Acceleration of
village development is expected lift economic growth up
Based on ministry of finance, one
of factors which influenced the slowdown of economic growth was slow moving in
absorbing budget. There is unused fund amounting to IDR 273.5 billion at BPD in
each province.
That fund should be used for
development of village as priority program of Jokowi administration. Jokowi in
his campaign was promising special development program for villages across the
country. He said that he would allocate IDR 1 billion for each village at
entire nation.
Central bank expected the
acceleration in absorbing budget could increase economic growth in second
semester of 2015. It is predicted to reach 5 % growth.
Plan of revision in tax regulation for property: NJOP, BPHTB and price
limit
In order to get more tax revenue
government plans to revise its tax regulation include for property’s sector.
Government considers changing the price limit from IDR 10 billion to IDR 2
billion. If this new revision is implemented, there will be more people who pay
tax for property. On other hand, government also plans to change taxable value
of property (NJOP) which is used as guidance to measure how much land and
building taxes (PBB) and land and building transfer fees (BPHTB) have to be
paid. Government will use new system to measure land value which is called
price zoning.
If those new regulations are
approved, the consumer who purchase apartment valued 2 billon will be imposed
more cost and the sale of this segment may be decline.
If the government changes the
regulation, the developers may change its target for luxury segment as the cost
increase. Developers are predicted to focus on property which is valued less
than IDR 2 billion.
Tax paid on property: 5 % for
Land and building transfer fee, 10 % for value added tax, 5 % for income tax
and 20 % for luxury tax.
Company analysis: Purchase land bank in secondary city and expand in
theme park segment
According to annual report the
company experienced significant decline in revenue, the revenue of 2014 dropped
about 50 %. Apartment was still the key driver with largest contribution to
sales which was 21.6 % of total revenue and the second was housing with 13.6 %
of total revenue. The significant decline of sales was occurred for sale of
land, housing and apartments segments from about rp 1.042 in 2013 billion in to
about 399 billion in 2014.Bakrie Swasakti Utama is the biggest revenue
contributor which is more than 70 percent of total revenue. The decline in
revenue was occurred due to strict regulation such as Loan To value and Tax
regulation and happening because the slowdown of economic growth. It was
reflected in sharply increase of inventory and receivable in period of 2013
until 2014.
In spite of decline in sales the
company could increase its net profit and start new market in playground
segment.
In 2014 the company purchased
land bank in sidoarjo which was amounted to about IDR 500 billion as the
company did acquisition of Mutiara Mahsyur Sejahtera. The company seems start
to focus in secondary city as its strategic growth in 2014 due to removal of
tax regulation for property and playground or theme park as its new market in
challenging downturn of economy.
According to annual report the
company has 1,030.18 ha as its land bank. The largest was located at bogor and
the second was located in sidoarjo. In 2013 the company sold its several assets
in golden triangle to pertamina and sinar mas teladan due to liquidity problem
in paying its obligation
Meanwhile, capitalization of borrowing
cost to inventory was amounted to Rp 115.5 billion and rp 501.51 billion until
December 31, 2014 and 2013 respectively.
The largest share holder of the
Bakrie land was avenue capital Luxembourg which was the part of Avenue Capital
at New York, USA. More than 75 % of
total share is owned by Public. PT Asuransi Jiwa Sinar Mas MSIG own 5 % and Interventures
Capital pte Ltd owns more than 8 %.
The company has debt amounting to
USD 155 million which would be matured in March 2015. The convertible bond has
three monthly coupon payments with 8.625 % interest rate.
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