Introduction

Ciputra Development (CTRA IJ) stands as one of Indonesia’s leading property developers, renowned for its diversified township projects and an asset-light business model. Established in 1981, the company has cemented its position in the industry with a vast portfolio of projects across the nation. This report delves into Ciputra Development’s strategies, financial performance, and key projects, and provides a comprehensive analysis of the company’s growth trajectory and investment potential.

Investment Thesis

Strong Pre-Sales Growth

Ciputra Development has displayed the strongest pre-sales growth among its peers since the pandemic. Driven by its diverse geographic project locations, the company has effectively captured varying regional demands. As of FY24E, pre-sales were 184% of FY19 levels, showcasing the highest recovery in the sector. Between FY24E-26E, the company is projected to achieve a compound annual growth rate (CAGR) of 4.7% in pre-sales, following a remarkable 20% CAGR from FY20-24E.

New Project Launches

New projects have been pivotal to Ciputra Development’s growth. In FY23, townships such as Citra Garden Serpong and Citra Sentul City drove pre-sales, contributing 38% of the total. With new launches in FY24, including CitraLand Sampali KDM in Medan and CitraLand Gresik in East Java, the company continues to sustain its growth trajectory.

Joint Operation (JO) Projects

Joint operation schemes play a significant role in Ciputra Development’s strategy, contributing 63-64% of total pre-sales in FY24E-26E. This model enables quick market entry and enhances asset turnover while leveraging the expertise of local partners to develop new townships effectively.

Focus on Affordable Housing

The company’s focus on affordability has resonated with end-users. Approximately 70% of pre-sales are funded by mortgages, and properties under IDR2 billion account for 48% of total pre-sales, the highest among peers. This strategic alignment caters to first-time homebuyers and addresses affordability challenges.

Financial Strength

Ciputra Development maintains a robust financial position, with consistent revenue growth and a net cash position since 2022. FY25E revenue is forecasted to grow by 7.5% YoY. The company projects an FY25E ROE of 10.0%, supported by its healthy balance sheet.

Recommendation

The report re-initiates coverage of Ciputra Development with a “BUY” rating and a target price of IDR1,250, reflecting a 35% upside from its current share price of IDR945. The target price implies a P/B FY25E multiple of 0.98x, aligned with its five-year mean, and a 62% discount to RNAV.

Key Projects

CitraGarden Serpong

Located in Tangerang, West Jakarta, this JO project spans 350 hectares, with 120 hectares currently being developed. Targeting middle-low to middle-high segments, homes are priced between IDR803 million and IDR4.2 billion. As of 9M24, the project recorded pre-sales of IDR698 billion, contributing 8% to total pre-sales.

Citra City Sentul

Launched in October 2023, this JO development in Sentul spans 400 hectares. Pre-sales for 9M24 stood at IDR660 billion, with homes priced between IDR858 million and IDR6.8 billion. The project is strategically located near the Sentul Selatan toll exit, providing excellent connectivity.

CitraGarden Bintaro

This 28-hectare JO development in South Jakarta was launched in November 2023. Targeting middle-low to middle-upper segments, homes range from IDR1.2 billion to IDR4.8 billion. As of 9M24, pre-sales reached IDR393 billion, contributing 4.5% to total pre-sales.

CitraRaya Tangerang

One of Ciputra’s oldest projects, this directly owned development spans 2,760 hectares in Tangerang. With homes priced between IDR150 million and IDR4.9 billion, the project contributed IDR443 billion to 9M24 pre-sales, or 5.1% of the total.

CitraLand Gama City Medan

Located in Medan, North Sumatra, this JO project targets middle to middle-upper segments with homes priced between IDR1.3 billion and IDR7.6 billion. As of 9M24, the project contributed IDR212 billion, or 2.5% of total pre-sales.

CitraLand Surabaya

This directly owned project is one of Ciputra’s flagship developments, launched in 1993. Covering 1,700 hectares, it targets middle to middle-high segments with homes priced between IDR832 million and IDR7.8 billion. As of 9M24, it contributed IDR1,204 billion, or 14% of total pre-sales.

Corporate Actions and Shareholder Structure

Ciputra Development was listed on the Indonesia Stock Exchange in 1994. Over the years, the company has undertaken multiple corporate actions, including limited public offerings and mergers with its subsidiaries Ciputra Property and Ciputra Surya in 2017. The Ciputra family remains the majority shareholder, owning 53.2% of the company.

Conclusion

Ciputra Development emerges as a strong contender in the Indonesian real estate sector, backed by its diversified portfolio, robust financials, and strategic focus on affordable housing. With its proven track record and forward-looking strategies, the company is well-positioned to sustain its growth trajectory. The “BUY” recommendation reflects confidence in its ability to deliver substantial returns to investors.