Equity Deep Dive: $DMAS

For a more complete write-up, please check our PDF file. This research was published on 16 May 2023.




PT Puradelta Lestari Tbk (IDX: DMAS) operates an Indonesia-based integrated industrial estate, commercial, and residential area located in Central Cikarang, Bekasi Regency, West Java. DMAS has five business segments: industrial, commercial, residential, rental, and hotel. More than 70% of DMAS revenue comes from industrial land sales.


DMAS is known as a company that consistently distributes massive dividends, with more than a 10% yield.  However, it remains to be seen whether DMAS can still pay out dividends since it depends on the company’s free cash flows, revenue growth, and capex requirements. We identified two factors that could help drive the industrial estate market moving forward.


#1: Data Centre Still Has Some Gas Left in the Tank

Demand from data center companies drove the industrial estate market.  According to Colliers, automotive sector led the pack in land absorption in Greater Jakarta from 2018 to 2021, before data center sector became the first place in 2022. Interestingly, GIIC, DMAS’ industrial estate, took the biggest market share in land absorption from data center in Greater Jakarta last year, followed by KIIC in Karawang, DMAS’ sister company.


DMAS allocated a dedicated industrial area for data center companies with a private fiber optic network and a direct electricity supply from PT PLN.  This enabled DMAS to sell industrial land at a higher price (IDR3 million per sqm, about IDR2.7-2.8 million per sqm after negotiation). In our view, a dedicated area for data center companies is one of DMAS’ competitive differentiations.


Moving forward, demand from data center companies will likely still drive the market. According to Cushman & Wakefield, data center capacity in operation per 2H22 in Greater Jakarta reached 144 MW, while  307 MW is still under construction. These figures remain below Singapore (876 MW) and Greater Tokyo (865 MW). In addition, data from APJII indicate that the internet penetration rate in Indonesia only reached 77% in mid-2022. This means that over 62 million of population are not yet online. Further, research by Alpha JWC and Kearney shows that the digital adoption of tier-2 and tier-3 cities (classified based on social-economic criteria) lagged that of tier-1 cities.


Based on our discussion with the management, there are about 120-130 hectares remaining of the dedicated area for data centers (around 60-65% of DMAS’ total net salable industrial land bank of 203 hectares per 1Q23). A data center typically takes up 5-10 hectares. Thus, the remaining land bank could accommodate up to 26 data centers. Hence, GIIC could house up to 41 data center tenants (including 15 existing data centers). If we assume an average selling price of Rp2.7-2.8 million per sqm, DMAS’ potential revenue from the remaining land bank for data centers is about Rp3.2 trillion to Rp3.6 trillion.


#2: Nascent EV market

According to Gaikindo as cited in DataIndonesia.id, electric car sales in Indonesia were recorded at 15.4 thousand in 2022, significantly up from 3.2 thousand in 2021. However, these figures remain well below overall car sales in Indonesia at about 1 million per year. According to IESR, lack of infrastructure, high upfront costs, and low performance hampered the adoption of EV. Nevertheless, competition, more affordable models, and the government’s incentives can drive EV adoption.


Indonesia contributed 48.5% of total global nickel production in 2022, according to USGS. Nickel is one of the EV battery components, thus incentivizing  companies to build the whole EV value chain from upstream to downstream. At least 120 factories will be needed to cater to the projected EV demand by 2030, McKinsey estimates. As things stand, negotiations with companies are underway to build an EV battery ecosystem in Indonesia.


Investment Risk

However, investors should note that DMAS’ industrial land bank will only be enough for another four to five years. Management said that the short-medium term plan is to acquire 300-350 hectares of land near the existing land. The estimated price will be around IDR600-700 thousand per sqm depending on negotiations. This implies that the total acquisition costs will be around Rp1.8 trillion to Rp2.45 trillion (if rezoning happens), as the newly-acquired land will require 6-12 months until ready for marketing.



DMAS trades at 6.9x forward P/E, higher than BEST (6.6x) but higher than SSIA (13.2x). Historically, DMAS’ valuation is below its average. In mid-2019, the stock reached IDR340/share, with 30x P/E. In 2019, DMAS’ marketing sales almost hit the IDR3 trillion-mark, far exceeding the target of Rp1.25 trillion. In 2020, the stock trades at Rp270/share, during which marketing sales were Rp2.4 trillion, above the annual target of Rp2 trillion.


However, investors are now only willing to pay about 7x forward earnings. Investors should ask whether DMAS fundamentals have changed in line with the change in valuation. We see that demand from EV sector has not yet priced into the stock. According to Stockbit, analysts’ average price target is Rp217/share (29% upside), with the low estimate standing at Rp190/share (13 upside).


In conclusion, we like DMAS because of clear market drivers, stellar balance sheet position with no debt, lower-than-historical average valuation, and high dividend yield. The risk is competition from industrial estate in Karawang, with abundant land bank and lower industrial land price than that in Bekasi, as well as possible lower dividend pay-out as DMAS will have to acquire land bank.


Disclaimer: This write-up is not an investment recommendation. Please do your own due diligence.


Note: Sources were also included in the PDF file.


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