Indonesian Companies in Focus: Pembangunan Perumahan (PP)
Corporate earnings of Indonesian state-controlled construction and investment company Pembangunan Perumahan (abbreviated PP) are in line with analysts' forecasts. In the first quarter of 2016, PP's revenue rose 30.6 percent (y/y) to IDR 2.58 trillion (approx. USD $195 million), while net profit rose 5 percent (y/y) to IDR 98 billion (approx. USD $7.4 million) from the same quarter one year earlier. These figures indicate the company experienced a solid start of the year.
When commenting on Q1-2016 earnings, Maybank Kim Eng Securities stated that it is confident earnings of Pembangunan Perumahan (PP) will grow further in the following quarters, particularly on the back of the strong performance of its subsidiary PP Properti. Currently, the property business contributes about 5 percent to PP's earnings. However, in the next two years this figure is estimated to grow to 15 percent. Meanwhile, the profit margin of PP's property business segment is expected to climb to 13.5 percent in 2016-2017 from 13 percent in 2015.
In Q1-2016 PP secured IDR 6 trillion worth of new contracts, consisting of IDR 1.7 trillion worth of contracts in the property, precast concrete and construction segments, and IDR 4.3 trillion worth of contracts in the infrastructure segment. New projects include the BNI Tower (South Jakarta) and an apartment complex in Balikpapan (East Kalimantan). PP is also in the race to be awarded contracts to construct toll roads in South Sulawesi, East Java, and East Kalimantan.
PP targets to book IDR 31 trillion in new contracts in 2016 from both the private sector and the government (either directly or through state-owned enterprises). Given that PP is a government-controlled company (the central government controls a 51 percent stake in the company) it is expected to be easier for PP to win contracts related to government-led infrastructure development projects.
Maybank Kim Eng Securities recommends investors to buy shares of PP. The securities company set its target price for PP shares at IDR 4,300 a piece (reflecting a price-to-earnings ratio of 22 times) and added that PP is its favorite Indonesian company in the construction sector. However, on Thursday (12/05), shares of PP fell 1.10 percent to IDR 3,590 (the company was listed on the Indonesia Stock Exchange in February 2010). So far this year, the company's shares have fallen 7.35 percent.
Stock Quote Pembangunan Perumahan (PP) - PTPP:
CIMB Securities is also enthusiastic about the fundamentals of PP and set its target price for PP shares at IDR 5,000 a piece, primarily on expectations of strong property sales.
Indaryanto, Finance Director of PP Properti, said the company will sell IDR 900 billion (approx. USD $68 million) in bonds in 2016 in order to finance this year's capital expenditures (IDR 1.25 trillion). In the first quarter of 2016 the company has already issued IDR 300 billion in medium term notes.
Future Projection Pembangunan Perumahan's Financial Highlights:
| 2013 | 2014 | 2015 |
2016F | 2017F | |
| Sales | 11,655.8 | 12,427.0 | 14,217.0 | 20,069.0 | 25,395.0 |
| EBITDA | 1,180.0 | 1,505.0 | 1,745.0 | 2,658.0 | 3,365.0 |
| Net Income | 420.7 | 532.0 | 740.0 | 944.0 | 1,373.0 |
| P/E Ratio (x) | 42.2 | 33.2 | 24.0 | 18.8 | 12.9 |
| PBV (x) | 8.9 | 7.6 | 4.1 | 3.5 | 2.9 |
in billion IDR rupiah unless otherwise stated
¹ in IDR rupiah
Sources: Maybank Kim Eng Securities (12/05/2016)