Politic situation may
be worst due to price of rice
Politic circumstances in
Indonesia may be worst in second semester of 2015 due to the shrink of rupiah
currency which increases price of good and service. As the result of that, the
price of various food rises, mostly rice, the main food of Indonesian citizen.
The condition is become worst after government has stopped import of rice from
oversea.
The insufficient supply may also
increase its price level, the price increased above 50 % up since the
government allocated its subsidy in November 2015.
There are also many cases of
money politic in period of 2009 - 2014. In Indonesia, cost of politic is very
expensive, people who have been elected as dean; governor and president or
member of congress may need to look for fund resource from government project,
tax incentive, regulation which is made for investor and selling strategic job
position to pay the debt.
Various infrastructure projects
are possible taken by company with special relation to incumbent. There might
be new established company will be elected as the contractor in several
infrastructure projects in Indonesia.
In conclusion, the currency
exchange of recent which is at 13000/USD, will cause various company having
higher leverage because of its loan in USD currency, there will be more
companies facing poor in performance.
Central Bank may
increase its BI rate
If the fed increase its fund rate
in June 2015, the central bank may increase its BI rate to anticipate the
capital outflow to over sea. As the interest rate hikes the consumption is
predicted down in long term, people will prefer to save their money in the bank
than use it for consumption. As the demand of good and service falls the
unemployment is expected decline due to the decrease of production of good
and service.
Tax Holiday is good option to increase investment ?
Tax holiday for big company which
is operating in various business such as Sinar Mas Agro, it could be good
alternative to boost investment. As they pay lower level of tax income and they
have higher amount of reinvested fund, the company would have more funds for
investment such as open new factory, increase production capacity and open new
business segment. That means there will be more jobs for unemployment.
Subsidy for
consumption or Accelerate Government Purchase
Based on economic model of spending allocation, if the
government purchase climbs up and the non government factor do not increase,
the equilibrium interest rate will rise.
As we can see in the following formula:
C/Y + I /Y + NE / Y = 1-G/Y
I assumed that fuel subsidy accelerates consumption as the
transportation cost low and the decrease of subsidy will not decrease demand of
fuel. The infrastructure project amounting to Rp 200 trillion which are derived
from its allocation advances the government expenditure to purchase various
materials for the projects. It may not a suitable prediction.
Company Analysis
The company was established in 1990, the main sector of its
business is property. The company has several segments in its business such as
housing, apartment, Strata office, strata Hotel, hotel and resort and etc.
Its projects are both in domestic and in over sea, one of
its famous brands is rasuna epicentrum in kuningan. The company also has hotel
and resort in mecca, Saudi Arabia and
several 5 star hotel across Indonesia such as Pullman in legian, Bali island.
Key Driver
The main driver in its revenue
acceleration is in sales and lot of property product especially apartment
segment. According to annual report of 2013, it was 59 % of total revenue. The
company’s strategy is aiming strategic land bank location for its property development.
In 2013 the company sold its land bank amounted to Rp 3 trillion include its
land bank in bukit jonggol, Sentul, West
Java. Despite its loss in net profit at 2013, the company has various projects
in across Indonesia and Saudi Arabia in 2014.
The biggest share holder is
Northtern TST CO with 10 % ownership of total share. The company is a part of
an Indonesian tycoon family, Bakrie Family. Aburizal Bakrie is the key person
and Anindya bakrie is its candidate of family business’ leader in Indonesia and
the world.
In 2013, the company was able to
increase its revenue 13 % up compared to revenue of 2012. Despite its loss in
net profit in 2013, the company could increase its gross margin from 55.7
percent in 2012 to 56 percent in 2013.
The company has convertible bonds
amounted to Rp 2 Trillion which due in 2013. The leverage in 2014 may increase
significantly as it would be converted to equity in 2013. The company has
several available asset for sale such as Bakrie Toll Road, Samudra Asia Nasional and etc. The business may not
achieve good performance as its expectation.
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| Source : Annual report 2013 |
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| Source : Annual report 2013 |
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| Source : Annual report 2013 |
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| Source : Annual report 2013 |
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| Source : Annual report 2013 |
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| Source : Annual report 2013 |
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| Source : Annual report 2013 |
