Property & Building Materials - 3Q25 results recap: mixed performance

3Q25 results recap: mixed performance

We review 3Q25 results across our coverage in the property, industrial estate, and building materials sectors. Overall performance was mixed, with select names delivering notable results. We continue to like property and building materials, given low ownership of the stocks, which, in our view, should limit incremental selling pressure, although upside catalysts continue to be limited.

Property: Harvesting the fruits of past pre-sales

Property developers (PWON IJ [Buy], CTRA IJ [Buy], BSDE IJ [Buy]), and PANI IJ [Not rated]) posted consolidated 3Q25 revenue of IDR8.1tn (+14% y-y), supported by high handovers from strong FY22 pre-sales. PANI was the key growth driver, booking IDR1.5tn (+95% y-y) in revenue, primarily from its property development segment. CTRA and PWON also delivered solid revenues of IDR2.5tn and IDR1.7tn (+21%/+14% y-y), respectively, benefiting from last year’s low base. By contrast, BSDE recorded softer revenue of IDR2.4tn (-13% y-y), as large handovers were recognized earlier in 2Q25, ahead of the VAT exemption deadline.

From a profitability perspective, the property sector continues to exhibit resilient margins relative to the other segments, underpinned by disciplined pricing and conservative land banking strategies that help contain blended land costs. We note that developers remain prudent in their capital allocation – channelling internal funds towards deleveraging (sector blended DER: 22%), while continuing selective land acquisitions to sustain long-term growth. Despite limited dividend distributions, the sector’s ROE in the quarter improved to 6.5%, which reflects strong earnings quality and balance sheet efficiency.

Industrial estates: Recurring income a key positive in a soft market

For industrial estate companies, recurring streams – utilities, rentals, and power generation – could be the next growth pillars. KIJA IJ (Not rated) booked 3Q25 revenue of IDR0.9tn (-4.1% y-y), supported by strong recurring income (IDR0.8tn, +36% y-y) that offset weak property sales (IDR0.2tn, -56% y-y). This reflects the payoff from earlier investments in power and utilities. By contrast, SSIA IJ (Not rated) posted softer revenue (IDR1.2tn, -21% y-y) amid sluggish estate demand and the Melia Bali hotel renovation. The sector’s debt-to-equity ratio improved to 39% (3Q25) from 58% (1Q18), giving players more room to fund new projects in Subang and Kendal.

Building materials: Company strategy as a key winning factor

Consolidated revenue for the building materials sector remained largely flat at IDR18.5tn (-0.3% y-y), pressured mainly by weak cement demand. However, select players continued to capture growth and market share. AVIA IJ (Buy), ARNA IJ (Buy), and IMPC IJ (Not rated) posted positive revenue growth of 15%, 7.1% and 15% y-y, respectively, which reflected their targeted strategies to sustain performance despite subdued purchasing power. In the cement sector, PT Indocement Tunggal Prakarsa (INTP; Not rated) continues to focus on cost control to offset declining bulk demand, while PT Semen Indonesia (SMGR; Not rated) is optimizing its distribution strategy to maintain pricing competitiveness, according to company updates.