The growth in the property development segment — residences and shop houses, as well as offices — boosted 1Q18 sales to IDR1.36 trillion (+6.8% y-y). The towering COGS attributable to the change in product mix stunted 1Q18 gross margin performance. Nevertheless, the tumble of 42.1% y-y in 1Q18 profit to IDR125 billion was most likely attributable to the revenue recognition of asset divestment in 1Q17.
On the other hand, 1Q18 marketing sales surged further until May, the all–time high as of early 2018. Projects worth lower than IDR2 billion per unit dominated the marketing sales realization.
2H18 Likely Rosier Performance
We project that CTRA’s 2H18 performance is likely rosier. The revenue recognition of prior sales and larger numbers of newly launched projects than 1H18 projects are potent drivers for 2H18 rosier performance. Indeed, it adds a residential project to be launched in the end of 2018 in Sentul into its pipeline. Other than the two potent drivers, Bank Indonesia (BI) policy of loan-to-value (LTV) is likely a positive takeaway for CTRA’s soaring sales performance. Of note, end-user dominates its type of consumers.
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