Sinarmas Land

Sinarmas Land: Sinarmas Land tells The Edge magazine that is on a mission to help investors understand the company better. Over the next few years, the group will also unlock the value of assets, and raise recurring income to create a sustainable business model. A substantial portion of the group's land bank in Indonesia was acquired back in the 1980s, and the value of the properties has appreciated significantly since then. In particular, over the past five years, the property boom in Indonesia has led prices of residential property to double, and industrial land to triple. In FY13, Sinarmas Land achieved revenue of $985m, of which 90% was derived from its development projects in Indonesia, while the remaining 10% came from rental income from seven office buildings in Indonesia, 21%-stake in strata-owned Orchard Towers in Singapore, Le Grandeur Palm Resort Golf and Country Club in Senai, Johor and Palm Springs Golf and Beach Resort in Batam. Sinarmas Land intends to raise its recurring income base to 20-25% of overall sales going forward, particularly from the overseas market- citing Australia, US and London. Meanwhile, the group is also looking at ways to unlock value of some assets on its balance sheet. In Singapore, management sees potential to sell the units it owns at Orchard Towers via an en-bloc deal. Market watchers estimate that Sinarmas Land’s stake in Orchard Towers is worth ~$190m, compared to the $64m held in its books. Following management’s effort to raise visibility, the street is starting to pick up coverage on the stock. Greater investor awareness on the counter could lead to a firmer stock price. At $0.595, Sinarmas Land trades at 1.1x P/B. Bloomberg consensus has 2 Buys with consensus TP of $0.97.