PWON - Pakuwon Jati

Anxiety of crisis in 2015

In 1997 the economic crisis started from Thailand and Malaysia, its currency exchange rate was slump to US dollar. Then the crisis spread to other countries includes Indonesia. The speculators used that momentum to attack the foreign reserves of the ASEAN’s country to get gain in money market. Indonesia and Philippines needed more time to recover from economic crisis. They took more than three years to fix their economic condition.

At the past, Indonesia got loan from IMF which was disbursed 3 times in two years. At the last aid, Indonesia considered to the 50 point of understanding of proposal from IMF. The points were apparently not matching with circumstances of Indonesian economic condition. IMF did the same treatment for economic recovery package of Indonesia with other countries such as South Korea and Mexico in 1995 and 1997 respectively.

  In 2015, the crisis may be started from Malaysia; it was begin from the wall street journal which was posted an article about the conjecture of corruption by the prime ministry through 1^st MDG foundation. He was reported receive fund amounting to about USD 700 million through the foundation. The case has deteriorated the stability of politic condition in Malaysia. The opposite party started to do massive demonstration in its capital to ask the prime ministry to resign.

The momentum had apparently been used by the speculator to attack the Ringgit due to the economic and politic issue in the country. Ringgit was experienced the worst decline in August among of ASEAN’s currencies.

The current issue in Indonesia is the case of the dwelling time in the sea port especially for Priok. The case may relate with the previous regime, there was a friction between government official who has different interest in the sea port.  

NPL attained highest level since 2011, construction is the worst

Non Performing loan of banking industry in Indonesia reached highest level since November 2011. The allowance of bad loans soared due to its increase. The highest increase of bad debt provision cost was CIMB Niaga.  The average increase of bad debt expense was 57 % year on year. Latest data from OJK and the central bank said that the NPL ratio of banking industry in April 2015 was at 2.48 %.

The highest NPL rate was in Construction sector which reached 5.5 %. The second was socio cultural, community, entertainment, other individual services sector which was at 3.78 %, followed by transportation and warehousing with 3.53%.

Market is irrational in Short Term ?

Although the macro indicator showed particular data either positive or negative, the market is irrational in the short term as Soros’ opinion and theory. The investor in money market tends to decide for investing based on what the majority people do in the market and based on issue and information in media.

Druckenmiller, the son of Soros, was doing mistake in predicting US dollar currency movement. He bet the US dollar falls, a decision was taken based on macro indicator, the increase of current account deficit which indicates that the import side exceeds export side.

Economic stimulus: 12 policies for banking sector  

OJK planned to conduct policies for economic stimulus; it consisted of stimulus for banking, Capital market, non bank financial institution and Education and consumer protection. For banking sector, OJK would like to implement 12 policies related with credit risk and credit quality in encouraging the loan growth in Indonesia.

Company Analysis: Asset rose by Acquisition

Based on annual report In 2014 there was a significant increase of asset, it rose 80.4 percent up compared to asset in 2013. The increase of asset was reached from acquisition of Pakuwon Permai, Centrum Utama Permai and others. The company acquired PP with cost more than IDR 2.34 trillion. The fund was attained from bonds amounting to more than USD 200 million. Another acquisition was Centraum Utama Prima, the company increased its share from 45 % in to 70 %. It set as controller position with more than 50 % ownership.

The significant increase in asset was property investment part, it rose from about 3 trillion rupiah in to 8 trillion rupiah.

In 2014 the sales increased 27.8 percent compared to sales in 2013. The company used equity method in acquisition either PP or CUP that is why the sales did not increase significantly. The company also got gain in purchasing companies with discount price.

The gross margin in 2014 was about 60 % in spite of there has been a slowdown in economic growth. According to audited financial statement, the land yet not developed in 2014 was at 1,461,183,232 thousand rupiah, it increased from previous position which was at 438,535,058 thousand rupiah. Its biggest portion was at south Jakarta. Meanwhile, there was also significant increase in its net income in 2014 compared to net income in 2013. It was more than double or above 128 % up due to acquisition as the above explanation.

Real estate was the key driver in 2014 with largest contribution at more than 50 % of total sales. In spite of there was a plan to change tax regulation for property the company seem still able to show good performance in 2014.

Source: Mandiri institute: Economic review , Annual report 2014