TRIM FLASH NOTES. Hanson International. Huge land bank NOT RATED. Jan 21, Company Update. Stock Data. Major Shareholders:

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1 Volume Price - Hanson International Huge land bank TRIM FLASH NOTES Jan 21, 2014 Sitting on plenty of land bank Hanson has 2899ha of land bank, third largest after BSDE (4,100ha) and KIJA (2,911ha) among listed property companies. The company s land is located in four areas: 1) Maja Raya (1,713ha residential township), 2) Serpong (615ha residential), 3) Bekasi (413ha industrial), 4) Cengkareng (158ha residential). None of the land is developed yet, with Maja to be the closest to development (expected first marketing sales in 2Q14. NOT RATED Company Update Share Price Rp550 Sector Property Price Target - Prev. TP - Stock Data Reuters Code MYRX.JK Bloomberg Code MYRX.IJ Issued Shares (m) 14,211 Mkt Cap (Rpbn) 7,820 Average Daily T/O (m) Wk range Rp740 / Rp200 Major Shareholders: PT AJ Adisarana W. 7.3% Other 17.7% Public 75.0% Strategy tapping on big developers expertise and infrastructure build-out Hanson s ownership group has approximately 20 years of experience as property investor in raw land. The company plans to tap on big developers experience by having them as partners in developing its land. The first of these is Maja Raya, which it plans to develop jointly with Ciputra group. Maja benefits from new train station (completed last year). Its Bekasi land will benefit from new Cibitung-Cilincing toll road (currently still in land acquisition phase), and the Cengkareng land should benefit from a new bridge being built that will connect the land with major roads. First project: Maja Raya The 2,400ha project in Maja called Maja Raya (current land owned is 1,713ha, implying potential further land acquisitions in the area) is divided into 5 phases, the first of which (400ha) will be developed under joint-cooperation agreement with Ciputra group, which has had extensive experience in developing integrated townships. It is targeted for low to medium-end customers with most of the land to be used for low-end housing. Currently the train from Maja station to Tanah Abang station (central Jakarta) goes 5x a day with commuting time of 1.5 hours. We estimate the total commuting time (door to door) of those living in Maja and working in CBD area in Jakarta to be approximately 2 hours. Execution risk exists, but simply cheap There is execution risk given the company s lack of track record in developing townships and industrial land, but the stock is cheap on NAV basis. It currently trades at 82% to total NAV of the land (as per Baker Tilly valuation) and at 20% discount to the raw land valuation (as per Knight Frank valuation). Potential catalysts are: 1) Good marketing sales progress for Maja Raya project, 2) Newsflow of partnership agreements with other well-known developers for Hanson s other lands, and 3) Divestment of non-property businesses (currently company still has mineral and oil trading businesses). Land Sizes of the Four Tracts Stock Price Name Land Size Bekasi Land ,000, ,000,000 Cengkareng Land ,000,000 Maja Land ,000, ,000,000 Serpong Land ,000,000 Total /18/2013 3/18/2013 5/18/2013 7/18/2013 9/18/ /18/2013 1/18/2014 Sebastian Tobing sebastian.tobing@trimegah.com

2 Figure 1. Map of Land Ownership Figure 2. Comparison of Land Value Figure 3. Comparison of Land Value (con t) Serpong Maja Bekasi Cengkareng Type of houses Residential & Residential & Industrial & Residential & commercial commercial commercial Commercial Total area 600 1, Utilization ratio 60% 60% 60% 60% ASP of land MM2100 industrial estate: >IDR 1.5mn Pantai Indah Kapuk: >IDR25 mn BSD City: >IDR 10mn Citra Raya: >IDR 3mn nearby Alam Sutera: >IDR 13mn Suvarna Sutera: >IDR 1.5mn Average: IDR 1.5mn Average: IDR25mn Gading Serpong: >IDR 10mn Average: IDR 11mn Average: IDR 2.25mn 2

3 Figure 4. Location of Maja Land Figure 5. Location of Serpong Land 3

4 Figure 6. Location of Bekasi Land Figure 7. Location of Cengkareng Land 4

5 PT Trimegah Securities Tbk 18th Fl, Artha Graha Building Jl. Jend. Sudirman Kav Jakarta 12190, INDONESIA Tel : (6221) Fax : (6221) DISCLAIMER This report has been prepared by PT Trimegah Securities Tbk on behalf of itself and its affiliated companies and is provided for information purposes only. Under no circumstances is it to be used or considered as an offer to sell, or a solicitation of any offer to buy. This report has been produced independently and the forecasts, opinions and expectations contained herein are entirely those of Trimegah Securities. While all reasonable care has been taken to ensure that information contained herein is not untrue or misleading at the time of publication, Trimegah Securities makes no representation as to its accuracy or completeness and it should not be relied upon as such. This report is provided solely for the information of clients of Trimegah Securities who are expected to make their own investment decisions without reliance on this report. Neither Trimegah Securities nor any officer or employee of Trimegah Securities accept any liability whatsoever for any direct or consequential loss arising from any use of this report or its contents. Trimegah Securities and/or persons connected with it may have acted upon or used the information herein contained, or the research or analysis on which it is based, before publication. Trimegah Securities may in future participate in an offering of the company s equity securities.