PPRO
Contact our analyst Eka
36% upside. BUY
26th December 2019
Price Rp67
Target price Rp91
26th December 2019
Price Rp67
Target price Rp91
9M2019 Results: Weak marketing sales
Valuation: TP 91, Upside 36% BUY
- As of 9M2019, PPRO revenue fell -24.7% to IDR 1.37 trillion from IDR 1.82 trillion. Most of the revenue came from Apartment sales at IDR 894.9 billion or 65% of total revenue. Housing sales contributed 26.6% of total revenue.
- COGS also decreased -28.6% to IDR 964.7 billion, which resulted in a decrease in gross profit -13.5% to IDR 407.7 billion. Net Income decreased -31.2% to IDR 210.54 billion from IDR 305.8 billion.
- The result is in line with the marketing sales in 9M2019. PPRO booked marketing sales of IDR 1.44 trillion in 9M2019, lower than 9M2018’s IDR 3.1 trillion & far below PPRO’s targeted 2019 marketing sales of IDR 4.17 trillion.
- A new accounting standard, PSAK no. 72, will be applied in 2020 (revenue can only be recognized after handover), PPRO has a strategy to deal with this by simplifying and speeding up the process of hand over, and adding landed house projects.
- The apartment projects which will be handed over in 2020 are Evencio Tower 1 Extension, Guning Putri Square shop houses, Ayoma West Tower, Amartha View Tower 1, Grand Dharmahusada Lagoon Tower Olive, and Begawan Residential & Commercial project.
- As more projects will be handed over in 2020, PPRO is targeting marketing sales of IDR 4.8 trillion, higher than 2019’s 4.17 trillion. Revenue is targeted to reach IDR 3.19 trillion, compared to the 2019 target of IDR 2.5 trillion. Net profit to set to reach IDR 346 billion in 2020.
- PPRO plans to increase their landed house projects while still focusing on high rise buildings.
- Increasing landed house project is another of PPRO’s strategies to offset PSAK No.72 in 2020.
- New Landed house projects for 2020 include Transyogi Cibubur, Rancasari Bandung, a new project in Makassar East Jakarta and Creative City West Java. While for apartments, new projects in 2020 are Sinduadi Yogyakarta, Petra Surabaya and PP Square.
Valuation: TP 91, Upside 36% BUY
- We have a one year target price for PPRO of IDR. 91, offering investors a potential return of 36%. This would mean the stock trading at 15x 2020F PE
- We recommend BUY.
