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Seeing is Believing

Lately, Loro Piana's Summer Walk loafers- a casual elegant slip-on shoe with remarkable simplicity and comfort - have garnered favor among the financial elite of Wall Street and the magnates of Silicon Valley. The 100 year old luxury Italian house is currently having a surprising moment of hype, selling as “the Uniqlo of billionaires,” the official provider of super-soft essentials for the lucky 1% who love discreet luxury.

In 2013, Bernard Arnault, the head of LVMH and the wealthiest individual globally, had such an affinity for Loro Piana sweaters that he acquired an 80% stake in the company for $2.6 bn. The brand has proven its success with a mass cult acknowledging its superb quality.

Various theories surround the loafers' rise to popularity. Certain fashion pundits credit their acclaim to the show "Succession": actor Jeremy Strong, who portrays Kendall Roy, dons them in season three.

Alternatively, some link the Summer Walk's surge to the glamorization of pandemic-induced trends, highlighting the preference for exceedingly comfortable shoes. The trend could stem from the wealthy's perpetual desire for exquisite, costly, and understated items—a style that conveys an attitude of nonchalance despite meticulous concern: “Worn by those who do. Copied by those who don’t.”

This narrative illustrates how true quality inevitably emerges and asserts itself over time. Although it required a great management, such as Brian Arnault for its value to be recognized, Loro Piana made a remarkable resurgence after a century of being a disregarded luxury brand, now emerging as the new sensation in the fashion industry.

We are firm believers that this story holds true for PT Bukit Sentul City (BKSL), a long standing property company. What might appear as an underdog could transform into a significant resurgence under new and seasoned leadership of Eddy Sindoro. With ownership of undoubtedly top-notch assets spanning 15,000 hectares a scale that presently surpasses all other property firms – BKSL has the potential to make an impressive turnaround!

Can you imagine how massive of a land size 15.000 ha is? As a size comparison, Vancouver city is merely 11.500 ha, San Fransisco lies at 12.140 ha, whereas as the closest local comparison, Bogor is 11.140 ha!

Source: Sucor Sekuritas, Company

Amidst the pandemic, the Sentul area gained considerable popularity due to its hiking destinations, convenient toll access, and its proximity to Jakarta – just a roughly 50-minute drive away. This trend has endured even beyond the pandemic, as most hotels in the area are consistently fully booked during weekends, and the hiking trails are bustling with visitors.

The progress in this region doesn't solely originate from Sentul City. A residential housing venture in collaboration with CTRA, Citra Sentul City, is set to debut this October. Furthermore, there are additional developments by Artha Graha and the Sanctuary Project by Perennials.

This appeal is well-deserved, as Sentul City is nestled amidst hills and mountains, providing a refreshing environment in stark contrast to the pollution of Jakarta. The locale boasts attractions such as the AEON mall ( the most crowded compared to all its other branches!) IKEA, Taman Budaya, and a verdant golf course. I dare say that the Sentul area can be likened to the likes of Rancamaya and Puncak, offering even better accessibility from Jakarta and more affordable land prices.

Despite being marred by its past association with poor management, BKSL's asset quality remains untarnished. Positioned strategically within the Jabodetabek area, it boasts direct access to the Jagorawi toll road, upcoming LRT stations, and the Sentul-Karawang toll road. When coupled with the anticipated surge in property demand, an increase in property prices is on the horizon!

Source: Company

The objective is to reposition the company as a highly efficient sales-driven enterprise, constantly expanding its profitability within the real estate industry, and eventually book recurring income.

Yet, the key step toward revealing the true value of BKSL's land assets is the restoration of trust. As a show of good faith, the company is set to deliver its Spring Valley houses at the end of this year or only few months since the cluster launching, faster than its initial target of 18 months!

Source: Company

To provide further assurance, the company also provides a 2-year home warranty (compared to the average of other developers which is 90-120 days).

Since Eddy Sindoro's team assumed leadership in August 2022, numerous significant milestones have been reached. After 8 years of inactivity in terms of direct residential sales, the new team achieved ambitious marketing sales of Rp171 bn in 2H22, Rp242 bn in 1H23, and a further Rp 219 bn from July to August.

Source: Sucor Sekuritas, Company

They effectively addressed the pressing challenge by amicably resolving conflicts with homeowners. Furthermore, to initiate four residential housing projects and preempt potential legal complications regarding the PKPU deadline, they transferred 20% ownership of the Opus Park project to Sumitomo.

Source: Company

Another noteworthy accomplishment involves effectively gaining backing from three state-owned banks—BBNI, BBRI, and BBTN—for mortgage provisions, along with the successful recruitment of 300 house brokers, initially hesitant to partner in selling BKSL properties. As per our channel check Brighton plans to open its marketing office in Sentul City in the near future!

Source: Company

Having surpassed a crucial juncture in its trajectory, BKSL is now forging ahead. We anticipate an impressive 64% CAGR in marketing sales over the next five years. While this growth forecast is ambitious, it's important to note that these projections arise from a relatively modest starting point. Looking ahead, our target price lies at Rp 122, indicating an annual average of Rp118 bn FCFF over the next five years.

Bear in mind that even if there are additional reductions in marketing sales achievements, BKSL remains an attractive BUY!

I’ll close this note with “Bought by those who knows. Copied by those who don’t.”

Our unwavering belief rests in the unparalleled asset quality - a feat nearly impossible to replicate in terms of securing such an extensive land size in such a strategically advantageous location.

We will be closely monitoring the new team's ability to execute marketing and sales strategies. Below is the progress of Spring Valley extension from our last visit.

Now, the question remains: Are you interested to know more?

We are always keen to discuss our calls, perhaps over a cup of coffee while enjoying the scenic Mountain View in Sentul City!

Read our full Report here:

Rebirth from the ashes report:


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