Excerpts from analyst's report

Phillip Securities analyst: Peter Ng

Highlights 
sinar bsd3.16 The unveiling of 10 economic reform packages by the Indonesian Government in 2015 in a bid to boost foreign direct investments (FDI) 

 Majority of revenue continues to be derived in Indonesia; Bumi Serpong Damai (BSD) City and Kota Deltamas 

 51.4% own subsidiary, Bumi Serpong Dermai Tbk (BSDE.JK, Rp1,945) achieved 90% of sales target in FY15; shortfall was due to project delays 

 44.5% own subsidiary, Puradelta Lestari (DMAS.JK, Rp204) saw weaker sales in FY15 amid uncertainties in the global economic environment accompanied by the overall weak land sales in Indonesia 

 Completed the acquisition of Alphabeta Building in London and started contribution in 3Q15


How do we view this?
 A strong pipeline of new property launches amounting to c. Rp6tr backed by a healthy demand for Indonesia residential properties would likely propel the absorption of these newly launched properties

 We expect development sales from BSDE to remain as the primary driver of revenue for the group moving forward, and view that a targeted marketing sales in the region of Rp6.8tr in FY16 is achievable

 Plentiful amount of land bank (7,000 hectares) remaining; puts Sinarmas Land (SML) in a good stead to ride on the recovery in the Indonesia economy

 While industrial land sales were considerably muted in 2015, however, the adamant stance of developer on refusing to cut prices is a vote of confidence on the land value

♦ Buy, target price 79 cents
"Along with a change of analyst, we maintain our BUY rating with a reduction in TP to $0.79 (S$0.96 previously) based on our SOTP RNAV estimates, taking into account of the higher amount of debt taken on its balance sheet to drive business expansions."

-- Phillip Securities

 Low supply but strong demand for office space in Central London likely to benefit valuations for both of its office properties in London

 We note that the group has entered into a net debt position of S$482m as at end Dec- 15 amid rapid expansions outside of BSD City and Kota Deltamas

Investment Actions
We remain positive about the company’s prospects going forward amid its strong fundamentals, and view that SML will be the beneficiary of a recovery in the Indonesia economy. We favour SML’s buoyant sales performance, deep development pipeline and a history of positive operating cash flows are avenues, which the group can leverage to strengthen its balance sheet.

Full report here.

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