Modernland finds new

stepping stone with Jardine

group
Rini Winati

Bareksa.com

Indonesia's promising property market has attracted multinational real

estate firms to collaborate not only with domestic peers but also
international partners. An alliance between the Astra group, Hongkong
Land and Modernland Realty shows this well.
Astra Land Indonesia and Mitra Sindo Makmur have created a joint
venture to acquire 70 hectares of land in Cakung, East Jakarta, worth
Rp 3.4 trillion. The collaboration was marked under an agreement
inked on Oct. 12 in Jakarta.

Astra Land is a joint venture between Astra International (ASII) and

Hongkong Land, while Mitra Sindo Makmur is a subsidiary of
Modernland Realty (MDLN). The new entity will develop the land for a
project dubbed Jakarta Garden City.

This should provide positive sentiments for Modernland, given the fact
that the new partners are well-known firms in Asia. Astra is a well-
known Indonesian conglomerate while Hongkong Land is a leading
property investment, management and development group in Hong
Kong, Singapore and mainland China.

They are indirectly affiliated companies as Jardine Matheson sits as the

main shareholder, owning more than 50 percent of shares in the two
companies.

Source: Bareksa.com(Bareksa/Chart)

While Astra has only three years of experience in the real estate
business, Hongkong Land has laid foundations in Indonesia for over 30
years. Currently managing US$32 billion of assets in Asia, it has been
operating in Indonesia since the 1970s.

Under a collaboration with Central Cipta Murdaya, Hongkong Land built

the WTC Complex in Sudirman, Jakarta, as its first project. It has also
developed two other big projects in Indonesia, namely Nava Park (joint
venture with Sinarmas Groups Bumi Serpong Damai) and Anandamaya
Residence (joint venture with the Astra group).

Financially beneficial

In its latest research report, Mandiri Sekuritas appraised the joint

venture as it will provide security for Modernland in terms of marketing
sales and earnings, in light of Hongkong Lands established track
record and experience.

Furthermore, this action could benefit Modernland as the cash inflow

from the transaction could reduce its debt ratio, especially as it was
sealed amid the economic slowdown.

*
Bloomberg estimate(Bareksa/Chart)

As of the first half of 2016, Modernland had booked Rp 1.1 trillion in

revenue, down by 18 percent year-on-year from Rp 1.35 trillion last
year, due to fewer projects launched this year. This brought down net
income by 88 percent to Rp 26 billion.

Bloomberg estimates the companys full-year revenue in 2016 will

increase by 4 percent to Rp 3 trillion but the net income may retreat 17
percent to Rp 728 billion amid the current property situation.
Therefore, the newly formed joint venture with Astra and Hongkong
Land in Jakarta Garden City will give better prospects for Modernland.
As for Jardine Matheson group, the joint venture will augment its
portfolio in the largest property market in Southeast Asia. (ags)

Source: Bareksa.com