Contact our analyst Eka

A turn around story, 131% upside. BUY

18 October 2022

Price Rp50

Target price Rp118

Investment Consideration

9M2022 marketing sales Jump

• As of September, PPRO achieved marketing sales of IDR 656 billion, much higher than 2021 marketing sales of IDR 380 billion. Most of the marketing sales came from Grand Dharmahusada Lagoon at 15.6% of the total, followed by Apartement Begawan Malang at 14.7%. With a  51% budget marketing sales achievement in 9M2022, PPRO is optimistic they can reach the marketing sales target of IDR 1.28 trillion for 2022.
• In 1H2022, PPRO revenue reached IDR 984 billion, an increase of +69% YoY, while in 2Q2022 revenue reached IDR 603.8 billion, an increase of +67% YoY and +58.5% QoQ.
• Since 2020, the property industry has seen a decline. Despite many government incentives, demand is still depressed. The property industry has started to recover in 2022 though, and this is expected for continue despite the VAT discount ending in September, and higher than expected mortgage rates.

More development projects

• PPRO had three new developments starting in 2022, a landed house project in Cilegon, development of national strategic areas in Batang, and another landed house development in Cibubur.
• The landed house project in Cilegon is on a 180 ha development area, and expected to contribute IDR 18 trillion to revenue until 2044.
• The national strategic areas project in Batang, will build a township and is expected  to contribute revenue of IDR 1,8 trillion.
• The landed house project in Transyogi, Cibubur is expected to contribute revenue of IDR 4.6 trillion with an 8.1 ha development area.
• The landed house projects are expected to boost PPRO marketing sales in the future.

1H2022 Result: Triple-digit growth bottom line

• In line with higher revenue, PPRO bottom line profit increased +137% YoY to IDR 5.25 billion in 1H2022. For 2Q2022, PPRO bottom line profit jumped +229.5% YoY or +206% QoQ to IDR 3.96 billion. PPRO EBITDA also increased +57% YoY in 1H2022 to IDR 79.4 billion , while 2Q2022 EBITDA jumped +105%  to IDR 53.3 billion with a higher EBITDA margin of 8.8% from 5.2% in 2Q2021.
• In terms of debt, PPRO has fully paid Bonds and MTNs which matured in 2022 with a total value of IDR 2.5 trillion. This means a better credit ratio for 2022F.
• We expect PPRO bottom line profit will reach IDR 22.8 billion with +12% YoY growth.

Valuation: TP 118, Upside 131% BUY

• We have a one year target price for PPRO of IDR. 118, based on a 46% discount to RNAV/share or offering investors a potential return of 131%.