COWELL DEVELOPMENT TBK - COWL

Macro economy

Gross domestic product of Indonesia increase 6.5 % in 2012 compared to 2011. it means that indonesia has good economic environment for investment. Despite the IDR currency rate continue to drop to US dollar currency rate, and BI rate rises in recent year, several industries still have good future to invest, include in real estate.

Real estate industry has steady growth; in 2006 - 2010 the industry increases in the range 10% - 19% with average growth at 14.32 %.

Instead of indonesia Central Bank has implemented new regulation about Loan To Value which arranges the collateral value in mortgage at 70 % (Bank Indonesia Circular No. 14/10/DPNP, dated 15th March 2012), mortgage still increases in first quarter of 2013 at 47 % compared to the same period in 2011. In 2010 real estate industry to total GDP is only 2.4 %, this is lower than others country in south east asia such as malaysia and thailand.   

 For residential, jakarta has strong demand for luxury apartment which is driven by corporate leasing and inbound business trips from oversea. Apartment rent is projected to grow in the range 15%-16% in 2013, based on jones lang lasalle.  

The real estate sector industry is still promising in 2013.

Real estate industry

Real estate to GDP (%)

Cowell Development Tbk (listed in Jakarta Stock Exchange)

Forecasting

Based on sales the last 5 years I conclude that the sales will increase 38.85 %, I used formula growth = (sales of 2012 / sales of 2008)^0.25 - 1

The revenue will be affected by inflation rate and interest rate. Real estate price in indonesia is growing faster, the apartment price in jakarta increase 43 % in 2012 compared to 2011. Demand for real estate is still higher than its supply, mostly in strategic and favorite position.  The interest rate which is rising and the Loan To Value policy which is more conservative will make real estate industry grows slower. 

Project

The company has several real estate projects, but the key driver of its high growth is westmark apartment at CBD , West Jakarta which has 71 % contribution of total revenue. Others project are Melati Mass Resident and Serpong park residence. The company expanded to Borneo island for its new project, it is named as Borneo Paradiso.

Benchmarking  (2012)

	Cowell	Alam Sutra	Ciputra
Revenue	100.0%	100.0%	100.0%
Gross Margin	45.4%	50.2%	60.0%
Interest Expense	2.4%	21.4%	5.7%
Net Income	22.4%	25.6%	49.7%

From the table at above I conclude that cowell will still be growing and it needs more improvement. Its gross margin is lower than other competitors and it is same with its net income. its interest expense is lower than others , in 2012 the company has just done acquisition of subsidiary. The company may have low leverage cause have allocated more equity in its capital structure.

Economic Growth Of Indonesia

I made the forecasting at below based on moving average time series analysis. The data was taken from Trade ministry Department. According to my calculation Gross domestic product will rise slightly 1,7 % (with adjustment) and 4,6 % (without adjustment). Government has made target 6 % for economic growth.

Slower economic growth goal is made because of the global economic condition. The Fed plan to reduce debt and money supply. The treasury secretary said that possibility of economic growth in 2013 is below 6%.

Forecast : Time Series VS Exponential smoothing 

with exponential smoothing i find bigger  MAD, MSE and MAPE than Time series. So I think we better use time series. If you want better result you should calculate with more data for input. 

Manufacturing Industry as the biggest portion of GDP in indonesia

Manufacturing Industry in 2006 - 2010 

Manufacturing Industry to GDP in 2006 -2010 

Unilever Indonesia Tbk

Sales Forecasting with Moving Average Time series analysis (in Billion IDR) 2008 2009 2010 2011 2012 2013 Q1 3,787.2 4,482.3 4,972.9 5,668.3 6,604.1 5,387.9 Q2 3,832.9 4,473.4 4,949.7 5,795.8 6,755.5 6,582.0 Q3 4,135.3 4,556.9 4,762.4 5,858.0 6,984.5 8,961.5 Q4 3,822.3 4,734.2 5,005.3 6,147.0 6,959.2 8,447.9 Total 27,303.2 29,379.3 Growth  7,6%

Based on the table at above, sales projection of 2013 increase 7,6 %. I used simple combination of moving average and time series, then use its factor to adjust the forecast in four quarters. 

Forecasting with seasonality 

with another method, I conclude that the growth rate will be at 15 % up.  I used seasonality method to estimate the sales of 2013. 

I think the advancement in sales is occurred because of inflation rate factor and increase in sales. It is need deeper in analysis at sales in number.  Is there any increase in number ? which product are dominant in sales contribution ?. commonly consumer goods are inelastic in its demand to price. 

Rise of oil and gas price which is moved by the worse politic condition in Middle East make the global economy slow downs. The energy cost, production cost and transportation cost is more expensive. 

Meanwhile the Fed plans to decrease its money supply as the economic start to recover in USA. The Indonesian rupiah will be weaken to US dollar. In recent times the US government has shut down its activities because they have to negotiate with parliament about Government Debt. Government plan to increase its debt but unfortunately parliament disagree with that plan. 

Meanwhile based on data from trade ministry, Indonesia's export is decrease in 2011 - 2012. It declines 5 % down.

estimation for next year in private consumption will be decline because people will spend more money for transportation cost, energy cost and also the multiplier effect of cost of energy. The price of goods will increase as the increase in production cost.

According to the forecasting above I have made its financial projection

In 2013 -2015, i estimate the company will be able to increase their sales 15 % up in each year. I use seasonality method with 15% growth. 

Big company usually grow stronger with M&A strategy or buy the existing brand in order to advance growth. Unilever has done several corporate action such as buy local brand like sari wangi, buavita etc.

I think the analyst have to find the product which has stronger impact in sales increase then it must be figure out its price sensitivity. Will the change in its price effect demand from customer ?

ANALYSIS OF TESLA

Back Ground

Co-Founder and key success factor

I do not doubt that the key driver of Tesla is at a one man show of the CEO and Co-Founder ,  Elon Musk.  Elon manages the innovation of the tech company in set up its Goal setting.  Elon has successful story in his former company Pay Pal, he was the co founder of Pay Pal.Elon is also involved in space x. Company which is concerning in advancement of rocket Tech.

Elon interest are in space, clean energy and internet. He thought himself with computer programming when he was a child.

Elon is also supporting his cousin clean energy business at Solar City. Solar City is the biggest solar energy project in USA. Elon collaborates with solar city to support battery equipment for Tesla's Vehicle. I think elon should move to Germany, the nation with biggest solar energy production.  

Business Model

The company applies an integrated innovation in material science, internet and clean energy.

The company produces electric power train system for major player in vehicle maker such as Toyota, BMW, Mercedez Benz and Daimler. The company provides all spare parts and builds supercharger network for charging at several cities, provide retail and service center. The business model could engage the customer. The company is also providing resale value guarantee for the customer to boost revenue with such financing program.   

The electric car which has been produced is Tesla Roadster. The available models of roadster are model x and model s. The car is built for premium segment because it is an electric sport car.

Recent Condition

Tesla begins to produce vehicle for major player company. I think Elon do different strategy in order to reduce competition with major player such as Toyota or BMW. In 2013, Elon plans to produce 40,000 vehicles, a sport sedan model for BMW. He decided to make partnership with BMW.

The company starts to expand in Europe to sell the vehicle.

Key Financial term

The company experiences losses in several consecutive years since 2008 until 2012. This is a common condition for start up company. The cash flow from operation and cash flow for investing are negative. The company gets the fund from common stock and Long term debt for financing the business.

The revenue in 2012 increase 159 % up compared to 2011. But i think the company has to check its aging receivable and collecting the money ASAP if there is overdue payment. The investor also has to check the sales contract because the inventory in 2012 increases 436 % up than the previous year but i think this is all right because it is financed by 440 % of increase of account payable in 2012 compared to 2011, an indicator of vehicle piled up in its warehouse.  

The type of operational management usually has big impact in cash to cash cycle. In operating lease concept, the company records the vehicle at the balance sheet. The net operating lease in 2012 is drop 14 % compared to 2011. This means the car order may drop or there were many resale cars from customer.

The company faces higher competition in high quality sport electric car segment, it is indicated with the decline of profit margin since 2010 until 2012: 21,79 %, 19,80 % and 13 %. I think at the next year the profit margin will be lower because they start act as vehicle manufacturer for another company based in three years trend. BMW is doing its branding strategy in sport electric car, they buy car from another manufacturer then sell it with BMW as its Logo.

The company spend 6.89 % of its revenue for Research and development cost. This was lower than the same cost in 2011 which is at 9 % of its sales. It seems the company start to reduce cost to increase profit.

Outlook

Sport electric car may compete with natural gas car. Tesla needs more capital to provide supercharger network for the customer. Natural Gas increases in its production level, mostly in US. in order to continue growth i think the company need to produce hybrid car.  

 Resale Value guarantee may be hooks the company at the future. It represents that it doesn't confidence in electric sport car.

The Revenue will increase at the end of 2013 compared to the same period in 2012. The inventory increases sharply almost fifth times bigger but it has been balanced with 5 times bigger on its account payable and the company also has high cash level, 18 % of its total asset in 2012. It means supplier believe that Tesla will sell more and i will invest more in supercharger network and service center. The working capital is negative means that the company does new strategy in run the business. There are a certain contract between supplier, Tesla and the corporate buyer.

	Asset	Sales
2008	51,699.0	14,742.0
2009	130,424.0	111,943.0
2010	386,082.0	97,078.0
2011	713,448.0	148,568.0
2012	1,114,190.0	385,699.0
2013	1,800,000.0	537,593.1

I have made projection of  the revenue with excel tools, i figured out that the asset increases double every year and it has strong correlation with sales. i estimate that sales will increase 40 % in 2013 compared to 2012.