Indonesian Property Companies in Focus: Ciputra Development
Ciputra Development, one of Indonesia's leading property companies with 75 projects spread across 33 cities, is increasingly focused on diversifying its portfolio outside the island of Java. The company has expanded to Sumatra, Kalimantan and Sulawesi as it wants to "bet on more than one horse" to improve its corporate earnings.
The property company, which develops shopping centers, hotels, serviced apartments and golf courses, has high hopes for property development on the big islands other than Java, especially on the long term. This view is supported by the government's focus on infrastructure development across Indonesia (hence improving connectivity and causing multiplier effects in the regions).
Although property sales in the outer islands (referring to those islands other than Java and Madura) have generally fallen over the past couple of years amid low commodity prices (especially between 2011 and 2016), there now exists optimism that property sales in the outer islands will rise on the back of gradually improving commodity prices.
Moreover, Harun Hajadi, Director of Ciputra Development, said commodity prices and purchasing power start to recover outside the island of Java, hence the company's revenue from pre-sales is targeted to grow by 20 percent in full-year 2017 on the back of a number of new property projects in big cities on Sumatra and Kalimantan. Several new projects on Sumatra are CitraLand Megah, Citra AeroLink, and Citra Plaza.
Securities firm Mandiri Sekuritas believes that the diversified portfolio of Ciputra Development is a great source for growth of the company's corporate earnings. Many other property companies are rather dependent on sales in Jakarta.
In the January-August 2017 period, Ciputra Development's marketing sales have reached IDR 3.85 trillion (approx. USD $289 million), or 45.3 percent of the full-year target. Although, these sales are a bit behind schedule, the company expects to see rapid growth in the fourth quarter of the year after the Losari reclamation project in Makassar has been completed. However, most likely, this project will have a bigger impact on next year's sales.
On Tuesday (19/09) shares of Ciputra Development did not move. So far this year, however, the property firm's shares have fallen 11.24 percent to IDR 1,185 a piece.
Stock Quote Ciputra Development - CTRA:
In the first half of 2017 Ciputra Development's revenue fell 1.7 percent (y/y) to IDR 2.82 trillion, while its net profit rose 9.6 percent (y/y) to IDR 309.7 billion. Sales of houses and shophouses accounted for most of the company's revenue so far this year (at IDR 1.48 trillion), followed by apartments (IDR 344.4 billion), and office space (IDR 104.7 billion).
A few days ago it was reported that Ciputra Development issued 150 million Singapore dollars worth of medium term notes, with a coupon of 4.85 percent per year (four-year tenor). Proceeds are used for refinancing.
Future Projection Ciputra Development's Financial Highlights:
| 2016 | 2017F | 2018F | |
| EBITDA | 1,806 | 2,040 | 2,492 |
| Net Profit | 862 | 1,150 | 1,495 |
| P/E Ratio (x) | 20.9 | 18.9 | 14.5 |
| EV/EBITDA (x) | 14.6 | 13.2 | 10.8 |
| P/B Ratio (x) | 2 | 1.6 | 1.5 |
| ROAE (%) | 9.8 | 10.1 | 10.5 |
in billion IDR rupiah, unless otherwise stated
Sources: Bisnis Indonesia & Mandiri Sekuritas (17/09/2017)