Ciputra Development (CTRA IJ)

Expect Strong Marketing Sales Trend to Continue in 2H24 from Top-10 Key Projects

 

  • We believe CTRA will be able to maintain its strong pre-sales trend in 2H24 (1H24 est. +3% yoy), driven by its vast landed-residential projects.
  • Our channel check on Elaia Serpong shows a potential Rp270-300bn pre-sales in 2Q24. We raise our overall FY24F est. by 17% to Rp11.5tr.
  • We resume coverage with a Buy rating and RNAV-based TP of Rp1,700 (assuming slightly higher disc. to RNAV of 52%); CTRA is our sector pick.

Non-VAT Exempted Products Pre-Sales Growth Remain Resilient

We believe CTRA’s vast landbank size versus peers (exh.1) and its ability to leverage brand equity through Joint-Operation will remain the key competitive advantage to sustain pre-sales in FY24F-FY25F (our forecast of Rp11.5tr/Rp12.0tr). The landed-residential dominated portfolio is also well-suited with the current demand profile from end users-driven, supported by VAT and LTV incentives, with non-VAT-exempted products remain contributing competitively vs. peers, as shown in 3M24 pre-sales (exh.12).

Channel check on Elaia; raising our FY24F/FY25F pre-sales est. by 17%/25%

We estimate that the early launch of CGS Elaia, slated in Jun24, may yield Rp270-300bn pre-sales in 2Q24, bringing overall CGS project achievement in 1H24 to reach ~50% of its FY24F target (exh.2). Our conservative estimates suggest that aggregate CTRA’s marketing sales achievement of 1H24 will remain in-line with the company’s target at 47% to FY24F target (exh.3). Incorporating the 3M24 pre-sales and our channel checks, we raise our FY24F/FY25F pre-sales forecast by 17%/25% to Rp11.5tr/Rp12.0tr (4% above the company’s target in FY24F), which we still deem as conservative considering there will still be potential product launching in 3Q24-4Q24 (e.g., CitraLand Gresik, CitraLand Losari Canal Drive Shophouses, etc.). As a result, we also adjusted our revenue recognition period and raised our FY24F revenue/net profit forecast by 3%/3% to Rp10.9tr/Rp12.2tr.

Resuming Coverage with a Buy rating and TP of Rp1,700

We resume our coverage on CTRA with a Buy rating and TP of Rp1,700, based on a higher 52% disc. to our revised RNAV, implying 1.4/1.3x FY24F/FY25F P/BV. The stock currently trades at 68% disc.to RNAV (vs. FY12-15 at 31%), which we believe is unwarranted given its resilient pre-sales trend aided by the vast landed portfolios. Key risks are; 1) lower pre-sales traction out of Top10 key projects, 2) lack of stock liquidity (6-mo. avg. turnover of Rp22.9bn/day, despite of CTRA better than the peers avg. at Rp13.0bn/day) 3) discontinuation of gov’t incentive decelerate property demand.

 

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