Feb 16, 2010

Summarecon sets Rp460 bio capex

Kelapa Gading-based PT Summarecon Agung Tbk (SMRA) has set Rp460 billion for capital expenditure (capex) this year.
In a research report published by PT Danareksa Sekuritas on February 15, the capex is used to bankroll completion of Harris Hotel worth Rp150 billion, Rp80 billion is utilized to build an office tower in Kelapa Gading, a flyover valued Rp80 billion, and development of Mall Serpong phase 2 worth Rp150 billion. 
The source of capex shall be internal cash and equity (Rp247 billion of warrants to be exercised by June 2010). 
If this is not sufficient, there is always the option of bank financing. With gross gearing of only 72% (net gearing 46%) SMRA should comfortably be able to take on more loans. If it does, the cost should not be too high either
According to Summarecon's management, it has already been offered a loan at 10.5% interest. Strong pre
sales should also boost SMRA’s cash. The company is estimated to post Rp1.3 trillion in revenue and Rp163 billion in net profit last year.
The recent acquisition of 100 hectares of landbank in Serpong has been an astute move. "We believe, it will
boost SMRA's NAV by 133% to Rp5.7 trillion (assuming 10%-15% annual land price increases since
2007)," Danareksa'a analyst Lydia Suwandi wrote in her report.
Through joint operations with PT Telaga Gading Serpong, Spring will be launched, a project
that will give Summarecon a 55% share of the total revenues generated. Based on her research, she believes that Bekasi development is the next Kelapa Gading for SMRA 

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