CTRA - Toning down 2024F earnings estimate

KBVS Update
Friday, 19 Apr 2024

CTRA- Toning down 2024F earnings estimate 
(Maintain BUY - TP: IDR1,350)

Expect stronger marketing sales growth in the upcoming quarters. CTRA reported marketing sales of Rp3.3 tn (-4% yoy) in 1Q24. This drop was attributed by the high-base effect in 1Q23, compounded by the presidential election, and fasting month. On the other hand, CTRA achieved 30% of its full-year 2024 target of Rp11.1 tn, surpassing the 24% historical average for 1Q performance in the last 5 years.  

Guided 5% net profit growth in 2024. CTRA projects financial growth for 2024, anticipating an 8% increase in both revenue and gross profit driven by higher recognition from real estate business, with gross margin remaining stable between 49%-50%. Net income is also expected to climb by 5%. The projection is below our and consensus initial expectation of IDR2.2tn and IDR2.1tn, respectively (at the date of announcement).

Promising mid-term outlook. The mid-term outlook for recurring income is promising, a hospital in Surabaya is slated to commence operations in 2/3Q24, boasting 200 beds. Additionally, there are prospects for additional recurring income streams, including a hospital and mall in Makassar in the coming years.

Reiterate BUY with lower TP IDR1,350 (previously IDR1,450). Following the downward adjustment in earnings and our expectation in higher capex, we reiterate BUY on CTRA with target price of IDR1,350 using DCF-based TP (WACC: 11.1%; LTG: 3%), which implied to 1.0x ‘24F PB and 74.2% discount to ‘24F RNAV.

Regards,
Benyamin Mikael -KBVS Research