Maybank (ZP)

BSDE BUY UPGRADE TP 1750 (fr 1250)

Maybank-KE research: Bumi Serpong Damai (BSDE)
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Aurellia Setiabudi maintains BUY recommendation on Bumi Serpong Damai (BSDE), and upping TP to IDR1,750 (from IDR1,250) per shares. New TP is based on 53% discount to RNAV, -1 Standard Deviation of its 5-year mean.

Aurellia raises TP to IDR1,750 as she raises EPS by 10-25% in FY19E-FY20 on the back IDR is expected to strength as much 10% in 2019E will give beneficary from reversal of FX losess. Interest-rate hikes are also expected to stop in the near term, will impact to residential acceleration in FY19-FY20E.

Based on latest strategy report on 30 Nov 2018, our regional team expects IDR to strengthen to IDR12,900 from IDR14,500, on the back of narrowing growth and yield differentials between the US and rest of the world. This should alleviate inflation and pressure on the BI to raise rates, potentially catalysing property demand in 2019E.

Aurellia also increases presales assumptions by 2-8% as banks appear to have a high appetite for mortgage lending. They are offering competitive rates to sustain affordability.

After booking high non-cash FX losses of IDR405b or 23% of its EBIT in 9M18 for its USD649m bond, Aurellia assume FX reversals in FY19E. FX gains plus higher presales lift her EPS forecasts for FY18-20E.

Aurellia views that BSDE has underperformed JCI by 13% YTD as investors fret over its USD649m bond exposure. As of 9M18, it held USD331m of cash to parthedge its FX exposure. Net gearing of 20% was also one of the lowest in the sector.
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