May 20, 2010

Danareksa targets Intiland Rp1,250

Assuming high yield assets, sales acceleration, divestment of non profitable property assets, PT Intiland Development Tbk (DILD) is estimated to reach earning growth of 35 folds in the next three years.
By using its cash of Rp2.1 trillion from rights issue, Intiland acquired land banks in 3 areas worth Rp2.76 trillion, boosting its total land bank to 2,130 hectares. To develop the land bank, the company needs Rp3 trillion and accomplish in 6 years.
In a research report published by Danareksa Sekuritas yesterday, estimation of return on investment will be around 40%. "We initiate to cover DILD with buy recommendation and set a target price of Rp1,250 per share," the research said.
The target price implies 21.4-15.8x of forecast PER 2010-2011 and 1.84-1.64x of PBV, a 30% discount to DILD's net asset value.
According to the report, Intiland will fasten disposal of existing low yield assets and sales of 19.3 hectares of inventory. In return, Intiland will reallocate its resources to new high yield property products.
In the next two years, growth on Intiland will be boosted by sales of existing mature assets on area of 19.3 hectares from housing products in Jakarta and Surabaya. Marketing sales from both areas now reaches Rp254 billion and Rp383 billion of the total cash will be obtained in the next two years. In total, Intiland will develop 689 hectares in the next five years.

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