital Exp.(net) (1,722) (2,506) (2,939) (2,130) (1,108)
Other Invts.(net) (284) 284 0.0 0.0 0.0
Invts in Assoc. & JV 319 387 155 157 158
Div from Assoc & JV 0.0 0.0 0.0 0.0 0.0
Other Investing CF 458 (696) 0.0 0.0 0.0
Net Investing CF (1,230) (2,530) (2,783) (1,973) (951)
Div Paid (310) (332) (324) (322) (322)
Chg in Gross Debt 1,379 1,881 1,495 57.9 (148)
Capital Issues 0.0 0.0 0.0 0.0 0.0
Other Financing CF 0.0 (0.5) 0.0 0.0 0.0
Net Financing CF 1,069 1,549 1,171 (264) (470)
Chg in Cash 136 (1,027) 1,169 (1,372) (951)
Opg CFPS (Rp) 86.0 106 85.9 89.7 92.3
Rp
S.No. Dat e Rat ing
Pric e Pric e
4 1: 26 J an 15 1595 1780 BUY
2
1783
3 2: 01 Apr 15 1770 1780 BUY
5 3: 27 Apr 15 1895 2200 BUY
8 4: 04 May 15 1820 2200 BUY

1583 6 5: 13 J ul 15 1800 2050 BUY
1 6: 03 Sep 15 1525 1855 BUY
7: 16 Sep 15 1245 1855 BUY
1383
8: 30 Nov 15 1550 1855 BUY
1183 7
983
Source: DBS Vickers

Page 69
Bekasi Fajar Industrial Estate
Edition 2 Version 1 | Bloomberg: BEST IJ | Reuters: BEST.JK Refer to important disclosures at the end of this report
FULLY VALUED (Downgrade from HOLD) Hanging in There

Last Traded Price: Rp289 (JCI : 4,525.92) Downgrade to Fully Valued with declining net earnings going
Price Target : Rp230 (20% downside) (Prev Rp285) forward. We lowered our RNAV assumptions by 20% to
Rp440/sh (from Rp548/sh previously) to reflect sustained weak
Potential Catalyst: FDI to boost demand for industrial land marketing sales and the revised risk premium (to 5.5%) for
Where we differ: Significantly lower estimates than consensus given our WACC calculation. Subsequently, our TP is cut by 19% to
pessimistic outlook Rp230, implying 20% downside to current price.
Analyst
Edward Ariadi Tanuwijaya +6221 3003 4932 No earnings buffer from recurring sources. As demand for
edward.tanuwijaya@id.dbsvickers.com industrial estates continues to be weak (without any potential
block sales) and the generally slow lease commitment take-up in
its phase 1 investment properties (i.e. Standard factory building
– SFB and warehousing), BEST’s earnings are not sufficiently
Price Relative insulated from prolonged slowdown.
Rp Relative Index
540
1,053.0
953.0
490 Wait for industrial cycle to turn positive. BEST’s MM2100
853.0
440
390
Industrial Estate will cover c.600ha of land bank with direct
753.0
653.0 340
290
access from the main toll road. And, coupled with being
553.0
453.0 240 relatively close to Jakarta city and Tanjung Priok international
353.0 190
253.0 140 seaport, are the key advantages that every industrial estate
developer craves for. However, BEST needs to wait for the
153.0 90
Apr-12 Apr-13 Apr-14 Apr-15
Bekasi Fajar Industrial Estate (LHS) Relative JCI INDEX (RHS) industrial cycle to turn up.
FY Dec (Rpbn) 2014A 2015F 2016F 2017F
Considering our pessimistic outlook for industrial land demand
Revenue 840 657 610 581
EBITDA 476 374 362 340 in Indonesia, our TP of Rp230 is based on a deep 48%
Pre-tax Profit 433 301 229 223 discount (adjusted average before the industrial estate boom)
Net Profit 391 268 198 194 to our RNAV estimate. BEST is currently trading at a 34%
Net Pft (Pre Ex.) 391 268 198 194
EPS (Rp) 40.5 27.8 20.5 20.1 discount to RNAV (wider than its 3-year average of 20% since
EPS Pre Ex. (Rp) 40.5 27.8 20.5 20.1 IPO) and 14x FY16F PE (at its mean forward PE).
EPS Gth Pre Ex (%) (48) (32) (26) (2)
Net Pft Gth (Pre-ex) (%) (48) (32) (26) (2) Key Risks to Our View:
Diluted EPS (Rp) 40.5 27.8 20.5 20.1
Net DPS (Rp) 2.28 8.11 5.55 4.11 Recovery in FDI
BV Per Share (Rp) 295 315 330 346 Any sign of a recovery in Indonesia’s slowing economy,
PE (X) 7.1 10.4 14.1 14.4 coupled with more relaxed regulations, will lift investment
PE Pre Ex. (X) 7.1 10.4 14.1 14.4 sentiment and subsequently FDI commitments into Indonesia.
P/Cash Flow (X) 17.0 17.8 15.7 15.7
EV/EBITDA (X) 6.2 10.4 12.0 14.0 This could lead to better-than-expected demand for industrial
Net Div Yield (%) 0.8 2.8 1.9 1.4 estate land.
P/Book Value (X) 1.0 0.9 0.9 0.8
Earnings Rev (%): (21) (30) (55) Mkt. Cap (Rpbn/US$m) 2,788 / 201
Consensus EPS (Rp): 31.7 34.8 42.7 Major Shareholders
Other Broker Recs: B: 6 S: 4 H: 4 Argo Manunggal Land Devt (%) 51.3
Daiwa House Industry Co Ltd 10.0
Source of all data: Company, DBS Vickers, Bloomberg Finance L.P.
Free Float (%) 38.7
ICB Industry : Financials / Real Estate Investment & Services

ed: TH / sa: MA
Company Guide
Marketing sales
1,258
1,200
1,000 945
800
Earnings Drivers:
Sliding industrial marketing sales 600 534
BEST recognises marketing sales from the previous 1-2 years 400
395
277
as revenue. We expect industrial land sales revenue keep 200
sliding by close to 20% CAGR from FY14-17F given the
0
weak marketing sales for industrial land over the past two 2013A 2014A 2015F 2016F 2017F
years and are expected to decline further by a 17% CAGR

Sales Trend
over 2014-17F.
Rp bn
1,400 50.0%
BEST is a pure industrial play as industrial land sales account 1,200 40.0%
30.0%
for most of its consolidated earnings. Hence, compared to 1,000
20.0%
peers, BEST’s marketing sales is very highly correlated to 800 10.0%
upturns and downswings of the industrial cycle. 600 0.0%
-10.0%
400
-20.0%
Growing recurring income to support but not able to prevent 200 -30.0%
earnings decline 0 -40.0%
BEST’s venture into standard factory buildings (SFB) and 2013A 2014A 2015F 2016F 2017F
warehousing rental facilities should see its recurring revenue Total Revenue Revenue Growth (%) (YoY)
tripling between 2013 and 2017F. Coupled with a sustained

slide in industrial land sales, the portion of recurring revenue Profitability Trend
Rp bn
is expected to rise to c.31% from less than 10% in 2014.

793
High G&A expenses (as % of revenue) to continue given 693
slow marketing sales 593
Significant increase in G&A expenses (mainly fixed cost); and 493
slow industrial land marketing sales cut into its operational 393
profitability. Controlling SG&A expenses (back to historical
293
levels) will be crucial for BEST to maintain or grow its
earnings going forward. 193
2013A 2014A 2015F 2016F 2017F
Operating EBIT Pre tax Profit Net Profit
Company Background
BEST is the developer of MM2100 industrial estate in Bekasi Margins Trend
area (east Jakarta suburb). The estate is the closest to Jakarta 70.0%
65.0%
city among developments in the area, and its tenants are
60.0%
primarily Japanese manufacturers. 55.0%
50.0%
45.0%
40.0%
35.0%
30.0%
2013A 2014A 2015F 2016F 2017F
Operating Margin % Net Income Margin %
Disc to RNAV trend

60%
40%
Average 21%
20%
0%
Aug-12
Aug-13
Aug-14
Aug-15
Apr-12
Dec-12
Apr-13
Dec-13
Apr-14
Dec-14
Apr-15
Dec-15
-20%
-40%

Page 71
Company Guide

Balance Sheet: 0.5
0.70
Gearing up for more investment property projects 0.5
0.60
BEST secured US$130m in syndicated loan facilities in early 0.4
March 2015 for its expansion capex. Net gearing has risen 0.50
0.4
significantly and will continue in the next few years given the 0.40
0.3
slower cash generation from industrial land sales. 0.30 0.3

0.20 0.2
Exposure to US$ debt 0.10 0.2
The additional US$ syndicated loan facilities, BEST’s balance 0.00

2013A 2014A 2015F 2016F 2017F
0.1
sheet is exposed to USD/IDR volatility amid weak IDR Gross Debt to Equity (LHS) Asset Turnover (RHS)
environment. BEST has not entered into any contract to

Capital Expenditure
hedge its US$ debt position. Rp
1,000.0
900.0
Capex ramping up given more investment properties 800.0
As more investment properties such as SFBs, warehouses and 700.0

600.0
hotels are under construction, we expect capex to remain 500.0
high for the next few years. 400.0

300.0
200.0
Share Price Drivers: 100.0

0.0
Marketing sales achievement 2013A 2014A 2015F 2016F 2017F
Marketing sales is a good indicator for all industrial estate Capital Expenditure (-)
developers as it gives revenue visibility for the next 1-2 years. ROE (%)
35.0%
FDI into Indonesia 30.0%
Commitment from foreign companies to invest in businesses 25.0%

in Indonesia will be followed by demand for industrial land
20.0%
(starting with the large manufacturers, followed by other
15.0%
players along the relevant supply chains).
10.0%
Key Risks: 5.0%
Regulatory changes: reversal of business-friendly policies 0.0%

2013A 2014A 2015F 2016F 2017F
Constant changes to regulations could deter investments in
Indonesia. Additionally, the new government has recently Forward PE Band (x)
shown that it will not hesitate to intervene and regulate (x)
businesses when needed. The risk of being perceived as a 27.6
populist government may discourage potential investors. +2sd: 25.1x

22.6
+1sd: 19.8x
Lingering risks of labour protests 17.6
Despite the issuance of Government regulation (PP) no. 12.6

Avg: 14.4x
78/2015 (in Oct 2015), which formulated the new ‐1sd: 9x

7.6
mechanism to determine minimum wages in order to
provide greater certainty on the annual minimum wage 2.6
‐2sd: 3.7x
increase, annual protests are still expected and may still
disrupt manufacturing activities. PB Band (x)
(x)
5.3
Competition from the ASEAN Economic Community (AEC)
+2sd: 4.53x
The AEC could see Indonesia losing some of its advantages 4.3
and competitive edge over neighbouring countries. 3.3

+1sd: 3.5x
2.3
Avg: 2.48x
1.3 ‐1sd: 1.45x
0.3 ‐2sd: 0.43x

Page 72
Company Guide
BEST: RNAV summary

Adjusted Value
Portfolio Stakes Full Value (Rpbn) % of total Landbank (ha)
(Rpbn)
Industrial estate
MM2100 (Bekasi) 5,451 100% 5,451 94% 635
Semarang (Central Java) 276 100% 276 5% 184
MM2100 (Bekasi) 88 51% 172 2%
Net Debt (Cash) 1,567

RNAV 4,247
No. of outstanding shares (bn) 9.6
RNAV/share 440
Source: DBS Vickers

Page 73
Company Guide
Key Assumptions
FY Dec 2013A 2014A 2015F 2016F 2017F
Marketing sales 1,258 945 277 395 534
Segmental Breakdown
FY Dec 2013A 2014A 2015F 2016F 2017F
Revenues (Rpbn)
Land plots 1,278 766 569 458 402
Standard factory building 0.0 0.0 0.0 46.3 51.6
Maintenance fee 23.5 35.0 42.0 50.4 60.5
Others 22.4 38.4 46.1 55.3 66.4 Landplot sales remain
significant going forward
Total 1,324 840 657 610 581
Gross Profit (Rpbn)
Land plots 924 547 410 339 298
Standard factory building 0.0 0.0 0.0 37.0 41.3
Maintenance fee 13.3 15.0 23.7 28.4 34.1
Others 8.68 17.5 17.9 21.5 25.8
Total 946 580 451 426 399

Land plots 72.3 71.4 72.0 74.0 74.0
Standard factory building N/A N/A N/A 80.0 80.0 High and improving
margins
Maintenance fee 56.3 42.8 56.3 56.3 56.3
Others 38.8 45.6 38.8 38.8 38.8
Total 71.4 69.1 68.7 69.8 68.7

FY Dec 2013A 2014A 2015F 2016F 2017F
Revenue 1,324 840 657 610 581
Gross Profit 946 580 451 426 399
Other Opng (Exp)/Inc (62.8) (108) (85.5) (73.2) (69.7)
Other Non Opg (Exp)/Inc (41.4) (5.2) 11.0 10.6 9.87
Associates & JV Inc 0.0 (0.2) 0.0 0.0 23.4
Net Interest (Exp)/Inc (30.0) (33.7) (76.2) (134) (140)
Pre-tax Profit 812 433 301 229 223
Tax (66.7) (41.5) (32.9) (30.5) (29.0)
Minority Interest (1.2) (0.4) (0.2) (0.1) (0.1) Net profit to keep
Preference Dividend 0.0 0.0 0.0 0.0 0.0 declining given no
Net Profit 744 391 268 198 194 expected recovery in
Net Profit before Except. 744 391 268 198 194 industrial land sales
EBITDA 888 476 374 362 340
Growth
Revenue Gth (%) 37.2 (36.6) (21.7) (7.2) (4.8)
EBITDA Gth (%) 67.5 (46.4) (21.4) (3.3) (6.0)
Opg Profit Gth (%) 67.5 (46.5) (22.5) (3.7) (6.6)
Net Profit Gth (Pre-ex) (%) 58.1 (47.4) (31.5) (26.0) (2.3)
Margins & Ratio
Gross Margins (%) 71.4 69.1 68.7 69.8 68.7
ROAE (%) 35.0 14.7 9.1 6.4 5.9
ROA (%) 26.3 11.1 6.1 3.8 3.5
ROCE (%) 32.3 13.5 8.0 6.0 5.4
Div Payout Ratio (%) N/A N/A N/A N/A N/A

Page 74
Company Guide

FY Dec 3Q2014 4Q2014 1Q2015 2Q2015 3Q2015
Revenue 253 343 178 161 125

Cost of Goods Sold (52.4) (133) (48.1) (35.4) (41.3)
Gross Profit 200 211 130 126 83.9
Operating Profit 180 156 110 106 60.7
Other Non Opg (Exp)/Inc (4.4) (15.7) (17.6) (17.5) (103)
Pre-tax Profit 169 128 83.6 67.3 (65.2)
Tax (15.0) (15.4) (8.2) (7.2) (5.4)
Minority Interest (0.1) (0.1) 0.0 0.0 (0.1)
Net Profit 154 113 75.5 60.1 (70.7)
Net profit bef Except. 154 113 75.5 60.1 (70.7)
EBITDA 180 156 110 106 60.7
Burned by non-cash-outflow
Growth accounting forex loss. This
Revenue Gth (%) 192.2 35.8 (48.1) (9.7) (22.2) should continue in 4Q15
EBITDA Gth (%) 266.2 (13.2) (29.6) (3.5) (42.8)
Opg Profit Gth (%) 266.2 (13.2) (29.6) (3.5) (42.8)
Net Profit Gth (Pre-ex) (%) 348.0 (26.5) (33.1) (20.4) (217.8)
Margins
Gross Margins (%) 79.3 61.4 73.0 78.0 67.0

FY Dec 2013A 2014A 2015F 2016F 2017F
Net Fixed Assets 76.6 162 855 1,035 1,075

Other LT Assets 5.60 122 4.41 4.41 4.41
Cash & ST Invts 548 318 746 470 70.7
Inventory 2,400 2,493 2,938 3,342 3,834
Debtors 80.2 35.8 22.1 20.5 19.5
Total Assets 3,360 3,653 5,109 5,440 5,596
ST Debt 149 233 148 165 167

Creditor 71.0 47.3 20.7 18.5 18.3
Other Current Liab 255 272 189 183 179
LT Debt 393 234 1,695 1,872 1,876
Other LT Liabilities 16.4 17.7 17.7 17.7 17.7
Additional US$130m
Minority Interests 1.34 1.73 1.88 1.99 2.11 syndicated loan
Total Cap. & Liab. 3,360 3,653 5,109 5,440 5,596 facilities stretched
balance sheet
Non-Cash Wkg. Capital 2,405 2,731 3,294 3,729 4,248
Net Cash/(Debt) 6.13 (148) (1,097) (1,567) (1,972)
Inventory Turn (avg days) 1,926.9 3,493.5 5,018.0 6,567.1 7,671.5
Asset Turnover (x) 0.5 0.2 0.2 0.1 0.1
Current Ratio (x) 6.9 6.1 11.9 12.0 12.4
Quick Ratio (x) 1.3 0.6 2.1 1.3 0.2
Capex to Debt (%) 158.9 21.2 31.3 21.8 26.5
Z-Score (X) 4.8 4.5 2.7 2.6 2.8

Page 75
Company Guide

FY Dec 2013A 2014A 2015F 2016F 2017F
Pre-Tax Profit 812 433 301 229 223

Dep. & Amort. 4.59 4.12 8.40 9.62 11.2
Tax Paid (66.7) (41.5) (32.9) (30.5) (29.0)
Assoc. & JV Inc/(loss) 0.0 0.0 0.0 0.0 0.0
Chg in Wkg.Cap. (196) (233) (118) (30.6) (27.7)
Other Operating CF 0.01 1.71 (1.3) (0.1) (0.1)
Net Operating CF 553 164 157 177 177
Capital Exp.(net) (860) (98.9) (577) (444) (542)
Other Invts.(net) 0.0 0.0 0.0 0.0 0.0
Invts in Assoc. & JV 0.0 0.0 0.0 0.0 0.0
Div from Assoc & JV 0.0 0.0 0.0 0.0 0.0
Other Investing CF (3.8) (201) (450) (150) (0.5)
Net Investing CF (864) (299) (1,027) (594) (543)
Div Paid (91.6) (22.0) (78.2) (53.5) (39.6)
Chg in Gross Debt 314 (75.2) 1,376 194 6.06
Capital Issues 53.5 3.28 0.0 0.0 0.0
Other Financing CF 0.0 0.0 0.0 0.0 0.0
Net Financing CF 276 (93.9) 1,298 141 (33.6)
Chg in Cash (35.0) (230) 428 (276) (399)
Opg CFPS (Rp) 77.8 41.2 28.5 21.5 21.2
Rp
760 Closing T arget
S.No. Dat e Rat ing
Pric e Price
1: 03 Mar 15 690 730 HOLD
660 1 2: 01 Apr 15 575 730 HOLD
2 3: 04 May 15 580 730 HOLD
4
4: 05 May 15 570 730 HOLD
560
3 5: 23 J ul 15 423 445 HOLD
6: 10 Aug 15 344 445 HOLD
7: 03 Sep 15 279 285 HOLD
460
8: 02 Nov 15 372 285 F ULLY V ALUED
8
5 6
360
260
Jan-15 May-15 7
Sep-15 Jan-16
Source: DBS Vickers

Page 76
Lippo Cikarang
Edition 2 Version 1 | Bloomberg: LPCK IJ | Reuters: LPCK.IJ Refer to important disclosures at the end of this report
BUY Seeking the Vertical Limit

Last Traded Price: Rp7,025 (JCI : 4,525.92) Still a BUY based on valuation and debt-free balance sheet. We
Price Target : Rp7,900 (12% upside) tweaked our RNAV assumptions slightly to Rp19,724/sh (from
Rp19,766/sh previously) to reflect the latest marketing sales
Potential Catalyst: Better monetisation of land bank in OCBD achievement and the revised risk premium (to 5.5%) for WACC
Where we differ: Our forecast earnings are largely lower than consensus calculation. No changes in TP (at Rp7,900) given very minimal
estimates because of our more cautious view on industrial estate and alterations and thus still offers c.11% upside.
Indonesia’s overall economy
Shouldering majority of parent's marketing sales. LPCK’s
Analyst Orange County Business District (OCBD) development should
Edward Ariadi Tanuwijaya +6221 3003 4932 remain as the main driver of parent LPKR’s marketing sales
given its niche apartment demand in industrial areas. As of
9M15, LPCK's marketing sales made up 70% of LPKR’s total
marketing sales and therefore, LPCK is a better exposure than
its parent for investors.
Price Relative
Rp Relative Index
Transformation into high-rise developer has paid off so far.
540 LPCK’s gradual shift towards residential and commercial
490
11,611.0
440 developments has proven to be a masterstroke given declining
9,611.0 390
340
industrial land sales since 2012. Also, the launch of the OCBD
7,611.0
5,611.0
290
240
high-rise development would help to preserve its land bank for
3,611.0
190 more efficient use, which would increase its value further.
140
1,611.0 90 Valuation:
Given our pessimistic demand outlook for industrial estates in
Lippo Cikarang (LHS) Relative JCI INDEX (RHS)
Indonesia and a slower domestic economy overall, our TP of
Forecasts and Valuation Rp7,900 is based on a deep 60% discount (adjusted average
FY Dec (Rpbn) 2014A 2015F 2016F 2017F discount before the industrial estate boom in 2011) to our
Revenue 1,792 1,894 2,186 2,443 RNAV estimate. LPCK is now trading at a 64% discount to
EBITDA 925 888 957 1,105
Pre-tax Profit 942 1,043 1,074 1,198 RNAV (at its 8-year average of 65%) and at an attractive 5.1x
Net Profit 844 939 954 1,064 FY16F PE (just below its mean forward PE).
Net Pft (Pre Ex.) 844 939 954 1,064 Key Risks to Our View:
EPS (Rp) 1,213 1,349 1,370 1,529 Slower take-up for OCBD launches.
EPS Pre Ex. (Rp) 1,213 1,349 1,370 1,529
EPS Gth Pre Ex (%) 43 11 2 12 Weaker property affordability, potential increase in interest
Net Pft Gth (Pre-ex) (%) 43 11 2 12 rate and stricter implementations of high-rise developments
Diluted EPS (Rp) 1,213 1,349 1,370 1,529 could prompt delays in launching pipelines and cause
Net DPS (Rp) 0.0 0.0 0.0 0.0
marketing sales to miss our expectations.
BV Per Share (Rp) 3,826 5,176 6,546 8,075
PE (X) 5.8 5.2 5.1 4.6 Slower-than-expected economic growth
PE Pre Ex. (X) 5.8 5.2 5.1 4.6 We are expecting better economic growth in 2016 (recovery
P/Cash Flow (X) 17.5 3.9 14.7 2.4 from 2015). However, slower-than-expected growth will
EV/EBITDA (X) 5.0 5.0 4.9 2.9
Net Div Yield (%) 0.0 0.0 0.0 0.0 reduce foreign investments in Indonesia, and subsequently,
P/Book Value (X) 1.8 1.4 1.1 0.9 demand for industrial land, which has been weak in the last
Net Debt/Equity (X) CASH CASH CASH CASH two years.
ROAE (%) 37.7 30.0 23.4 20.9 At A Glance
Earnings Rev (%): 12 (2) (4) Issued Capital (m shrs) 696
Consensus EPS (Rp): 1,390 1,465 1,669 Mkt. Cap (Rpbn/US$m) 4,889 / 353
Other Broker Recs: B: 6 S: 0 H: 0 Major Shareholders
Kemuning Satiatama PT (%) 42.2
Source of all data: Company, DBS Vickers, Bloomberg Finance L.P.
Free Float (%) 57.8
ICB Industry : Financials / Real Estate Investment & Services

ed: TH / sa: MA
Company Guide
Lippo Cikarang
Marketing sales
2,680
2,700
2,360
2,400
2,100
1,858 1,809
1,800 1,698
Transformation into a high-rise developer to continue 1,200
LPCK’s gradual shift towards residential and commercial 900

600
developments since 2012 will see its future revenue driven
300
more by sales of apartments and high-rise units. 0
2013A 2014A 2015F 2016F 2017F
We forecast revenue from apartments and residential

Sales Trend
segment to grow at a 24% CAGR from 2014-17F, while
Rp bn
revenue from industrial land to decline at an 8% CAGR in the 2,500 40.0%
same timeframe. Revenue from apartments and residential 2,000

35.0%
30.0%
projects has exceeded industrial land in 2015 and the
25.0%
divergence will continue for next few years. 1,500
20.0%
1,000 15.0%
Lower margins expected from the shift in product mix 10.0%
500
Shifts in product mix to be more focused on high-rise 5.0%
developments will slowly decrease LPCK’s overall margins 0 0.0%
2013A 2014A 2015F 2016F 2017F
going forward, as industrial land segment generally churns
more than 15ppts higher GP margins than high-rise Total Revenue Revenue Growth (%) (YoY)
developments. We forecast overall GP margins to decrease to

Profitability Trend
53% in 2017F from the peak of c. 59% in 2014. Rp bn
1,190
Good revenue recognition growth 1,090
Real estate developers recognise non-recurring revenue from 990
marketing sales from earlier years (i.e. 3-4 years for high-rise
890
developments and 1-2 years for industrial estates). We expect
property sales (non-recurring revenue) to grow at a 10% 790
CAGR over 2014-17F supported by a 13% CAGR in 690
marketing sales from 2011-2014.

590
2013A 2014A 2015F 2016F 2017F
Growing recurring revenue for sustainability Operating EBIT Pre tax Profit Net Profit
Rental revenue from the Japanese SMEs Center's

Margins Trend
development will be a growth driver for recurring revenue
54.0%
going forward. We expect FY17F recurring revenue to almost
52.0%
triple from FY13’s level and contribute c.15% of consolidated
50.0%
revenue from the current 11% level.
48.0%
46.0%
44.0%
LPCK has been able to keep SG&A expenses (as % of
42.0%
revenue) under control since 2011, despite the significant
40.0%
increase in its two key items in SG&A expenses; “advertising 2013A 2014A 2015F 2016F 2017F
& promotion” given its many new launches and “salaries & Operating Margin % Net Income Margin %
employee benefits” given new projects (particularly OCBD

Disc to RNAV trend
development) in its portfolios.
100%
80%
Company Background
LPCK was established in 1987 as part of conglomerate Lippo 60% Average 65%
Group, and started developing property in 1995. The 40%
company develops the 3,500-ha industrial township in 20%

Cikarang (east Jakarta suburb). 0%
Aug-08
Aug-09
Aug-10
Aug-11
Aug-12
Aug-13
Aug-14
Aug-15
Dec-07
Apr-08
Dec-08
Apr-09
Dec-09
Apr-10
Dec-10
Apr-11
Dec-11
Apr-12
Dec-12
Apr-13
Dec-13
Apr-14
Dec-14
Apr-15
Dec-15
-20%
-40%
-60%

Page 78
Company Guide
Lippo Cikarang

0.05 0.5
Balance Sheet: 0.05 0.5
Healthy balance sheet. The company has been debt-free for 0.04 0.5
0.04 0.4
the past three years, and its strong internal cash generation 0.03 0.4
should allow LPCK to execute its expansion plan. 0.03 0.4
0.02 0.4
Capex ramped up in 2015 from new project launches, 0.02 0.4

0.01 0.3
given few apartment launches from its Orange County 0.01 0.3
Business District (OCBD) last year. This high capex level may 0.00 0.3
2013A 2014A 2015F 2016F 2017F
continue if LPCK plans to speed up its tower launches Gross Debt to Equity (LHS) Asset Turnover (RHS)
aggressively.
Capital Expenditure
Rp
Marketing sales achievement 1,000.0
Marketing sales is a good indicator for all industrial estate 800.0

developers as it gives revenue visibility for the next 1-2 years. 600.0
400.0
FDI into Indonesia
200.0
Commitment from foreign companies to invest in businesses
in Indonesia will be followed by demand for industrial land 0.0
2013A 2014A 2015F 2016F 2017F
(starting with the large manufacturers, followed by other Capital Expenditure (-)

ROE (%)
Key Risks: 35.0%
Regulatory changes: reversal of business-friendly policies 30.0%
Constant changes to regulations could deter investments in 25.0%
Indonesia. Additionally, the new government has recently 20.0%
shown that it will not hesitate to intervene and regulate 15.0%
businesses when needed. The risk of being perceived as a 10.0%
populist government may discourage potential investors. 5.0%
0.0%
Lingering risks of labour protests 2013A 2014A 2015F 2016F 2017F
Despite the issuance of Government regulation (PP) no.

Forward PE Band (x)
78/2015 (in Oct 2015), which formulated the new (x)
mechanism to determine minimum wages in order to 11.4
provide greater certainty on the annual minimum wage 10.4
9.4
increase, annual protests are still expected and may still 8.4
+2sd: 8.8x
disrupt manufacturing activities. 7.4 +1sd: 7.3x

6.4
Avg: 5.8x
Competition from the ASEAN Economic Community (AEC) 5.4
4.4
The AEC could see Indonesia losing some of its advantages ‐1sd: 4.2x
3.4
and competitive edge over neighbouring countries. 2.4 ‐2sd: 2.7x
Stricter regulations for high-rise developments. Plot ratio PB Band (x)

approval and balanced ratio rules, when strictly (x)
5.5
5.0
Liquidity tightening could dampen demand further. 4.5
4.0
Potential interest rate hike. Property demand is sensitive to 3.5 +2sd: 3.52x
and is negatively correlated to interest rate movements. 3.0 +1sd: 2.93x

2.5
Avg: 2.34x
2.0
‐1sd: 1.75x
1.5
1.0
‐2sd: 1.15x

Page 79
Company Guide
Lippo Cikarang
LPCK: RNAV summary

Adjusted Value
Portfolio Stakes Full Value (Rpbn) % of total Landbank (ha)
(Rpbn)
Residential 2,742 100% 2,742 20% 80

Commercial 557 100% 557 4% 27
Industrial
Delta Silicon (1-6) 812 100% 812 6% 122
Delta Silicon 8 (JO) 648 45% 1,440 5%
Orange County
Planned development 461 100% 461 3%
Landbank 8,400 100% 8,400 62% 280
13,161
Net Debt (Cash) -208
RNAV 13,828
RNAV/share 19,724
Source: DBS Vickers

Page 80
Company Guide
Lippo Cikarang
Key Assumptions
FY Dec 2013A 2014A 2015F 2016F 2017F
Marketing sales 1,698 1,858 2,680 2,360 1,809
Segmental Breakdown
FY Dec 2013A 2014A 2015F 2016F 2017F
Revenues (Rpbn)
Industrial land and Highest portion of
808 815 657 441 627
revenue will come from
Apartment, residential 359 781 951 1,427 1,490
apartment and
Town management 141 170 260 290 296 residential projects
Others 19.3 25.5 26.5 27.8 29.2 starting in 2015
Total 1,328 1,792 1,894 2,186 2,443

Gross Profit (Rpbn)
Industrial land and 484 534 452 303 432
Apartment, residential 168 417 460 691 721 Lower margins due to
Town management 72.9 86.7 117 131 133 product shift to more
Others 17.7 19.1 7.94 8.34 8.76 apartments and
residential projects
Total 743 1,057 1,037 1,133 1,295
Industrial land and 59.9 65.5 68.7 68.8 68.8
Apartment, residential 46.7 53.4 48.4 48.4 48.4
Town management 51.7 50.9 45.0 45.0 45.0
Others 91.4 75.2 30.0 30.0 30.0
Total 55.9 59.0 54.7 51.8 53.0

FY Dec 2013A 2014A 2015F 2016F 2017F
Revenue 1,328 1,792 1,894 2,186 2,443
Cost of Goods Sold (585) (735) (858) (1,053) (1,148)
Gross Profit 743 1,057 1,037 1,133 1,295
Operating Profit 634 914 866 925 1,063
Associates & JV Inc 5.13 5.49 159 125 130
Net Interest (Exp)/Inc 22.2 11.6 17.3 22.9 4.90
Exceptional Gain/(Loss) 0.0 0.0 0.0 0.0 0.0 Significant increase due
Pre-tax Profit 666 942 1,043 1,074 1,198 to JV for developing
Tax (75.1) (98.2) (104) (120) (134) Delta Silicon 8
Minority Interest 0.0 0.0 0.0 0.0 0.0
Net Profit 591 844 939 954 1,064
Net Profit before Except. 591 844 939 954 1,064
EBITDA 643 925 888 957 1,105
Growth
Revenue Gth (%) 31.1 35.0 5.7 15.4 11.7
EBITDA Gth (%) 45.3 43.8 (4.0) 7.8 15.5
Opg Profit Gth (%) 45.1 44.2 (5.2) 6.8 14.9
Net Profit Gth (Pre-ex) (%) 45.1 42.9 11.3 1.6 11.6
Margins & Ratio
Gross Margins (%) 55.9 59.0 54.7 51.8 53.0
ROAE (%) 38.8 37.7 30.0 23.4 20.9
ROA (%) 17.7 20.7 19.0 16.5 15.3
ROCE (%) 36.9 36.5 24.8 20.1 18.5
Net Interest Cover (x) NM NM NM NM NM

Page 81
Company Guide
Lippo Cikarang

FY Dec 3Q2014 4Q2014 1Q2015 2Q2015 3Q2015
Revenue 470 472 518 436 517

Gross Profit 317 233 301 255 319
Net Interest (Exp)/Inc 2.81 2.65 3.08 5.51 4.87
Pre-tax Profit 298 192 303 231 283
Tax (21.3) (28.0) (28.1) (24.7) (29.3)
Minority Interest 0.0 0.0 0.0 (3.2) (0.8)
Net Profit 277 164 275 203 253
EBITDA 284 182 263 203 271
Growth
Revenue Gth (%) 24.5 0.4 9.8 (15.8) 18.4
EBITDA Gth (%) 46.0 (36.0) 44.5 (22.7) 33.3
Opg Profit Gth (%) 46.0 (36.0) 44.5 (22.7) 33.3
Net Profit Gth (Pre-ex) (%) 57.4 (40.8) 67.8 (26.2) 24.4
Margins
Gross Margins (%) 67.4 49.3 58.1 58.4 61.7

FY Dec 2013A 2014A 2015F 2016F 2017F
Net Fixed Assets 589 538 719 802 878

Other LT Assets 78.9 96.9 107 117 127
Cash & ST Invts 308 246 495 208 1,746
Inventory 2,510 2,882 3,672 4,167 4,548
Debtors 60.5 65.5 81.4 93.9 105
Total Assets 3,854 4,310 5,596 5,935 7,980
ST Debt 0.0 0.0 0.0 0.0 0.0

Creditor 0.0 40.4 40.4 40.4 40.4
LT Debt 0.0 0.0 0.0 0.0 0.0
Other LT Liabilities 57.2 45.0 45.0 45.0 45.0
Minority Interests 0.0 8.25 8.25 8.25 8.25 Debt-free since 2012
Total Cap. & Liab. 3,854 4,310 5,596 5,935 7,980
Non-Cash Wkg. Capital 872 1,822 2,306 3,454 2,894

Net Cash/(Debt) 308 246 495 208 1,746
Inventory Turn (avg days) 1,409.3 1,358.0 1,430.2 1,400.8 1,439.1
Asset Turnover (x) 0.4 0.4 0.4 0.4 0.4
Current Ratio (x) 1.6 2.3 2.4 3.8 3.0
Quick Ratio (x) 0.2 0.2 0.3 0.2 0.8
Net Debt/Equity (X) CASH CASH CASH CASH CASH
Net Debt/Equity ex MI (X) CASH CASH CASH CASH CASH
Capex to Debt (%) N/A N/A N/A N/A N/A
Z-Score (X) 3.2 4.2 4.0 4.0 4.0

Page 82
Company Guide
Lippo Cikarang

FY Dec 2013A 2014A 2015F 2016F 2017F
Pre-Tax Profit 666 942 1,043 1,074 1,198

Dep. & Amort. 9.03 10.8 21.3 31.8 42.3
Tax Paid (75.1) (98.2) (104) (120) (134)
Assoc. & JV Inc/(loss) 0.0 0.0 0.0 0.0 0.0
Chg in Wkg.Cap. 200 (578) 306 (654) 942
Other Operating CF 0.0 1.90 (1.9) 0.0 0.0
Net Operating CF 800 279 1,265 332 2,048
Capital Exp.(net) (786) (334) (991) (609) (500)
Other Invts.(net) (13.2) 14.3 (14.3) 0.0 0.0 High capex mostly from
Invts in Assoc. & JV 0.0 8.25 0.0 0.0 0.0 apartment projects in
Div from Assoc & JV 0.0 0.0 0.0 0.0 0.0 OCBD
Other Investing CF (2.1) (29.9) (10.0) (10.0) (10.0)
Net Investing CF (802) (341) (1,015) (619) (510)
Div Paid 0.0 0.0 0.0 0.0 0.0
Chg in Gross Debt 0.0 0.0 0.0 0.0 0.0
Capital Issues 0.0 0.0 0.0 0.0 0.0
Other Financing CF 0.0 0.0 0.0 0.0 0.0
Net Financing CF 0.0 0.0 0.0 0.0 0.0
Chg in Cash (2.2) (62.2) 249 (287) 1,538
Opg CFPS (Rp) 862 1,231 1,377 1,416 1,590
Rp
Closing T arget
S.No. Dat e Rat ing
11937 2 Pric e Pric e
1 3 1: 03 Mar 15 11800 13900 BUY

10937 2: 30 Mar 15 11500 13900 BUY
3: 30 Apr 15 11975 13900 BUY
9937 4: 23 J ul 15 8975 12500 BUY
5: 10 Aug 15 8325 12500 BUY
4
6: 03 Sep 15 6725 7900 BUY
8937
7: 30 Oct 15 8000 7900 BUY
7937 5
7
6
6937
5937
Source: DBS Vickers

Page 83
Surya Semesta Internusa
Edition 2 Version 1 | Bloomberg: SSIA IJ | Reuters: SSIA.JK Refer to important disclosures at the end of this report
HOLD Gearing Up for More Growth

Last Traded Price: Rp695 (JCI : 4,525.92) Maintain HOLD given slow earnings. We tweaked our RNAV
Price Target : Rp765 (10% upside) assumptions slightly to Rp1,529/sh (from Rp1,532/sh previously)
to reflect the latest marketing sales achievement and the revised
Potential Catalyst: Better-than-expected industrial land demand, and risk premium (to 5.5%) for WACC calculation. We expect
valuation re-rating of private contractors interest expense to increase to Rp151bn/Rp189bn in FY16/17F
Where we differ: One of the neutral calls in the market amid BUY as we expect debt level to increase (i.e. net gearing rose to 13%
recommendations
as of 9M15, from net cash back in 2011-2013). Therefore,
Analyst earnings are dampened in FY16-18F.
Edward Ariadi Tanuwijaya +6221 3003 4932 Acquisition opportunities for inorganic growth. SSIA has geared
up for the past two years for its planned capex in investment
properties (i.e. CBD office tower and Batiqa hotels). SSIA is
looking for opportunity to acquire infrastructure company
(which projects are in line with and will complement SSIA’s
Price Relative
Rp
existing businesses).
Relative Index
1,690.5
219 Weakness in industrial land sales to continue. Industrial estate
segment is the major net profit driver for SSIA because of
199
1,490.5 179
1,290.5 159 superior margins as compared to other business segments.

139
1,090.5
119 However, construction and hospitality have been the major
890.5
690.5
99
revenue contributors (with highest level at 87% of
79
490.5 59 consolidated revenue in 2014). Share of revenue from
construction and hospitality will hover at c.85% going forward
Surya Semesta Internusa (LHS) Relative JCI INDEX (RHS)
given the sustained demand slowdown for industrial estates.
FY Dec (Rpbn) 2014A 2015F 2016F 2017F We maintain our cautious outlook for industrial estates and a
Revenue 4,464 4,803 4,589 4,932 slower Indonesian economy (which would affect the
EBITDA 790 741 810 856
Pre-tax Profit 671 749 750 703 infrastructure and hospitality segments as well). SSIA is
Net Profit 415 491 477 421 currently trading at a 55% discount to our RNAV (wider than
Net Pft (Pre Ex.) 415 491 477 421 its 8-year average of 48%) and 7.5x FY16F PE (at -0.5SD of its
EPS (Rp) 88.2 104 92.1 81.4
mean forward PE).
EPS Pre Ex. (Rp) 88.2 104 92.1 81.4
EPS Gth Pre Ex (%) (40) 18 (12) (12) Key Risks to Our View:
Net Pft Gth (Pre-ex) (%) (40) 18 (12) (12) Slower-than-expected economic growth
Diluted EPS (Rp) 88.2 104 92.1 81.4 We are expecting better economic growth in 2016 (recovery
Net DPS (Rp) 29.8 18.0 19.4 18.8
from 2015). However, slower-than-expected growth will
BV Per Share (Rp) 563 767 770 833
PE (X) 7.9 6.7 7.5 8.5 reduce foreign investment commitments into Indonesia, and
PE Pre Ex. (X) 7.9 6.7 7.5 8.5 subsequently, demand for industrial land, which has been
P/Cash Flow (X) 10.9 2.5 4.4 4.6 weak in the last two years.
EV/EBITDA (X) 4.8 5.3 7.1 6.9 At A Glance
Net Div Yield (%) 4.3 2.6 2.8 2.7
Issued Capital (m shrs) 4,705
P/Book Value (X) 1.2 0.9 0.9 0.8
Net Debt/Equity (X) 0.0 0.0 0.3 0.3 Mkt. Cap (Rpbn/US$m) 3,270 / 236
ROAE (%) 16.7 15.7 12.5 10.2 Major Shareholders
Earnings Rev (%): 5 8 (17) Union Sampoerna PT (%) 9.0
Consensus EPS (Rp): 104 101 120 Arman Investment Utama PT (%) 8.9
Other Broker Recs: B: 7 S: 0 H: 5 PT Persada Capital Investama 7.7
Free Float (%) 74.4
Source of all data: Company, DBS Vickers, Bloomberg Finance L.P. 3m Avg. Daily Val (US$m) 1.4
ICB Industry : Industrials / Construction & Materials

ed: TH / sa: MA
Company Guide
Marketing sales
664
CRITICAL DATA POINTS TO WATCH 671
587
520
503 482
Earnings Drivers:
Steady construction segment 419 382
335 304
Construction, a big segment under SSIA’s listed subsidiary
251
Nusa Raya Cipta (NRCA), will remain an important revenue
168
driver for SSIA despite much lower margins than the highly 84
cyclical industrial estate segment. A staggering 38% CAGR 0
growth over 2010 – 2015F from new construction contracts 2013A 2014A 2015F 2016F 2017F
provides the backbone for revenue in the next two years. We

Sales Trend
estimate that construction segment will contribute c.70% of
Rp bn
consolidated revenue in the next three years. 5,000 40.0%
4,500 35.0%
4,000
30.0%
Unexciting growth from industrial estate marketing sales 3,500
25.0%
Industrial estate developers recognise non-recurring revenue 3,000
2,500 20.0%
from marketing sales from the previous 1-2 years. We expect 2,000 15.0%
industrial land sales revenue to stay flat over 2015-7F given 1,500
10.0%
1,000
the weak demand for industrial land over the past two years. 500 5.0%
0 0.0%
2013A 2014A 2015F 2016F 2017F
Higher revenue from industrial estate sales may flow in after
2018F if Subang development proceeds as expected and the Total Revenue Revenue Growth (%) (YoY)
demand cycle for industrial estate returns.

Profitability Trend
Rp bn
More toll road investments would be positive 865
SSIA’s investment (effectively 24.8%) in the 116-km 815
Cikampek –Palimanan (Cipali) toll road project since 4Q12 765
has had a positive impact given its potential value and

715
665
additional boost from contracts to its construction arm. 615
Further investments in good toll roads would be a plus. 565
515
Hospitality business undergoing expansion 465
415
The hospitality segment currently generates c.13% of SSIA’s 2013A 2014A 2015F 2016F 2017F
revenue (mostly from its 5-star hotels and resorts). The Operating EBIT Pre tax Profit Net Profit
ongoing expansion of 3-star hotels (started since 2013) under

Margins Trend
the Batiqa hotel chain will support the hospitality segment in
20.0%
the long run.
18.0%
Good control of operating costs 16.0%
SSIA has been able to keep SG&A expenses (as % of revenue) 14.0%
under control. despite the more-than-average increase in 12.0%

“salaries & post-employment benefits” and “professional 10.0%
fees” given new and upcoming projects in its portfolio. Good
8.0%
control of SG&A expenses is crucial for SSIA to maintain its 2013A 2014A 2015F 2016F 2017F
profitability during this challenging period Operating Margin % Net Income Margin %
Company Background Disc to RNAV trend

Established in 1971 and listed on the IDX in 1997, SSIA has 100%
three main primary businesses: property (including industrial 80%

estate and rental property), construction and hospitality.
60%
Average 48%
40%
20%
0%
Aug-08
Aug-09
Aug-10
Aug-11
Aug-12
Aug-13
Aug-14
Aug-15
Dec-07
Apr-08
Dec-08
Apr-09
Dec-09
Apr-10
Dec-10
Apr-11
Dec-11
Apr-12
Dec-12
Apr-13
Dec-13
Apr-14
Dec-14
Apr-15
Dec-15
-20%
-40%

Page 85
Company Guide

Balance Sheet: 0.9
Need to gear up for growth 0.50

0.9
Last year, SSIA secured shareholders’ approvals for two 0.40 0.8
corporate actions: 1) SGD bond issuance, and 2) 2-year 0.8

0.30
option window for exercising 10% rights issue. SSIA was in a 0.7
net cash position from 2011 to 2013 during the industrial 0.20 0.7
cycle boom. However, the slowdown in industrial estate and 0.10

0.6
aggressive capex for expansion resulted in net gearing ratio 0.6
increasing to 13% as of 9M15 and we expect this to head 0.00

2013A 2014A 2015F 2016F 2017F
0.5
higher in the next few years. Gross Debt to Equity (LHS) Asset Turnover (RHS)
Capital Expenditure
Exposure to forex debt Rp
With planned SGD bond issuance, SSIA’s balance sheet has 2,500.0
exposure to weak IDR environment. 2,000.0
1,500.0
Capex to ramp up until 2016 and then subside
Given the current expansion plan (i.e. more investment 1,000.0
properties), we expect capex to hit a peak in 2016F and 500.0
subside thereafter, unless there is an opportunity for large

0.0
investments (i.e. toll road projects or stake acquisitions). 2013A 2014A 2015F 2016F 2017F
Share Price Drivers: ROE (%)

Marketing sales achievement 35.0%
The level of marketing sales is a good indicator for all 30.0%
industrial estate developers as it gives revenue visibility for the 25.0%

next 1-2 years.
20.0%
15.0%
FDI into Indonesia
Commitment from foreign companies to invest in businesses 10.0%
in Indonesia will be followed by demand for industrial land 5.0%
(starting with the large manufacturers, followed by other 0.0%

2013A 2014A 2015F 2016F 2017F
Forward PE Band (x)
Key Risks: (x)
Regulatory changes: reversal of business-friendly policies 14.2
Constant changes to regulations could deter investments in 12.2 +2sd: 12.4x

Indonesia. Additionally, the new government has recently
10.2 +1sd: 10.5x
shown that it will not hesitate to intervene and regulate
businesses when needed. The risk of being perceived as a 8.2
Avg: 8.6x
populist government may discourage potential investors. ‐1sd: 6.7x

6.2
‐2sd: 4.8x
Lingering risks of labour protests 4.2
Despite the issuance of Government regulation (PP) no.
78/2015 (in Oct 2015), which formulated the new PB Band (x)
mechanism to determine minimum wages in order to 5.1
(x)
provide greater certainty on the annual minimum wage 4.6 +2sd: 4.6x
increase, annual protests are still expected and may still 4.1
3.6
disrupt manufacturing activities. 3.1
+1sd: 3.48x
2.6
Avg: 2.36x
Competition from the ASEAN Economic Community (AEC) 2.1
1.6
The AEC could see Indonesia losing some of its advantages ‐1sd: 1.24x
1.1
and competitive edge over neighbouring countries. 0.6
0.1 ‐2sd: 0.12x

Page 86
Company Guide
SSIA: RNAV summary
Current portfolio Adjusted Value (Rpbn) Stakes Full Value (Rpbn) % of total Landbank (ha)
Industrial estate
Surya Cipta (Karawang) 1,147 100.0% 1,147 9% 128.1
Subang (West Java) 3,591 100.0% 3,591 29% 1,200
North Bekasi (West Java) 444 100.0% 444 4% 370
SuryaCipta Technopark 128 50% 256 1%
Construction 689 60.6% 1,137 5%
Hospitalities
Luxury hotels & resorts 1,097 86.8% 1,263 9%
Batiqa hotels 269 100.0% 269 2%
Investment in Cikampek - Palimanan toll road 872 24.8% 3,519 7%
Office in Kuningan (Jakarta CBD area) 532 100.0% 532 4%
Net Debt (Cash) 1,573

RNAV 7,196
RNAV/share 1,529
Source: DBS Vickers

Page 87
Company Guide
Key Assumptions
FY Dec 2013A 2014A 2015F 2016F 2017F
Marketing sales 664 382 304 482 520
Segmental Breakdown
FY Dec 2013A 2014A 2015F 2016F 2017F
Construction segment to
Revenues (Rpbn)
remain as largest
Industrial land 991 420 510 482 494 contributor to revenue
Construction 2,843 3,243 3,435 3,248 3,574 with more than 70%
Hotel 580 626 641 595 557 contribution
Rental & Maintenance 152 175 217 263 307
Others 15.9 0.53 0.53 0.53 0.53
Total 4,583 4,464 4,803 4,589 4,932
Gross Profit (Rpbn)
Industrial land 660 308 374 376 395
Construction 244 302 309 292 322
Hotel 390 421 481 446 417
Rental & Maintenance 16.1 23.5 32.5 39.5 46.0
Others 10.4 0.51 0.48 0.48 0.48
Total 1,320 1,054 1,197 1,155 1,181
Industrial land 66.5 73.3 73.3 78.0 80.0 Industrial land has and
Construction 8.6 9.3 9.0 9.0 9.0 should generate
Hotel 67.2 67.2 75.0 75.0 75.0 significantly higher GP
Rental & Maintenance 10.6 13.4 15.0 15.0 15.0 margins compared to
Others 65.1 96.3 90.0 90.0 90.0 other segments
Total 28.8 23.6 24.9 25.2 23.9

FY Dec 2013A 2014A 2015F 2016F 2017F
Revenue 4,583 4,464 4,803 4,589 4,932
Gross Profit 1,320 1,054 1,197 1,155 1,181
Other Non Opg (Exp)/Inc 30.5 (25.7) 0.0 0.0 0.0
Associates & JV Inc 65.3 226 230 245 262
Net Interest (Exp)/Inc (60.9) (63.6) (77.3) (122) (173)
Pre-tax Profit 907 671 749 750 703
Tax (160) (158) (168) (184) (197)
Minority Interest (55.5) (98.5) (89.8) (90.0) (84.3) Significant downcycle in
Preference Dividend 0.0 0.0 0.0 0.0 0.0 the industrial estate
segment caused steep
Net Profit 691 415 491 477 421
drop in earnings
Net Profit before Except. 691 415 491 477 421
EBITDA 988 790 741 810 856
Growth
Revenue Gth (%) 28.6 (2.6) 7.6 (4.5) 7.5
EBITDA Gth (%) (2.3) (20.1) (6.1) 9.2 5.7
Opg Profit Gth (%) (5.0) (38.7) 11.5 5.1 (2.1)
Net Profit Gth (Pre-ex) (%) (2.3) (39.9) 18.2 (2.8) (11.6)
Margins & Ratio
Gross Margins (%) 28.8 23.6 24.9 25.2 23.9
ROAE (%) 35.3 16.7 15.7 12.5 10.2
ROA (%) 13.0 7.0 7.3 5.9 4.6
ROCE (%) 20.9 10.0 9.7 8.0 6.5

Page 88
Company Guide

FY Dec 3Q2014 4Q2014 1Q2015 2Q2015 3Q2015
Revenue 1,074 1,210 1,317 1,182 1,356

Gross Profit 223 290 378 230 411
Operating Profit 86.4 141 254 78.0 247
Other Non Opg (Exp)/Inc (6.6) 35.5 20.8 28.6 69.3
Associates & JV Inc 35.0 108 21.3 29.2 (6.0)
Pre-tax Profit 97.7 261 277 113 283
Tax (37.0) (48.8) (49.5) (35.9) (49.0)
Net Profit 38.9 187 204 52.5 220
Net profit bef Except. 38.9 187 204 52.5 220
EBITDA 86.4 141 254 78.0 247
Boost from accounting forex
gain and other one-off
Growth income (i.e. sales of
Revenue Gth (%) (15.0) 12.7 8.8 (10.3) 14.7 investment properties and JV
EBITDA Gth (%) (59.2) 62.9 80.4 (69.3) 217.0 investment dilution)
Opg Profit Gth (%) (59.2) 62.9 80.4 (69.3) 217.0
Net Profit Gth (Pre-ex) (%) (78.0) 379.6 9.2 (74.3) 319.2
Margins
Gross Margins (%) 20.7 23.9 28.7 19.5 30.3

FY Dec 2013A 2014A 2015F 2016F 2017F
Net Fixed Assets 1,531 2,024 2,630 3,638 4,181

Other LT Assets 565 1,068 1,258 1,275 1,302
Cash & ST Invts 1,692 1,173 952 501 294
Inventory 459 351 1,085 2,065 2,111
Debtors 699 470 511 489 525
Total Assets 5,814 5,993 7,366 8,919 9,387
ST Debt 79.8 248 110 114 93.7

Creditor 346 356 278 264 289
LT Debt 1,199 1,031 1,027 1,960 1,861
Minority Interests 291 390 480 570 654
Total Cap. & Liab. 5,814 5,993 7,366 8,919 9,387
Non-Cash Wkg. Capital 252 249 583 1,412 1,338

Net Cash/(Debt) 414 (106) (186) (1,573) (1,661)
Inventory Turn (avg days) 36.1 46.8 75.7 176.8 217.2 Net gearing to increase
due to aggresive
Asset Turnover (x) 0.9 0.8 0.7 0.6 0.5
expansion into
Current Ratio (x) 2.0 1.7 1.7 1.8 1.7
investment properties
Quick Ratio (x) 1.3 1.0 0.7 0.4 0.3
Capex to Debt (%) 48.0 29.2 154.0 104.6 42.5
Z-Score (X) 2.7 2.4 1.9 1.9 1.9

Page 89
Company Guide

FY Dec 2013A 2014A 2015F 2016F 2017F
Pre-Tax Profit 907 671 749 750 703

Dep. & Amort. 116 255 145 183 242
Tax Paid (160) (158) (168) (184) (197)
Assoc. & JV Inc/(loss) 0.0 0.0 0.0 0.0 0.0
Chg in Wkg.Cap. (477) (105) 401 151 120
Other Operating CF (55.5) (364) 176 (90.0) (84.3)
Net Operating CF 330 299 1,302 810 783
Capital Exp.(net) (613) (374) (1,751) (2,170) (831)
Other Invts.(net) (465) (500) (190) (16.4) (27.1) Aggressive capex
Invts in Assoc. & JV 221 98.8 89.8 90.0 84.3 planned for 2015-
Div from Assoc & JV 0.0 0.0 0.0 0.0 0.0 2016F
Other Investing CF 336 42.6 0.0 0.0 0.0
Net Investing CF (521) (733) (1,852) (2,097) (774)
Div Paid (141) (140) (84.8) (100) (97.4)
Chg in Gross Debt (37.0) 0.59 (142) 937 (120)
Capital Issues (26.1) 0.0 555 0.0 0.0
Other Financing CF 198 53.2 0.0 0.0 0.0
Net Financing CF (6.7) (86.3) 329 837 (217)
Chg in Cash (198) (520) (221) (450) (208)
Opg CFPS (Rp) 172 85.9 192 127 128
Rp
S.No. Dat e Rat ing
Pric e Pric e
1236 1 1: 03 Mar 15 1300 1600 BUY
2 4 2: 01 Apr 15 1130 1600 BUY
1136
3: 20 May 15 1160 1400 BUY
3
4: 03 J un 15 1135 1400 BUY
1036
5: 23 J ul 15 920 1050 HOLD
936 6: 21 Aug 15 635 1050 HOLD
7: 03 Sep 15 745 765 HOLD
836 5
8: 01 Dec 15 605 765 HOLD
736
6 7
8
636
536
Source: DBS Vickers

Page 90
Industry Focus
DBSV recommendations are based an Absolute Total Return* Rating system, defined as follows:
STRONG BUY (>20% total return over the next 3 months, with identifiable share price catalysts within this time frame)
BUY (>15% total return over the next 12 months for small caps, >10% for large caps)
HOLD (-10% to +15% total return over the next 12 months for small caps, -10% to +10% for large caps)
FULLY VALUED (negative total return i.e. > -10% over the next 12 months)
SELL (negative total return of > -20% over the next 3 months, with identifiable catalysts within this time frame)
* Share price appreciation + dividends
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Page 91
Industry Focus
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Indonesia Industry Focus

Indonesia Property & Industrial Estate

DBS Group Research . Equity 5 Jan 2016

On the mend after a major setback JCI : 4,525.92

Rp US$m Price Rp 3 mth 12 mth Rating

property sector rather than strong demand fundamentals -30%

Recovery expected from tough 2015 3

Property segment outlook 2016 7

Neutral stance on sector 9

Agung Podomoro Land 21

Alam Sutera Realty 28

Bumi Serpong Damai 35

Recovery expected from tough 2015

Source: Companies, DBS Vickers. Note: Aggregate marketing sales above

More significant increase in debt seen for high-rise

Non-strata - Landed apartment projects in their portfolios.

50% 14% High foreign shareholding in property developer stocks –

350 Foreign ownership (as % of free float) trend

Source: Indonesia Central Securities Depository (KSEI), Bloomberg

Property segment outlook 2016

Burning predictions for property segment in 2016

structural long-term demand (from urbanisation), considerably 3.0

500,000 Demand Supply Occupancy

300,000 Land price trend in Greater Jakarta projects

200,000 Gading Serpong 14.0

Tangerang, and Bekasi) 1.2

Real GDP vs investment growth

Pre-committed office space absorption outside Jakarta

Active industries trend to industrial land pre-sales

Maintain neutral stance: BSDE as top pick

on the demand side, housing affordability remains weak as price- -20%

16%/-33% for industrial estate developers. 8.0

to downgrade PWON to HOLD purely because of limited -30%

SMRA 2,457 2,854 9.0% 5.5% 12.8% 1.3 -2% -1.7%

Source: DBS Vickers -6%

-7% -6.8% FY16F FY17F

Source: DBS Vickers.

All of our base-case assumptions above for property (incl.

Base-Case (Revised) & Worst-Case RNAV vs Current Stock Price

RNAV Now 524 795 3,626 1,730 1,411

TP Now 285 325 2,100 1,350 980

Rec Now Fully Valued Hold Buy Hold Fully Valued

PWON SMRA BEST LPCK SSIA

RNAV Now 570 2,457 440 19,724 1,529

TP Now 490 1,650 230 7,900 765

Rec Now Hold Hold Fully Valued Buy Hold

Source: DBS Vickers

dampened the attractiveness on the structure. 1.0%

Summary of regulations affecting property sector

RNAV breakdown by developer

Source: DBS Vickers

95 News on potential News on suspension

ASRI: Discount to RNAV trend

BSDE: Discount to RNAV trend

Source: DBS Vickers, Bloomberg Finance L.P

Source: DBS Vickers, Bloomberg Finance L.P.

Dec-07 Dec-07 Dec-07

PWON: Discount to RNAV trend

Source: DBS Vickers, Bloomberg Finance L.P

Source: DBS Vickers, Bloomberg Finance L.P.

Aug-12 Aug-12 Aug-12

Aug-13 Aug-13 Aug-13

Apr-14 Apr-14 Apr-14