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X - 44

SENTUL CITY’S VISIONTo be a Role Model Developer building integrated, most beautiful and Eco-Friendly city.

SENTUL CITY’S MISSIONProviding facilities and quality of life that makes people happy, healthy, safe, and serene.SE

NTUL

CITY

Stephen Hendra Gunawan

29110330

[3]

EXECUTIVE SUMMARY:

Sentul City is a satellite town located in Sub Province of Bogor which started to be developed in 1993 covering with 3.100 hectares. The company was established with the name PT. Sentragriya Kharisma and have changed its name several times until at last changed its name to PT. Sentul City, Ltd. on July 19th, 2006. At the average height of 300 M above the sea surface, Sentul City is a green area with 65% is green area. Besides flood free, Sentul City has clean and healthy environment quality.

Sentul City’s vision is “To be a Role Model Developer building integrated, most beautiful and Eco-Friendly city”. Sentul City mission is “Providing facilities and quality of life that makes people happy, healthy, safe, and serene”. The objective is to make Sentul City the largest and exclusive Urban Development Project in the South of Jakarta.

The current business activities of the Company is urban development, which comprises of activities related to building infrastructure and all its related facilities, provision of land ready for investor development, development of residential areas, building commercial and non-commercial buildings, provide services related to / or supportive of development of such city. The Company plans to develop a Kota Mandiri (Independent City) that consists of residential areas, offices, shops, recreational facilities, hospital, schools, and other facilities deemed necessary. In 2010, the Company generate net revenue growth of 172.7% and targeting its 2011 sales revenue to be 100% of previous sales, amounting for IDR 700 billion to IDR 900 billion from the previous IDR 444 billion.

As of today, BKSL is in a great condition with improvement in all aspects as of liquidity, productivity, leverage, profitability, and growth. Improvement also occurred in market ratio such as PER & PBV. Most of this improvements are contributed by change in Company’s strategy phase (from Land-banking activity phase into Selling phase) that bring exponential growth in sales revenue and net profit margin.

Author recommend that BKSL continues their strategies and activities that has gone so well all these years. Author also recommend for BKSL to not selling all of their land-banking inventories as retail housing only, but also investing in projects that will bring more profit and increase the overall value of their inventories (example: hospital, schools, universities, multi purpose building, water park, etc). They could invest in those kind of project as a sole proprietor or as a partner that give their land as a part of equity (that in the future will bring cash flow through profit sharing). The more detail effect of this recommendation will be explained in conclusion & recommendation section.

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TABLE OF CONTENTS:

History of The Company ................................................................................................................................. 05

Companies Business Activities ...................................................................................................................... 06

Sentul City Location ........................................................................................................................................ 07

Shareholders, Subsidiaries, and Associated Companies .............................................................................. 08

Financial Highlight .......................................................................................................................................... 09

Macroeconomic ............................................................................................................................................... 10

Financial Statement Analysis:Liquidity Ratio ........................................................................................................................................... 11Productivity / Activity Ratio ...................................................................................................................... 12Solvability / Leverage Ratio ...................................................................................................................... 14Profitability Ratio .......................................................................................................................................15Market Ratio .............................................................................................................................................. 19Other Ratio ................................................................................................................................................ 20Dupont & Growth Analysis ........................................................................................................................ 21

Forecasting ...................................................................................................................................................... 22

Working Capital Management ........................................................................................................................ 30

Feasibility Study .............................................................................................................................................. 32

Conclusion & Recommendation ...................................................................................................................... 34

Appendix:Income Statement ..................................................................................................................................... 35Balance Sheets ..........................................................................................................................................36Feasibility Study Cash Flow Calculations .................................................................................................37

References ....................................................................................................................................................... 38

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History of the CompanyThe company was established with the name PT. Sentragriya Kharisma, in accordance to Deed No. 311 on April 16, 1993 that was made in the presence of Misahardi Wilamarta, SH, Notary in Jakarta and has been approved by the Minister of Justice of the Republic of Indonesia with Decision No. C2-4350.HT.01.01.TH.93 dated on June 8, 1993.

On August 9, 1993, the Company has c h a n g e d i t s n a m e f r o m P T. Sentragriya Kharisma to PT. Royal Sentul Highlands, as stated in Act No. 27 dated on August 9, 1993 that was made in the presence of Dr. Widjojo Wilami, SH, Notary in Jakarta. The act has been approved by the Minister of Justice of the Republic of Indonesia with Decision Letter No. C2-2518 HT.01.04.Th.94 dated 16 February 1994.

For the purpose of public offering as well as adjustmet to the Company's Articles of Association has been completely amended through Act No. 42 dated 7 May 1997 that was made in the presence of Mr. Poerbaningsih Adi Warsito, SH, Notary in Jakarta. The Company's name changed into PT. Royal Sentul Highlands Lts. after obtaining approval from the Minister of Just ice of the Republ ic of Indonesia with Decision Letter No. C2-3643 HT.01.04.Th.97 dated in 12 May 1997 and has been announced in the State Gazzete of the Republic of Indonesia No. 71 dated September 5th, 1997, Addendum No. 3842.

On June 30th, 1997, based on the effective statement of the Chairman of Bapepam with letter No. S-1511/PM/1997, the Company conducted an Initial Public Offering (IPO) to the public over 400,000,000 Series A shares with the offering price of Rp 500.- (five hundred Rp) per share, t h u s r e c e i v i n g f u n d s o f R p 200,000,000,000.- (two hundred billion Rp) as a result of the IPO. The shares were recorded in the Bursa Efek Jakarta (BEJ or Jakarta Stock Exchange) and Bursa Efek Surabaya (BES or Surabaya Stock Exchange) on July 28th, 1997.

Afterwards as stated in the Deed No. 26 dated December 11th, 1997 made in the presence of Ms. Poerbaningsih Adi Warsito, SH, Notary in Jakarta, the Company's name was changed into PT Bukit Sentul Ltd. This Deed has been approved by the Minister of Justice of the Republic of Indonesia with Decision Letter No. C2-33 HT.01.04.Th.98 dated January 14th, 1998.

The Company changed its name once more to PT. Sentul City, Ltd. as stated in Deed No. 26 of July 19th, 2006 created in the presence of Fathiah Helmi, SH, Notary in Jakarta, that has been approved by the Minister of Justice and Human Rights of the Republic of Indonesia on July 20th, 2006 with Decision No. C2-21373 HT.01.04.Th.2006.

COMPANY PROFILE

PT SENTUL CITY Tbk. Head OfficeGedung Menara SudirmanLantai 25, 27Jl. Jend. SudirmanKav. 60Jakarta 12190,IndonesiaPhone : +6221 522 6877Fax : +6221 522 6818

Operational OfficeSentul City BuildingJl. MH. Thamrin Kav 8Sentul City, Bogor16810 - IndonesiaPhone : +6221 87926555Fax : +6221 87926565Email :ptsc@sentulcity.co.idWebsite:www.sentulcity.co.id

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Sentul City is a satellite town located in Sub Province of Bogor which started to be developed in 1993 covering with 3.100 hectares. The objective is to make Sentul City the largest and exclusive Urban Development Project in the South of Jakarta.

At the average height of 300 M above the sea surface, Sentul City is a green area with 65% is green area. Besides flood free, Sentul City has clean and healthy environment quality. Such topography will value higher, other than cool air temperature, it is also free from flooding, hence, the development of residential units an other facilities is assured. In addition, there is also potential development of recreational aspects which create more added value.

Repositioning launched in 2009 with the concept The City of ennovation with 4 (four) pillars of development has also shown significant progress. The four pillars of development are as follows:

*Eco-City, city development to ensure harmony with the surrounding locations with the surroundings locations with the concept Green Property.

*Education & Knowledge City or development of formal and non-formal facility development for public purposes. These education facilities start from Play Group to Higher Schools.

*Entertainment & Destination City, development of resorts and integrated commercial estates, including the accomodation function designed as destination resort and international-scale city facilities.

* Art & Culture City, development of art and cultural aspects th rough prov is ion o f fac i l i t i es and infrastructures for cultural exhibition and traditional places.

Current Business ActivitiesThe current business activities of the Company is urban development, which comprises of activities related to building infrastructure and all its related facilities, provision of land ready for investor development, development of residential areas, building commercial and non-commercial buildings, provide services related to / or supportive of development of such city.

The Company plans to develop a Kota Mandiri (Independent City) that consists of residential areas, offices, shops, recreational facilities, hospital, schools, and other facilities deemed necessary. In running its business, the Company purchases land and prepares it to become ready-for-development, complete with its infrastructure.

COMPANIES BUSINESS ACTIVITIESIt is “A New Beginning”...

New Target:Andrian Budi Utama, Director of Sentul CIty revealed that the company in 2011 targeting sales growth until nearly 2 times of previous sales, amounting for IDR 700 billion to IDR 900 billion from the previous IDR 444 billion. In order to realize these targets, this year BKSL will launch four clusters of luxury residences worth USD 500 million to Rp 3 billion with a total of 450 units. He said the investment needs for the construction of four new clusters will reached Rp 200 billion.

http://www.indonesiafinancetoday.com/read/5975/Kejar-Target-2011-Pengembang-Andalkan-Proyek-Perumahan

THE CITY OF @NNOVATION

Eco-City

Entertainment & Destination

City

Education & Knowledge City

Art & Culture City

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SENTUL CITY LOCATION In regional context, a 3,100 Ha Sentul City is strategically located between Bogor City and Jonggol City. Karang Tengah as an integrated part of Sentul City development serves as the main gateway to Jonggol City. A 30,000 Ha Jonggol City is planned to be the new future municipal centre of Indonesia.

# Residents : Modern Community of 7.089 land & home owners# Elevations : 300 – 500m above sea level.# Nearest City : Jonggol, Bogor & Jakarta (Capital of Indonesia).# Visitor : More than 100.000 People / week .# Easy Access : Jagorawi Gerbang Sentul Selatan, Bogor Outer Ring Road.# Landscape : 65 % of its area is open area offering Panorama of 5 Mountains, National Park, Waterfall, Cater, Rice field# Area Dimension : 3.100 ha.# Master Plan : Designed By David Klages & Walter Stewards (Well Known Master Planner from California, USA)# Project Commencements : 1993 (Restructured in 1997 & 2006).

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Shareholders holding more than 5% ownership (per 31 December 2010)

AWARDS:AAPH, 2002New Town Development Project award for Human Settlement Category.

MURI, 2008Initiator of the Widest Park on the Main Road of Kota Mandiri

Housing Estate Green Property, 2009Clean Water Supply and Green Nature

The Indonesia Property & Bank• New City Project Dedicating the Widest

Park to the Main Road of the Area, 2009.

• Pioneer in the Developing Green Wall & Green Roof Application, 2009.

• the Most Favorite Cluster With Green Wall Implementation & Eco Friendly Development, 2010.

• New City project with Eco Concept Application of Biodiversity in the Gold Line

The Indonesia Property Watch, 2009 - The Most Favorite Cluster With Green Wall Implementation & Eco Friendly Development.

SHAREHOLDERS NUMBER OF SHARES PERCENTAGE

PT CITRA KHARISMA KOMUNIKA 9,888,389,669 34.64%

ATHENA OFFSHORE HOLDING LIMITED 6,753,062,423 23.66%

BAKRIELAND DEVELOPMENT, PT 1,500,000,000 5.26%

Masyarakat (Under 5%) 10,401,452,918 36.44%

Subsidiaries Companies

SUBSIDIARIES COMPANIES PERCENTAGE OF STOCK OWNERSHIPS

CORE BUSINESS INVESTMENT DATE

REMARKS

PT Sukaputra Grahacemerlang 99.99 City Management January 19, 1996 Active

PT Gununggeulis Elok Abadi 99.99 Restaurant & Tourism March 3, 1994 Active

PT Gazelle Indonesia 60.00 Real Estate Decembr 17, 2009 Active

Associated Companies

ASSOCIATED COMPANIES % CORE BUSINESS INVESTMENT DATE REMARKS

PT Kencanamas Indahpersada 48.78 Real Estate January 19, 1996 Non-Active

PT Adigraha Multiselaras 48.07 Transportation January 19, 1996 Non-Active

PT Royal Sentul Resort Hotel 48.00 Hotel March 3, 1994 Non-Active

PT Jakarta Polo and Equestrian 42.00 Polo Club March 3, 1994 Non-Active

PT Bukit Jonggol Asri 56.64 Real Estate February 15, 2010 Active

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Financial Highlight

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MACROECONOMIC

The improvement in economic conditions in 2010 among others as reflected in the low inflation rate, relatively stable interest rates and support from the socio-political condition that is fairly stable and secure has pushed economic growth in Indonesia. One of the drivers of this economic growth is the property industry.

This growth in property industry is also reflected in the Company performance of 2010 that was the achievement year for PT Sentul City Ltd. and also was the year when Company's growth and work performance started to increase.

In 2010 the Company succeeded in achieving a net revenue growth of 172.7% over the previous year with net revenues of Rp 443.6 billion with a business profit of Rp 136.9 billion. The Company closed its 2010 accounts recording a net profit of Rp 65.5 billion, significantly increasing compared to the net profit of the previous year of Rp 2.5 billion. The attainment of this net revenue is 53.7% above the revenue target of the Company of Rp 288.7 billion. The Company�s total assets at the end of 2010 had also increased significantly from Rp 2.8 trillion to Rp 4.8trillion.

FINANCIAL STATEMENT ANALYSIS

Financial Statement Analysis (FSA) is the process of understanding the risk and profitability of a firm through analysis of reported financial information. Whether You watch analyst on CNBC or read articles in economy magazine, You’ll hear experts insisting on the importance of “doing your homework” before investing in a company. In other words, investors should dig deep into the company's financial statements and analyze everything that deemed important.

When it comes to assess a firm’s financial condition and performance, analyzing financial statement information (quantitative analysis), is one of the important element in the fundamental analysis process. At the same time, the massive amount of numbers in a company's financial statements can be bewildering and intimidating to to shareholders, creditors, and the firm’s own management. However, through financial ratio analysis, we will be able to work with these numbers in an organized fashion. The following ratio analysis below are developed based on the Sentul City’s Audited Financial Reports from 2007 to 2010.

NET REVENUE GROWTH OF 172.7%

IN 2010

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Investopedia.com explains Liquidity Ratios:

Common liquidity ratios include the current ratio, the quick ratio and the operating cash flow ratio. Different analysts consider different assets to be relevant in calculating liquidity. Some analysts will calculate only the sum of cash and equivalents divided by current liabilities because they feel that they are the most liquid assets, and would be the most likely to be used to cover short-term debts in an emergency.

A company's ability to turn short-term assets into cash to cover debts is of the utmost importance when creditors are seeking payment. Bankruptcy analysts and mortgage originators frequently use the liquidity ratios to determine whether a company will be able to continue as a going concern.

Generally, the higher the value of the ratio, the larger the margin of safety that the company possesses to cover short-term debts. (http://www.investopedia.com/terms/l/liquidityratios.asp#ixzz1aizG96qa)

LIQUIDITY RATIOA class of financial metrics that is used to determine a company’s ability to pay off its short-terms debt obligations.

Quick AnalysisAlthough we could say that

bigger Liquidity Ratio means better and more secure company, but too high liquidity ratio can also indicates that following Company is very conservative. Usually, companies that have liquidity ratio above 1.5 times are already

considered liquid and able to cover short-term debts in an emergency situations.

From the tables above, we could conclude that ELTY have the most aggressive liquidity ratios, while CTRP have very conservative liquidity and quick ratio, indicating that CTRP has already mature and have very low inventory. Perhaps it’s because

they expanding conservatively and rely on their cash cow properties as their core revenue.

BKSL, as a matter of fact, started to aggressively expanding their business and increasing their selling activities after a long t ime land banking act iv i ty, indicated by liquidity ratio that g r a d u a l l y b e c o m e m o r e aggressive by each years.

The Bigger, the Better

BKSL 2011 (F) 2010 2009 2008 2007

Current Ratio 2.87 4.31 6.99 9.03 11.71

Quick Ratio 1.08 1.06 0.94 0.74 1.68

ELTY 2011 (F) 2010 2009 2008 2007

Current Ratio NA 1.46 1.34 1.94 3.22

Quick Ratio NA 1.07 0.84 1.13 1.72

CTRP 2011 (F) 2010 2009 2008 2007

Current Ratio NA 7.82 11.96 9.66 11.81

Quick Ratio NA 7.80 11.94 9.56 11.73

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Investopedia.com explains Activity Ratios:

Common productivity / activity ratios include the Average Age of Inventory (AAI), Average Collection Period (ACP), and Average Payment Period (APP).

Companies will typically try to turn their production into cash or sales as fast as possible because this will generally lead to higher revenues. Such ratios are frequently used when performing fundamental analysis on different companies.

Generally, the smaller AAI and ACP means faster cycle of transformation from product to cash revenue (it’s favorable), while longer APP is more favorable because it’s means longer payment period.

Read more: http://www.investopedia.com/terms/l/liquidityratios.asp#ixzz1aix9SBfl

PRODUCTIVITY / ACTIVITY RATIOAccounting ratios that measure a firm’s ability to convert different accounts within their balance sheets into cash or sales.

AAI Quick Analysis

As we could see from the table above, BKSL’s AAI is very high compared with the other competitor’s AAI. CTRP has the smallest AAI, but it’s because they

h a d v e r y s m a l l i n v e n t o r y. Considering that BKSL is property company which inherently has slow pace in production and selling period, it’s normal to have high AAI. We could see that BKSL’s AAI decreasing each year caused by selling activity that

decreasing inventories. Moreover, BKSL had a lot of land banking (inventory) that increases faster in price than inflation rate, so it’s not deemed as unfavorable to have high AAI compared to other competitor.

AAI, ACP, and

APP

Average Age of Inventories (AAI)

Can also be referred to as “days to sell inventory”, AAI is the average number of days it takes for a firm to sell a product it is currently holding as inventory to consumers. A high average age of inventory can indicate that a firm is not properly managing its inventory or that it has a substantial amount of goods that are proving difficult to sell. Average age of inventory can help purchasing agents make buying decisions and help managers make pricing decisions (e.g. discounting existing inventory to move product and increase cash flow).

The higher a firm’s average age of inventory, the greater its exposure to obsolescence risk, the risk that the accumulated products will lose value in a soft market. Average age of inventory is critical in industries with rapid sales and product cycles (such as technology). If a firm is unable to move inventory, it will take an inventory write-off charge, meaning that the products were not equivalent to their stated value on a firm’s balance sheet. (http://www.investopedia.com/terms/a/average-age-of-inventory.asp#ixzz1ajLw3M3X)

AAI = Inventory / (Cost of Sales/365)

AAI 2011 (F) 2010 2009 2008 2007

BKSL 1559.13 1932.12 5026.70 8244.01 1469.36

ELTY NA 794.09 1066.69 1291.27 1256.42

CTRP NA 8.16 8.13 53.73 38.54

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APP Quick Analysis

As we could see from the table above, BKSL’s APP is not

very favorable compared to the other three. The best APP goes to CTRP, while BKSL is in the last place according to APP ratio even though 85 days to fulfill payment is

a lot of time compared to another industry.

Average Collection Period (ACP)

Can also be referred to as “Days Sales Outstanding” (DSO), ACP is the approximate amount of time that it takes for a business to receive payments owed, in terms of receivables, from its customers and clients. A low ACP number means that it takes a company fewer days to collect its accounts receivable. A high ACP number shows that a company is selling its product to customers on credit and taking longer to collect money.Due to the high importance of cash in running a business, it is in a company's best interest to collect outstanding receivables as quickly as possible. By quickly turning sales into cash, a company has the chance to put the cash to use again - ideally, to reinvest and make more sales. The ACP can be used to determine whether a company is trying to disguise weak sales, or is generally being ineffective at bringing money in.

ACP = Account Receivable / (Sales/365)

ACP 2011 (F) 2010 2009 2008 2007

BKSL 82.1546 109.5394 320.2369 271.8460 45.7390

ELTY NA 311.8527 304.9261 245.4041 206.8704615

CTRP NA 12.7000 9.6226 8.0580 12.6818

ACP Quick Analysis

As we could see from the table above, BKSL’s ACP is gradually become better in 2010

and 2011 (Forecasted). CTRP has the best ratio compared to ELTY and BKSL, perhaps because they had very low Account Receivable. Th is cond i t ion con f i rm the condition that CTRP no longer

aggressively doing any selling activities, but its core revenue tend to come from rent and existing cash-cow properties.

Average Payment Period (APP)

Can also be referred to as “Days Payable Outstanding” (DPO), APP is is an indicator of how long a company is taking to pay its trade creditors. APP calculates how efficiently accounts payable are settled. It indicates, on average, how many days does it take to pay off accounts payable. APP is also referred to as the average age of accounts payable or the accounts payable turnover ratio. The longer APP is more favorable.

APP = Accounts Payable / (Cost of Sales/365)

APP 2011 (F) 2010 2009 2008 2007

BKSL 128.0898 85.3932 237.3563 775.1161 92.7708

ELTY NA 146.8133 42.4797 10.5102 14.2469

CTRP NA 210.1627 465.3298 308.7925 184.7854

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A company's leverage relates to how much debt it has on its balance sheet, and it is another measure of financial health. Generally, the more debt a company has, the riskier its stock is, since debt holders have first claim to a company's assets. This is important because, in extreme cases, if a company becomes bankrupt, there may be nothing left over for its stockholders after the company has satisfied its debt holders.

Debt/Equity. The debt/equity ratio measures how much of the company is financed by its debt holders compared with its owners. A company with a ton of debt will have a very high debt/equity ratio, while one with little debt will have a low debt/equity ratio. Assuming everything else is identical, companies with lower debt/equity ratios are less risky than those with higher such ratios.

Debt/Assets. The debt/asset ratio shows the proportion of a company's assets which are financed through debt. If the ratio is less than one, most of the company's assets are financed through equity. If the ratio is greater than one, most of the company's assets are financed through debt. Companies with high debt/asset ratios are said to be "highly leveraged," and could be in danger if creditors start to demand repayment of debt.

SOLVABILITY / LEVERAGE RATIOAny ratio used to calculate the financial leverage of a company to get an idea of the company’s method of financing or to measure its ability to meet financial obligations.

Quick AnalysisFrom the table above, we

could see that three companies above has a good Debt to Equity Ratio by maintaining their debt low compared with their equity.

C o m p a r i n g t h e t h r e e companies above, CTRP has best Debt to Equity ratio each years. Perhaps it’s because they

already matured company that focus on security and healthiness of their financial ratio.

BKSL in second p lace maintaing its ratio by keeping company’s total debt under 25% of equity. Differ from CTRP, BKSL still in its growth phase so BKSL have a relatively higher ratio than CTRP.

ELTY is the most aggressive of all, with minimum debt to equity

of 35.91% and maximum in 2009 by 99.92% of equity.

From Debt /Assets s ide perspective, none of the three companies above had debt to asset ratio more than one. So it’s m e a n s t h a t m o s t o f t h e company’s assets are financed through equity. Once again, CTRP has number one place while BKSL is in second place and CTRP is in the last place.

The Smaller, the

Better

DEBT/EQUITY 2011 (F) 2010 2009 2008 2007

BKSL 22.32% 16.73% 21.90% 15.66% 12.32%

ELTY NA 62.80% 99.92% 60.25% 35.91%

CTRP NA 7.30% 6.32% 7.80% 11.91%

DEBT/ASSETS 2011 (F) 2010 2009 2008 2007

BKSL 18.25% 14.34% 17.97% 13.54% 10.97%

ELTY NA 38.58% 49.98% 37.60% 26.42%

CTRP NA 7.03% 6.14% 7.49% 10.64%

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Profitability Ratios are a class of financial metrics that are used to assess a business's ability to generate earnings as compared to its expenses and other relevant costs incurred during a specific period of time. When these ratios are higher than a competitor's ratio or than the company's ratio from a previous period, this is a sign that the company is doing well. Profitability ratios are useful in fundamental analysis which investigates the financial health of companies.Some examples of profitability ratios are profit margin, return on assets, and return on equity. It is important to note that one should understand the company and its business before making decisions that are based solely on ratios. For instance, some industries are seasonal, such as retailers, which typically experience higher revenues and earnings during the holiday season. Therefore, it would not be helpful to compare a retailer's fourth-quarter profit margin with its first-quarter profit margin. In contrast, comparing a retailer's fourth quarter profit margin with the profit margin from the same period a year before would be far more helpful.

PROFITABILITY RATIOare any ratios that measures a company’s ability to generate cash flow relative to some metric, often the amount invested in the company.

Revenue...Cost...Profit...

Gross Profit Margin (GPM)

Can also be referred as “gross margin”, GPM is a financial metric used to assess a firm's financial health by revealing the proportion of money left over from revenues after accounting for the cost of goods sold. Gross profit margin serves as the source for paying additional expenses and future savings. Comparing this metric with Company’s competitor, one with higher Gross Profit Margin is more favorable than the lower one.

GPM = Gross Profit / Sales

GPM 2011 (F) 2010 2009 2008 2007

BKSL 65.28% 47.92% 48.59% 39.22% 31.36%

ELTY NA 47.65% 45.14% 47.09% 40.50%

CTRP NA 61.96% 61.47% 62.21% 63.09%

GPM Quick Analysis

From the table above, we could see that BKSL and ELTY has a pretty similar gross profit margin (BKSL: 47.92% and ELTY: 47.65%), but none of them had gross profit margin higher than CTRP. This result could come from CTRP core activities that

already mature and doesn’t e x p a n d i n g i t s p r o p e r t y aggressively. This condition will automatically bring lower COGS that in time will increasing gross profit value.

If we pay some attention to trend, BKSL gross profit growing from only 31.36% in 2007 until as high as 47.92% in 2010 and 65.28% in 2011 (forecasted). This

upward trend contributed not only by higher revenue, but also contributed by properties price increases that enable BKSL to get more gross profit from its revenue. This result is a good sample of di fferences between mature company (CTRP) and a company that jus t s tar ted to se l l ing aggressively (BKSL).

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Operating Profit Margin (OPM)

Can also be referred to as “operating margin ratio”, OPM is a ratio used to measure a company's pricing strategy and operating efficiency. Operating margin is a measurement of what proportion of a company's revenue is left over after paying for variable costs of production such as wages, raw materials, etc. A healthy operating margin is required for a company to be able to pay for its fixed costs, such as interest on debt.Operating margin gives analysts an idea of how much a company makes (before interest and taxes) on each rupiahs of sales. When looking at operating margin to determine the quality of a company, it is best to look at the change in operating margin over time and to compare the company's yearly or quarterly figures to those of its competitors. If a company's margin is increasing, it is earning more per rupiahs of sales. The higher the margin, the better.

OPM = Operating Income / Sales

OPM 2011 (F) 2010 2009 2008 2007

BKSL 48.21% 30.85% 13.74% -25.53% 13.03%

ELTY NA 18.82% 16.74% 21.62% 21.19%

CTRP NA 31.08% 32.31% 31.29% 35.12%

OPM Quick Analysis

From the OPM’s table above, we could see that BKSL has a good record of trend from 2009

until 2010 and 2011 (F). BKSL’s OPM increase from 13.74% in 2007 into 48.21% in 2011 (F) while another companies doesn’t have OPM trend like BKSL has. This increases are caused by price

increases of their properties that bring more OPM rate for BKSL.

CTRP still had the highest OPM in 2010, but for CTRP it was a downtrend from 35.12% in 2007 into 31.08% in 2010.

Net Profit Margin (NPM)

A ratio of profitability calculated as net income divided by revenues, or net profits divided by sales. It measures how much out of every rupiahs of sales a company actually keeps in earnings. Profit margin is very useful when comparing companies in similar industries. A higher profit margin indicates a more profitable company that has better control over its costs compared to its competitors.

Looking at the earnings of a company often doesn't tell the entire story. Increased earnings are good, but an increase does not mean that the profit margin of a company is improving. For instance, if a company has costs that have increased at a greater rate than sales, it leads to a lower profit margin. This is an indication that costs need to be under better control.

NPM = Net Income / Sales

NPM 2011 (F) 2010 2009 2008 2007

BKSL 28.98% 14.76% 1.51% -19.62% 13.43%

ELTY NA 13.07% 12.49% 25.82% 17.16%

CTRP NA 43.35% 22.22% 57.19% 30.93%

NPM Quick Analysis From table above, BKSL shows us some promising trend ahead, even though BKSL still number 2 on those table.

BKSL’s NPM will increase when its properties and land price increases.

[17]

Earning Per Share (EPS)

EPS is the portion of a company's profit allocated to each outstanding share of common stock. Earnings per share serves as an indicator of a company's profitability. Earnings per share is generally considered to be the single most important variable in determining a share's price. It is also a major component used to calculate the price-to-earnings valuation ratio.

An important aspect of EPS that's often ignored is the capital that is required to generate the earnings (net income) in the calculation. Two companies could generate the same EPS number, but one could do so with less equity (investment) - that company would be more efficient at using its capital to generate income and, all other things being equal, would be a "better" company. Investors also need to be aware of earnings manipulation that will affect the quality of the earnings number. It is important not to rely on any one financial measure, but to use it in conjunction with statement analysis and other measures.

EPS = Net Income / Number of Shares Outstanding

EPS 2011 (F) 2010 2009 2008 2007

BKSL 10.17 2.59 0.25 -1.65 5.02

ELTY NA 4.48 6.64 13.66 6.85

CTRP NA 25.00 12.00 30.00 27.00

EPS Quick Analysis

From the table above, we could see that CTRP has the best

EPS compared to ELTY & BKSL. BKSL had the lowest EPS compared to ELTY & CTRP, but BKSL’s EPS i tse l f s ta r t to increasing exponentially from

minus 1.65 in 2008 into 2.59 in 2010 and forecasted to have 10.17 earning per share in 2011 because of new sales estimate (IDR 900 billion).

Return on Assets (ROA)

An indicator of how profitable a company is relative to its total assets, ROA gives an idea as to how efficient management is at using its assets to generate earnings. Calculated by dividing a company's annual earnings by its total assets, ROA is displayed as a percentage. Sometimes this is referred to as "return on investment". ROA tells us what earnings were generated from invested capital (assets). ROA for public companies can vary substantially and will be highly dependent on the industry. When using ROA as a comparative measure, it is best to compare it against a company's previous ROA numbers or the ROA of a similar company.

The assets of the company are comprised of both debt and equity. Both of these types of financing are used to fund the operations of the company. The ROA figure gives investors an idea of how effectively the company is converting the money it has to invest into net income. The higher the ROA number, the better, because the company is earning more money on less investment.

ROA = Net Income / Total Assets

ROA 2011 (F) 2010 2009 2008 2007

BKSL 4.80% 1.36% 0.09% -0.62% 1.92%

ELTY NA 1.05% 1.14% 3.26% 2.35%

CTRP NA 4.20% 2.10% 5.35% 2.58%

[18]

ROA Quick Analysis

From the table above, we could see that BKSL’s ROA has improved since their loss in 2008 (minus 0.62%) into 1.36% in 2010

and will increase exponentially into 4.80% in 2011 (forecasted). In BKSL’s industry, it’s normal for them to have ROA under 10% or even 5% because their inventory strategy is unique (their inventory is properties or/and land banking).

Using assumption that BKSL will not buy more land banking for the time being, BKSL’s ROA will significantly increase each years b e c a u s e o f d e c r e a s e i n inventories and increase in properties price.

Return on Equity (ROE)

ROE is the amount of net income returned as a percentage of shareholders equity. Return on equity measures a corporation's profitability by revealing how much profit a company generates with the money shareholders have invested. ROE is also known as "return on net worth" (RONW).

The ROE is useful for comparing the profitability of a company to that of other firms in the same industry.

ROE = Net Income / Total Equity

ROE 2011 (F) 2010 2009 2008 2007

BKSL 5.87% 1.59% 0.11% -0.71% 2.16%

ELTY NA 1.70% 2.28% 5.23% 3.20%

CTRP NA 4.36% 2.16% 5.58% 2.88%

ROE Quick Analysis

From the table above, we could see that BKSL’s ROE is also improved since their loss in 2008 (minus 0.71%) into 1.59% in 2010 and will increase exponentially into 5.87% in 2011 (forecasted).

Compared to its competitor, BKSL is the worst performer in 2010 and it’s because they just started to increasing their selling activities in 2009-2010 while ELTY had aggressively started their selling activities years before and CTRP is a veteran player that already matured in this industry.

One thing that unique from this industry is their financing method. BKSL and CTRP had a very low liabilities compared to

their equities (BKSL: 16.73% and CTRP 7.3% from their equities) while ELTY had the highest ratio of 62.8% from its equity.

W h i l e B K S L ’ s e q u i t y composition mostly come from common stock (87.47% from equity), 35.94% of CTRP equity’s compos i t ion come up f rom Additional Paid In Capital (the account represent the excess paid by an investor over the par-value price of a stock issue) and 43.15% come from common stocks.

ELTY is the most aggressive of them all wIth 62.8% of its equity comes from liabilities. Moreover, 60.85% of its liabilities comes from current liabilities.

All of these differences caused by each companies’

strategy and phase in company’s life cycle. BKSL, which had its land-banking activities for nearly 14-15 years can’t afford to financing its activities through debt, thus using common stock as their main weapon. CTRP which already matured had very small debt. Moreover, CTRP maturity and stability are well awarded by investor through relatively high composition of Additional Paid in Capital in equity section. ELTY that aggressively expanding using a lot of debt to leverage their activities.

BKSL itself expected to earn more Additional Paid in Capital in the future through its stock price increases.

[19]

Market Ratios are used to find the value of a company by comparing the financial statement of a firm to its market value. The two most popular market ratio is Price to Earning Ratio (PER) and Price to Book Value (PBV).

These ratios are attempts to identify undervalued or overvalued securities by taking the book value and comparing it to its market value.

MARKET RATIOMarket Ratios relate an observable market value, the stock price, to book values obtained from the firm's financial

PER Quick Analysis

As we could see from the table above, BKSL have the highest PER compared to the

others. This high PER caused by company strategy. BKSL use very little debt to finance their activities and tend to issue new common stock for their financing. This s t r a t e g y c a u s e d b i g g e r

denominator in counting EPS that in the end causing bigger PER.

But BKSL’s PER gradually become better each year fueled by bigger revenue and bigger profit margin.

PER & PBV

Price to Earning Ratio (PER)

PER is a valuation ratio of a company's current share price compared to its per-share earnings. Sometimes referred to as the "multiple", PER shows how much investors are willing to pay per dollar of earnings.In general, a high P/E suggests that investors are expecting higher earnings growth in the future compared to companies with a lower P/E. However, the P/E ratio doesn't tell us the whole story by itself. It's usually more useful to compare the P/E ratios of one company to other companies in the same industry, to the market in general or against the company's own historical P/E. It would not be useful for investors using the P/E ratio as a basis for their investment to compare the P/E of a technology company (high P/E) to a utility company (low P/E) as each industry has much different growth prospects.

It is important that investors note an important problem that arises with the P/E measure, and to avoid basing a decision on this measure alone. The denominator (earnings) is based on an accounting measure of earnings that is susceptible to forms of manipulation, making the quality of the P/E only as good as the quality of the underlying earnings number.

PER = Market Price / Earning Per Share

PER 2011 (F) 2010 2009 2008 2007

BKSL 10.72 42.08 395.43 -39.94 131.40

ELTY NA 24.35 14.61 4.83 96.40

CTRP NA 10.00 20.83 8.33 25.93

[20]

Price to Book Value (PBV)

Also known as the “Price-Equity Ratio”, PBV is a ratio used to compare a stock's market value to its book value (total assets - total liabilities). It is calculated by dividing the current closing price of the stock by the latest quarter's book value per share.

A lower P/B ratio could mean that the stock is undervalued. However, it could also mean that something is fundamentally wrong with the company. As with most ratios, be aware that this varies by industry.

This ratio also gives some idea of whether you're paying too much for what would be left if the company went bankrupt immediately

PBV = Market Price per Share / Book Value per Share

PBV 2011 (F) 2010 2009 2008 2007

BKSL 0.6291 0.6683 0.4254 0.2855 2.8332

ELTY NA 0.4000 0.4055 2.5675 2.3952

CTRP NA 0.4515 0.4662 0.4824 0.7472

PBV Quick Analysis

From the table above, we could see that BKSL had the worst PBV, we also could say that for companies that have PBV under 1, investor do not paying too much

for what would be left if the c o m p a n y w e n t b a n k r u p t immediately.

There is one unique thing in property industry that will affected PBV ratio. Conform to IFRS rule, land price could only recorded on its acquisition cost. Average price

for land that BKSL had acquired is IDR 100,000 while now its market selling price is about IDR 2 million per meter square in 2010 and will increase into IDR 3 million per meter square in 2011. It means BKSL is more undervalued than everybody think it is now.

Equity Multiplier Ratio (EqM)

This ratio measures the amount of total assets supported for each one money unit of equity. For example, a value of 3 for this ratio means that each IDR 1 of equity supports IDR 3 of total assets.

The higher the equity multiplier ratio, the more leveraged the company is in the sense of using debt and other liabilities to finance assets.

EqM = Total Asset / Total Equity

EQM 2011 (F) 2010 2009 2008 2007

BKSL 1.2232 1.1673 1.2190 1.1566 1.1232

ELTY NA 1.6280 1.9992 1.6025 1.3591

CTRP NA 1.0387 1.0284 1.0415 1.1191

OTHER RATIO

EqM Quick Analysis From the table above, we could see that CTRP has the best EqM compared to ELTY & BKSL. ELTY is the worst one among all by letting each IDR 1 of equity

supports 1.6280 assets while BKSL is closer to CTRP by letting each IDR 1 of equity supports 1.1673 of assets in 2010.

[21]

DuPont analysis is a method of performance measurement that was started by the DuPont Corporation in the 1920s. With this method, assets are measured at their gross book value rather than at net book value in order to produce a higher return on equity (ROE). It is also known as "DuPont identity".

DuPont analysis tells us that ROE is affected by three things:

- Operating efficiency, which is measured by profit margin.

- Asset use efficiency, which is measured by total asset turnover (The a m o u n t o f s a l e s generated for every dollar's worth of assets. It is calculated by dividing sales in dollars by assets in dollars. The higher the number, the better).

- Financial leverage, which is measured by the equity multiplier.

DUPONT & GROWTH ANALYSIS

Quick AnalysisFrom the table above, we

could conclude that improvement i n n u m b e r o f R O E d o n ’ t necessarily caused by increases in net profit margin alone, but these improvement are also caused by increases in Asset Turnover and Equity Multiplier.

1345.45% ROE increases in year 2009 into 2010 (0.11% to

1.59%) is caused by 877.48% i n c r e a s e s i n N P M , 5 0 % improvement in Asset Turn Over, and 4.24% better equity multiplier.

If a company's ROE goes up due to an increase in the net profit margin or/and asset turnover like BKSL, this is a very positive sign for the company. However, if the equity multiplier is the source of the rise, and the company was already appropriately leveraged,

this is simply making things more risky.

Since BKSL hasn’t pay any dividend to investors at least for this 4 years, its retention rate is 100% and BKSL’s sustainable growth is as big as its ROE, thus enable BKSL to more aggressive growth.

NPM,Assets TO,

& EqM

BKSL NPM ASSET -T.0. EQM ROE RR SST. GROWTH

2011 (F) 28.98% 0.17 1.2232 5.87% 100.00% 5.87%

2010 14.76% 0.09 1.1673 1.59% 100.00% 1.59%

2009 1.51% 0.06 1.2190 0.11% 100.00% 0.11%

2008 -19.62% 0.03 1.1566 -0.71% 100.00% -0.71%

2007 13.43% 0.14 1.1232 2.16% 100.00% 2.16%

2011 (F) 2010 2009 2008 2007 CAGR

Revenue Rp 887,095.16 Rp 443,547.58 Rp 162,658.61 Rp 80,110.39 Rp 355,786.09 25.66%

Net Income Rp 257,057.17 Rp 65,489.22 Rp 2,457.17 Rp (15,714.83) Rp 47,767.33 52.31%

Equity Rp4,381,218.37 Rp4,124,161.20 Rp2,283,864.60 Rp2,198,838.50 Rp2,215,403.30 18.59%

From the table above, we could conclude that BKSL CAGR is very good because all of CAGR is bigger than fundamental growth.

[22]

FORECASTING...

SENTUL CITY, TBK. FORECASTINGAndrian Budi Utama, Director of Sentul CIty revealed that the company in 2011 targeting sales growth until nearly 2 times of previous sales, amounting for IDR 700 billion to IDR 900 billion from the previous IDR 444 billion.

Forecasting is the process of making statements about events whose actual outcomes (typically) have not yet been observed. Forecasting can use historic data to determine the direction of future trends. There is no single right forecasting method to use. Selection of a method should be based on your objectives and your conditions (data etc.).

We can use regression technique as a statistical measure that attempts to determine the strength of the relationship between one dependent variable (usually denoted by Y) and a series of other changing variables (known as independent variables).

Regression takes a group of random variables, thought to be predicting Y, and tries to find a mathematical relationship between them. This relationship is typically in the form of a straight line (linear regression) that best approximates all the individual data points. Regression is often used to determine how much specific factors such as the price of a commodity, interest rates, particular industries or sectors influence the price movement of an asset.

[23]

After seeing and comparing BKSL's actual and predicted sales, the predicted results are significantly different with the the actual one. Perhaps since BKSL is just started selling aggressively from 2010 (different phase of company's strategy), we could not use linear regression technique because the result would be misleading. The R-square from linear regression itself is only 0.2425 that shows us equation above can only explain 24.25% of the happenstances.

So we will simply use information from the news which said that BKSL targeting its 2011 revenue to be about IDR 700 - 900 billion from the previous IDR 444 billion (increase about 100% from previous year revenue). We will use this news to form an assumption to forecast 2011 income statement & balance sheets.

KEY INPUT DATA 2010 DATA FOR REFERENCE USED IN THE FORECAST

Annual growth rate in sales 172.70% 100.00%

Tax rate 20.00% 30.00%

Dividend growth rate 0.00% 0.00%

S-T kd 7.00% 7.00%

L-T kd 9.00% 9.00%

WACC 10.00% 10.00%

Land Price Rp2,000,000 Rp3,000,000

Depreciation Rp7,243.9 9.85% from Gross Property Plant & Eq

Average inventory acquired price Rp100,000 Rp100,000

YEAR REVENUE (SALES)-IN MILLION

2006 Rp 91,696

2007 Rp 355,786

2008 Rp 80,110

2009 Rp 162,659

2010 Rp 443,548

2011 To be forecasted

Using the regression tools from StatPlus we found the linier equation below:

2011

Predicted Sales= Y-intercept + X variable x Year

379,932 -1.02E+08 51,057.57 2011

The forecasted sales for 2011 is IDR 379,932 with the actual and predicted sales data using the equation is located in the table below:

YEAR ACTUAL PREDICTED GROWTH

2006 91,696 124,645

2007 355,786 175,702 288.01%

2008 80,110 226,760 -77.48%

2009 162,659 277,817 103.04%

2010 443,548 328,875 172.69%

2011 (F) 379,932 -14.34%

[24]

2010 FORECASTING BASIS 2011 INPUT

2011 - FIRST PASS

Revenue Rp 443,547.58 Growth 100% Rp 887,095.16

Cost of Revenue Rp 231,004.50 % of sales before price increase: ((100/150) x new sales) x 52.08%

Rp 308,006.00

Gross Profit Rp 212,543.08 Rp 579,089.16

Operating Expenses Rp 75,695.80 % of sales 17.07% Rp 151,391.60

Income from Operations Rp 136,847.28 Rp 427,697.56

Other Income (Expenses)

Interest Income Rp 1,943.46

Gain on asset settlement Rp 184.49

Gain on sale of fixed asset Rp-

Tax expenses Rp (35,881.63)

Share in net loss from associated companies Rp (2,169.19)

Provision for doubtful accounts Rp (1,636.64)

(Loss) gain on foreign exchange Rp (53.97)

Bankruptcy Cost Rp-

Interest expenses Rp (1.43)

Others, Net Rp 4,228.43

Other Expenses, Net Rp (33,386.48) % of sales 7.53% Rp (66,772.97)

Decrease: Long Term Debt Interest Expense

Income before income tax expenses Rp 103,460.80 Rp 360,924.59

Income tax expense (benefit)

Current Rp 20,487.98

Deferred Rp (186.80)

Total Income Tax Expense Rp 20,301.18 Tax Rate 30% Rp 108,277.38

Net Income Before Minority Interest Rp 83,159.61 Rp 252,647.21

Minority Interest Rp 17,670.39 Rp-

Net Income Rp 65,489.22 Rp 252,647.21

INCOME STATEMENT (IN MILLION RP) :

[25]

ASSETS 2010 FORECASTING BASIS 2011 INPUT 2011 - FIRST PASS

Cash and Equivalents Rp 190,979.30 Plus Net Income Rp252,647.21 Rp 443,626.51

Short-Term Investments Rp 671.00 Previous Rp 671.00

TOTAL CASH AND SHORT TERM INVESTMENTS

Rp 191,650.30 Rp 444,297.51

Accounts Receivable Rp 133,112.20 % of sales after price increase 50% 30.01% x 1.5 Rp 199,668.30

Other Receivables Rp 37,799.50 % of sales 8.52% Rp 75,599.00

TOTAL RECEIVABLES Rp 170,911.70 Rp 275,267.30

Inventory Rp 1,222,818.50 Decreases as much as (new sales/new price)*100thsnd [purchased price]

Rp 1,193,249

Prepaid Expenses Rp 6,991.40 % of sales 1.58% Rp 13,983

Restricted Cash Rp 12,180.40 % of sales 2.75% Rp 24,361

Other Current Assets Rp 16,699.00 % of sales 3.76% Rp 33,398

TOTAL CURRENT ASSETS Rp 1,621,251.50 Rp 1,984,555

Gross Property Plant and Equipment

Rp 73,486.80 % of sales 16.57% Rp 146,974

Accumulated Depreciation Rp (44,864.60) (9.85% GPP&E + prev. acc. depr.) 9.85% Rp (59,342)

NET PROPERTY PLANT AND EQUIPMENT

Rp 28,622.20 Rp 87,632

Goodwill Rp 758.90 Previous Rp 759

Long-Term Investments Rp 1,558,217.50 Previous Rp 1,558,218

Deferred Tax Assets, Long Term

Rp 4,186.80 Previous Rp 4,187

Other Long-Term Assets Rp 1,601,278.30 Previous Rp 1,601,278

TOTAL ASSETS Rp 4,814,315.20 Rp 5,236,629

BALANCE SHEETS (IN MILLION RP) : ACTIVA

[26]

LIABILITIES & EQUITY 2010 FORECASTING BASIS 2011 INPUT 2011 - FIRST PASS

Accounts Payable Rp 54,044.40 % of sales 12.18% Rp 108,088.80

Accrued Expenses Rp 46,689.00 % of sales 10.53% Rp 93,378.00

Short-Term Borrowings Rp 256,951.50 % of sales 57.93% Rp 513,903.00

Current Income Taxes Payable Rp 18,530.70 Previous Rp 18,530.70

TOTAL CURRENT LIABILITIES Rp 376,215.50 Rp 733,900.50

Long-Term Debt Rp 70,000.00 Previous Rp 70,000.00

Minority Interest Rp 17,332.40 Previous Rp 17,332.40

Unearned Revenue, Non-Current Rp 200,514.80 Previous Rp 200,514.80

Pension & Other Post-Retirement Benefits - Rp-

Other Non-Current Liabilities Rp 43,423.60 Previous Rp 43,423.60

TOTAL LIABILITIES Rp 690,153.90 Rp 1,047,838.90

Common Stock Rp 3,833,840.50 Previous Rp 3,833,840.50

Additional Paid in Capital Rp 375,937.50 Previous Rp 375,937.50

Retained Earnings Rp (71,060.60) Previous + 2011RE Rp 181,586.61

Comprehensive Income and Other Rp (31,888.60) Previous Rp (31,888.60)

TOTAL COMMON EQUITY Rp 4,106,828.80 Rp 4,359,476.01

TOTAL EQUITY Rp 4,124,161.20 Rp 4,376,808.41

TOTAL LIABILITIES AND EQUITY Rp 4,814,315.20 Rp 5,424,647.31

BALANCE SHEETS (IN MILLION RP) : PASIVA

FIRST PASS AFN USED

Total Assets Rp 5,236,628.68

Total Liabilities & Equity Rp 5,424,647.31

AFN Rp (188,018.63)

Decrease long-term debt 37.23% Rp 69,999.34

New Inventories 62.77% Rp 118,019.29

Because we use AFN to pay long-term debt, there will be saving in interest expense as much as:IDR 69,999.34 x 9% = IDR 6,299.94 that will affecting Income Statement.

Thus the 2nd pass of Income statement would be needed.

[27]

2011 - FIRST PASS AFN 2011 - SECOND PASS

Revenue Rp 887,095.16 Rp 887,095.16

Cost of Revenue Rp 308,006.00 Rp 308,006.00

Gross Profit Rp 579,089.16 Rp 579,089.16

Operating Expenses Rp 151,391.60 Rp 151,391.60

Income from Operations Rp 427,697.56 Rp 427,697.56

Other Income (Expenses)

Interest Income

Gain on asset settlement

Gain on sale of fixed asset

Tax expenses

Share in net loss from associated companies

Provision for doubtful accounts

(Loss) gain on foreign exchange

Bankruptcy Cost

Interest expenses

Others, Net

Other Expenses, Net Rp (66,772.97) Rp (66,772.97)

Decrease: Long Term Debt Interest Expense Rp (6,299.94) Rp 6,299.94

Income before income tax expenses Rp 360,924.59 Rp 367,224.53

Income tax expense (benefit)

Current

Deferred

Total Income Tax Expense Rp 108,277.38 Rp 110,167.36

Net Income Before Minority Interest Rp 252,647.21 Rp 257,057.17

Minority Interest Rp- Rp-

Net Income Rp 252,647.21 Rp 4,409.96 Rp 257,057.17

INCOME STATEMENT (IN MILLION RP) :

Net Income increase this much. This surplus will be used to buy new inventories.

[28]

ASSETS 2011 - FIRST PASS AFN 2011 - SECOND PASS

Cash and Equivalents Rp 443,626.51 Rp 443,626.51

Short-Term Investments Rp 671.00 Rp 671.00

TOTAL CASH AND SHORT TERM INVESTMENTS

Rp 444,297.51 Rp 444,297.51

Accounts Receivable Rp 199,668.30 Rp 199,668.30

Other Receivables Rp 75,599.00 Rp 75,599.00

TOTAL RECEIVABLES Rp 275,267.30 Rp 275,267.30

Inventory Rp 1,193,248.66 Rp 118,019.3+ Rp 4,409.96

Rp 1,315,677.92

Prepaid Expenses Rp 13,982.80 Rp 13,982.80

Restricted Cash Rp 24,360.80 Rp 24,360.80

Other Current Assets Rp 33,398.00 Rp 33,398.00

TOTAL CURRENT ASSETS Rp 1,984,555.07 Rp 2,106,984.33

Gross Property Plant and Equipment Rp 146,973.60 Rp 146,973.60

Accumulated Depreciation Rp (59,341.50) Rp (59,341.50)

NET PROPERTY PLANT AND EQUIPMENT Rp 87,632.10 Rp 87,632.10

Goodwill Rp 758.90 Rp 758.90

Long-Term Investments Rp 1,558,217.50 Rp 1,558,217.50

Deferred Tax Assets, Long Term Rp 4,186.80 Rp 4,186.80

Other Long-Term Assets Rp 1,601,278.30 Rp 1,601,278.30

TOTAL ASSETS Rp 5,236,628.68 Rp 5,359,057.93

BALANCE SHEETS (IN MILLION RP) : ACTIVA

[29]

LIABILITIES & EQUITY 2011 - FIRST PASS AFN 2011 - SECOND PASS

Accounts Payable Rp 108,088.80 Rp 108,088.80

Accrued Expenses Rp 93,378.00 Rp 93,378.00

Short-Term Borrowings Rp 513,903.00 Rp 513,903.00

Current Income Taxes Payable Rp 18,530.70 Rp 18,530.70

TOTAL CURRENT LIABILITIES Rp 733,900.50 Rp 733,900.50

Long-Term Debt Rp 70,000.00 Rp (69,999.34) Rp 0.66

Minority Interest Rp 17,332.40 Rp 17,332.40

Unearned Revenue, Non-Current Rp 200,514.80 Rp 200,514.80

Pension & Other Post-Retirement Benefits - Rp-

Other Non-Current Liabilities Rp 43,423.60 Rp 43,423.60

TOTAL LIABILITIES Rp 1,047,838.90 Rp 977,839.56

Common Stock Rp 3,833,840.50 Rp 3,833,840.50

Additional Paid in Capital Rp 375,937.50 Rp 375,937.50

Retained Earnings Rp 181,586.61 Rp 4,409.96 Rp 185,996.57

Comprehensive Income and Other Rp (31,888.60) Rp (31,888.60)

TOTAL COMMON EQUITY Rp 4,359,476.01 Rp 4,363,885.97

TOTAL EQUITY Rp 4,376,808.41 Rp 4,381,218.37

TOTAL LIABILITIES AND EQUITY Rp 5,424,647.31 Rp 5,359,057.93

BALANCE SHEETS (IN MILLION RP) : PASIVA

[30]

WORKING CAPITAL MANAGEMENT

Working Capital Management is a managerial accounting strategy focusing on maintaining efficient levels of both components of working capital, current assets and current liabilities, in respect to each other. Working capital management ensures a company has sufficient cash flow in order to meet its short-term debt obligations and operating expenses.

Implementing an effective working capital management system is an excellent way for many companies to improve their earnings. The two main aspects of working capital management are ratio analysis and management of individual components of working capital. Ratio analysis will lead management to identify areas of focus such as inventory management, cash management, accounts receivable and payable management.

Working Capital is a measure of both a company’s efficiency and its short-term financial health. The working capital ratio is calculated as Current Assets - Current Liabilities. Positive working capital means that the company currently is unable to meet its short-term liabilities. Negative working capital means that a company currently is unable to meet its short-term liabilities with its current assets (cash, account receivable, and inventory)

WORKING CAP. 2011 (F) 2010 2009 2008 2007

Current Ratio 2.87 4.31 6.99 9.03 11.71

Net Working Capital

Rp 1,129,144.77 Rp 931,097.60 Rp 831,357.80 Rp 852,944.40 Rp 875,088.00

The table above shows us that BKSL, convergence with its strategy to expand their selling activities, gradually become less conservative by reducing their Current Ratio from 11.71 into 2.87. Moreover, it’s all done while maintaining Net Working Capital above IDR 800 billion.

MANAGEMENT LESSON:

NEVER START A PROJECT UNLESS ALL

RESOURCES ARE AVAILABLE.

[31]

Net Operating Working Capital

NOWC10 = Operating CA - Operating CL

Rp1,621,252 - Rp376,216

Rp1,245,036

NOWC11 = Operating CA - Operating CL

Rp2,102,574 - Rp733,901

Rp1,368,674

Total Operating Capital

TOC10 = NOWC + Fixed assets

Rp1,245,036 + Rp3,193,064

Rp4,438,100

TOC11 = NOWC + Fixed assets

Rp1,368,674 + Rp3,252,074

Rp4,620,747

Net Operating Profit After Taxes

NOPAT10 = EBIT x ( 1 - T )

Rp103,461 x 80%

Rp82,769

NOPAT11 = EBIT x ( 1 - T )

Rp367,225 x 70%

Rp257,057

Operating Cash Flow

OCF10 = NOPAT + Depreciation

Rp82,769 + Rp7,244

Rp90,013

OCF11 = NOPAT + Depreciation

Rp257,057 + Rp14,477

Rp271,534

Free Cash Flow

FCF11 = OCF - Increase in TOC

Rp271,534 - Rp182,648

Rp88,886

YEARS CCC = AAI + ACP - APP

2011 (F) 1513.1982 = 1559.13 + 82.1546 - 128.0898

2010 1956.2677 = 1932.12 + 109.5394 - 85.3932

2009 5109.5853 = 5026.70 + 320.2369 - 237.3563

2008 7740.7385 = 8244.01 + 271.8460 - 775.1161

2007 1422.3328 = 1469.36 + 45.7390 - 92.7708

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FEASIBILITY STUDY

PROJECT:SENTUL GIANT WATERPARK.Project Value: IDR 500 bioFinancing:Retained Earning: IDR 150 bio.New Common Stock: IDR 200 bio.Long-Term Debt: IDR 150 bio.

DATA & ASSUMPTIONS:Investment Rp500,000,000,000 IDR

Taxes 30% from EBT

Maintenance 20% from sales

Depreciation: straight line 10 years

Visitor Capacity per day 5,000 Persons

Food court 50 food stalls

Souvenir store 5 store

OPERATIONAL 360 Days/yrs

Normal Weekend 100 Days/yrs

Holiday 20 Days/yrs

Weekday 240 Days/yrs

Visitor EstimationVisitor EstimationVisitor Estimation

Normal Weekend 80% of capacity

Public Holiday 80% of capacity

Weekday 40% of capacity

Visitor Age EstimationVisitor Age EstimationVisitor Age Estimation

Adult 35% of visitor

Children 65% of visitor

Parking space 2,000 cars

All-day parking ticket Rp 10,000 per cars

Fixed Cost Rp 25,000,000,000 year - 1

Fixed Cost Increase 10% every years

Ticket Price - AdultTicket Price - AdultTicket Price - Adult

Weekend & Holiday Rp 400,000 year - 1

Weekday Rp 200,000 50% adult wknd

Ticket Price - ChildrenTicket Price - ChildrenTicket Price - Children

Weekend & Holiday Rp 300,000 75% adult wknd

Weekday Rp 150,000 37.5% adult wknd

Other IncomeOther IncomeOther Income

Food stall 75,000,000 per stall

Souvenir Store 50,000,000 per store

Price IncreasePrice IncreasePrice Increase

Ticket 5% every year

Parking 50% every 5 years

Food stall 5% every year

Souvenir store 5% every year

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NPV, PAYBACK PERIOD, & IRRBKSL WACC: 10%

YEARS CASH FLOW PV

0 Rp (500,000,000,000) Rp (500,000,000,000)

1 Rp 127,512,400,000 Rp 115,920,363,636

2 Rp 132,628,000,000 Rp 109,609,917,355

3 Rp 137,911,880,000 Rp 103,615,236,664

4 Rp 143,363,704,000 Rp 97,919,338,843

5 Rp 148,982,244,200 Rp 92,506,252,181

6 Rp 155,840,448,910 Rp 87,967,870,658

7 Rp 161,784,495,106 Rp 83,021,027,067

8 Rp 167,884,823,986 Rp 78,319,509,415

9 Rp 174,135,157,723 Rp 73,850,305,665

10 Rp 180,527,495,400 Rp 69,601,164,409

NPV: Rp 412,330,985,893

Payback Period (years): 4.7884

IRR: 25.66%

Margin of Safety: 15.66%

Based on calculation above, the "Sentul City Giant Waterpark" project is a feasible project. It can be seen from positive NPV and IRR bigger than WACC, with a margin of safety as big as 15.66%. Moreover, this project will elevate the overall property price in that area.This indicates that PT Sentul City should take this project. [The calculations are attached in page 37].

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CONCLUSION & RECOMMENDATION

Based on analysis above, we could conclude that BKSL is in the middle of phase interchange from land banking activities to selling activities. Different from CTRP that already mature and ELTY that already have a head start in aggressive selling activities, these are some conclusion in seven fundamental issues that basing this report:

1. Liquidity:BKSL is become more aggressive that shown by current ratio that gradually become lower each year.

2. Productivity:BKSL is start its selling activity, shown by AAI ratio that gradually lower each year even though not as low as ELTY’s or even CTRP that already mature and has low rate of inventory. BKSL’s ACP is also improving from 271 days on average in 2008 into 109 days on average in 2010.

3. Leverage:BKSL have a fairly low leverage, it’s because property projects are tend to be long-term projects and it’s risky to finance those project using debt (because of interest element in it). So it’s better to keep debt minimized.

4. Profitability:BKSL’s profitability ratios are gradually increases that caused by price increases and sales increases. This condition is favorable for investor since EPS is also increasing sustainably.

5. Market:BKSL’s market ratios is also gradually become better caused by increasing in sales revenue and property price.

6. Growth:BKSL’s growth is very good because its fundamental growth become better each year and CAGR is also bigger than fundamental growth.

7. Cash Conversion Cycle:BKSL’s CCC is also gradually better each year, fueled by improvement in AAI and ACP, while APP is varied and have no trend whatsoever.

Author recommend that BKSL continues their strategies and activities that has gone so well all these years. Author also recommend for BKSL to not selling all of their land-banking inventories as retail housing only, but also investing in projects that will bring more profit and increase the overall value of their inventories (example: hospital, schools, universities, multi purpose building, water park, etc). They could invest in those kind of project as a sole proprietor or as a partner that give their land as a part of equity (that in the future will bring cash flow through profit sharing).

If BKSL become an investment partner, lands that handed over as a part of equity on those project will be recorded as investments and additional paid in capital, so it won’t appear as revenues. This recording method will bring great savings for taxes calculation.

The problems if this activity executed are: this “profit” also won’t appear on income statement thus will not favorable for net income and EPS growth; furthermore, since additional paid in capital will affect Equity, BKSL’s ROE will decrease and give an illusion of non-growing company (net income decrease, equity increase = ROE suffer).

The other favorable effect is in PBV calculations: since investment as a part of fixed asset will increase Assets sections, its book value will be higher and generate lower PBV. This condition will increase Company’s stock value as it is deemed undervalued. This way, investor will be paid of not by dividend, but by capital gain.

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REFERENCES:

http://www.sentulcity.co.id/

http://stocks.about.com/

http://investing.businessweek.com/

http://www.wikipedia.org/

http://www.investopedia.com/

CFA Institute Curriculum - Book 4

RTI - licensed for PT Panin Sekuritas - Bandung Branch