Ride the wave - Maybank Kim Eng
U/G to BUY with 54% higher TP of 400 Upgrade BEST to BUY from HOLD as it appears set to capitalise on increasing FDI in Indonesia, with its strategically-located land assets in a prime industrial hub in Bekasi. Despite its strong rally since Oct’18, we believe that it has not fully priced-in its potential growth ahead the sector’s upcycle. Valuation wise, BEST is still undervalued, trading at 66% discount to RNAV and 0.7x P/B FY19E a deep discount to DMAS, its closest peer’s valuation at 44% disc. to RNAV. We lift our presales assumptions for FY19E-21E by 13%/36%/43% which lifts our EPS by +17%/+36%/43%. Our new TP is IDR400, up 54% from IDR260, based on a 54% disc. to RNAV, +1SD of its 5-year mean vs. a 68% disc. its 5-year mean, previously.
Only pure industrial-estate developer Unlike its peers, BEST sticks to its core strength of selling industrial land only. It has no plans to develop commercial or residential properties. Its gross land bank as of Jun 2019 was 1,043ha, of which 240ha was ready for sale. As new land in Bekasi is scarce, we believe pricing can be supported.
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