Weak catalyst; prioritize a different game
Upgrade to OVERWEIGHT from NEUTRAL, with a pecking order of PANI>BSDE>CTRA>SMRA. Despite its premium valuation, PANI remains our top pick, on the back of an ongoing corporate action to raise its stake in CBDK, a move which will bulk up its effective landbank. Famed as one of the top-performing marketing sales players, BSDE continues targeting a premium segment: buyers with robust purchasing power. Moreover, CTRA & SMRA are supported by an attractive government incentive to boost demand for middle and mid-lower segment properties. For these and other reasons, project handover is still robust for these major players, with their aggregate marketing sales steadily recording a new high. Apart from PANI, other property players include BSDE/CTRA/SMRA, trading at a very attractive valuation of 7.6/5.8/6.3 FY26F P/E, respectively.

Marketing sales at an ATH; incentive endures. Meanwhile, share price is still a laggard
Solid marketing sales outlook, even after a record high achievement. The aggregate marketing sales of 4 property players (BSDE, CTRA, SMRA, PANI) already peaked in 2024, at a record high of IDR31.1trn, and we expect these numbers to be sustainable in 2025-2026F - 1%/5% YoY – supported by a further extension of VAT incentive for residential below IDR5bn. The key beneficiaries of this extension remain CTRA and SMRA, as a majority of their products are at a ticket size ranging from IDR2-5bn.
i. CTRA marketing sales growth: -0.5%/+3.0% in FY25-26F
ii. SMRA marketing sales growth: +9.7%/+3.2% in FY25-26F
Meanwhile, PANI and BSDE are targeting an upper segment, signifying only a minimal contribution from any tax exemption, while demand remains robust, supported by rising average savings. Considering the recorded numbers of households at 75.6m (estimated 87.8m if you include unrecorded), and a home ownership rate of 85% - we estimate a potential national housing demand of 11.3m, close to the projected housing backlog of IDR9.9m families. In our view, the issue lies in purchasing power and affordability, both of which are alleviated by a declining loan rate for home ownership, dipping to 6.84% (Jun-25). Additionally, Government is providing yet another mortgage subsidy scheme (KUR Perumahan) to stimulate demand: for mortgages of IDR10-100m,the interest rate subsidy is 10%, and for mortgages of IDR100-500m the subsidy is just 5.5%.

Property backlog easing for lower income segment
Share price still lagging behind. Although marketing sales mark a record high, the share price of property companies under our coverage is still in the doldrums. BSDE, CTRA, SMRA are in fact trading at an attractive valuation of -1SD/-1SD/-1SD discount to NAV. Arguably, there is an execution risk for the companies, translating the landbank into revenue, while P/E valuation is a preferred method. Looking at project delivery, we appraise 2026F development revenue as remaining robust, reflecting 2024-2025 marketing sales, as landed-house handover normally takes 12-18 months. Our FY25-26 forecast indicates -3.2%/6.8%/7.2% EPS growth, implying 7.6/5.8/6.3 FY26F P/E for BSDE/CTRA/SMRA. Meanwhile, PANI is trading at a premium, compared to peers, on account of its coming corporate action (preemptive rights issuance), aiming to raise IDR16.7trn, the proceeds to be used to increase their stake in CBDK to 90%. This valuation will expand PANI’s effective landbank to 265 ha, unlocking new value.

Stable mortgage rate anticipated
Looking at the residential property price index (IHPR), small (<36 sqm) and medium (36-72 sqm) units are rising at a faster pace, compared to big ones (>72 sqm). Meanwhile, middle- and lower-income class household savings are on a decline – a factor which impairs affordability for mid-lower class consumers. Against this, higher-income-class average savings continue to swell, up to 1H25. We therefore believe the premium housing segment will continue to outperform the mid-lower segment, in view of a massive gap in ticket size, while government tax exemption program will extend support to mid-to-smaller housing buyers.

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