Oct 13, 2017 11:45:14

Alam Sutera ($ASRI) – 9M17 Marketing sales below estimate

Alam Sutera booked 9M17 marketing sales at IDR1,261bn (-55% YoY). This achievement only accounted for 34% of our fullyear  target of IDR3,728bn (25% from company’s target of IDR5,000bn) and below  its 4-year historical average of 81%. Presales in 3Q17 was weak as it fell 30%  QoQ & -66% YoY.

Based on our latest discussion, the management has no plans to revise its target  marketing sales. We have also confirmed that it has not recorded the agreed land  sales to China Fortune Land Development (CFLD) (600340 CH, NR) in 3Q17  because there were ~5% of the land yet to be acquired, thus we estimate this will  be booked in 4Q17.

Furthermore, management has yet to close the IDR2trn Office Tower sale with  the negotiation still ongoing amongst three potential buyers. Based on 5-year historical data, we estimate the average achievement in 4Q was IDR755bn,  combined with 9M17 numbers and land sales to CFLD in 4Q17 we estimate  marketing sales by the end of the year will be ~IDR3.02trn excluding the Office  Tower sale. Currently we have a BUY call on the counter with TP of IDR540,  however we will be revisiting our assumptions to better reflect current condition.  (Yualdo Tirtakencana)