Bumi Serpong Damai (BSDE.IJ Rp 1,280; BUY TP Rp 1,550) Well-Connected Township Remains Key Selling Points to Support FY24F-26F Core Marketing Sales

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Bumi Serpong Damai (BSDE IJ)

Well-Connected Township Remains Key Selling Points to Support FY24F-26F Core Marketing Sales

BSDE's projects boast the key value-add of strong connectivity, which we expect to support a 4% CAGR growth in FY24F-26F core pre-sales.
Our channel check on the new launches indicates potential Rp188bn in pre-sales in 3Q24; this leads us to raise our FY24F target by 23%.
We resume coverage with a Buy rating and RNAV-based TP of Rp1,550; Key risks are related to pre-sales growth and awaited ROE improvement.

Well-Connected Township will Remain BSDE’s Key Selling Point

We believe BSD City’s strong connectivity with Jakarta’s major highways and proximity to transport hubs will remain the key distinctive selling points in the Indonesian property market, allowing BSDE to dominate its market segment (exh.6) by pioneering a well-designed township. Supported by other projects strategically located in Jakarta’s suburb with interconnected transportation facilities (e.g. Grand Wisata Bekasi, where marketing sales have increased by ~Rp300bn/year post the effective operations of LRT Jabodebek), we believe these projects shall support BSDE’s core marketing sales (excl. JV land sales) in FY24F-FY26F (our forecast of Rp7.9tr-Rp8.7tr).

3Q24 Product Launches to Contribute ~2-4% to FY24F Marketing Sales

Our channel check indicates that BSDE’s newly launched products (exh.5) could contribute 2-4% to its FY24F marketing sales, with a relatively attractive take-up rate averaging ~32% in BSD City. This is despite the product being targeted at the Rp2-6bn market with a handover period of 18-24 months (and thus excluded from the VAT-exemptions). We maintain a positive view that BSDE can meet its FY24F target of Rp9.5tr. Incorporating the potential 4Q24 product launches and potential JV land lot in 2H24/FY25F, we raise our overall marketing sales fcst. by 23%/18% to Rp9.5tr/Rp9.7tr in FY24F/FY25F. This leads to an upward revision in our FY24F revenue/net profit by 33%/69% (exh.1).

Resuming Coverage with a Buy rating and a TP of Rp1,550

We resume our coverage on BSDE with a Buy rating and a higher TP of Rp1,550, based on a higher 67% disc. to our revised RNAV, implying 0.8/0.7x FY24F/FY25F P/BV. We incorporate the upcoming acquisition of SMDM into our RNAV calculation (~8% to total RNAV), by conservatively valuing the landbank at a ~70% discount to market value. We believe this could narrow in the future as we expect BSDE to implement a similar marketing strategy to SMDM’s project, which may add another ~5% to BSDE’s RNAV. Key risks are: 1) lower-than-expected marketing sales achievement 2) lower dividend payout (avg. peers' payout of 23%), deterring its ROE improvement to reclaim the 45-50% disc.to RNAV during FY14-FY15 property boom (exh.8).

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