Contact our analyst Eka
21% upside. BUY
21st December 2020
Price Rp580
Target price Rp706
Investment Considerations
Subang Smartpolitan Project
- SSIA has a new project through its subsidiary PT Suryacipta Swadaya called “Subang Smartpolitan”.
- Subang Smartpolitan is built on 2,700 ha of land in Subang, West Java and will be developed in 4 Phases. Phase I will cover an area of 400 ha. The development has begun in 4Q2020 (November) and its expected to be ready for handover in 1Q2023.
- Phase I includes commercial, industrial, residential areas and supporting infrastructure and facilities.
- Currently, management indicates that a number of investors from various industries and countries have expressed interest such as Japan, China, and South Korea.
- This project will contribute to land sales in 3Q-4Q 2021 and will boost 2021 revenue.
Patimban toll road progress
- Patimban toll road and Patimban Port are keys to the growth of the industrial estate business in West Java, especially Subang.
- The Subang Smartpolitan is located 89 km from Jakarta, with direct toll access, close to Patimban Seaport, Kertajati International Airport, and connected via the planned Jakarta – Surabaya High-speed-train.
- Patimban toll track has been decided and will pass though SSIA land. SSIA will take part in the Patimban Access toll road project consortium through a 25% stake.
- The construction of Subang-Patimban toll road will start in the middle of 2021.
9M2020: Margin Drop
- SSIA recorded revenue of IDR 2.12 tn, down -23.3% YoY due to the Covid-19 outbreak which has hit SSIA’s three main business pillars. Revenue from construction and hospitality was down by 12.5% and 70.6% respectively. While property business still recorded +8% growth as land sales grew 45% YoY to IDR 62.4 bn.
- Gross profit decreased by -50% YoY to IDR 338.5 bn, EBITDA dropped -86.4% YoY to IDR 39.7 bn with a lower EBITDA margin from 10.5% in 9M2019 to 1.9% in 9M2020.
- SSIA recorded a net loss of IDR -197.9 bn, with a lower net income margin of -9.3% from -0.3% in 9M2019. We expect SSIA net loss in 2020F to be IDR -63 bn and then turn profitable in 2021F as we expect additional income from the Subang project in line with higher industrial estate sales and property demand.
Valuation: BUY with 21% Upside
- We estimate SSIA shares will reach IDR 706, offering investor a potential return of 21% within a year. This would be mean the stock trading at 55x 2021F PE. We recommended to BUY