VAST Property IPO Shares Are Sold Premium, Still Interested?

Jakarta, CNBC Indonesia – Sector real estate and properties will be the arrival of a new issuer. PT Vastland Indonesia Tbk (VAST) will take the floor on the Indonesia Stock Exchange on February 7 2023. Fundamentally, the offered share price is quite expensive, both in terms of price to profit ratio (Price Earning Ratio/PER) and ratio to book value (Price Book). Value/PBV).

These prospective issuers offer prices in the range of Rp. 100 to Rp. 109 per share. In calculating PER VAST, for example price listings later it will be priced at 100 with EPS of 5.96, meaning the PER is 16. This is quite expensive, because the average PER of the real estate sector is around 10 cheap. Even though VAST is a company that can still grow, so PER is not the only reasons for assessing the reasonableness of the price.

Likewise in terms of Book Value, VAST is at BV 60 (fair price based on book value) while the IPO price offered is at Rp. 100-109, which means that these shares are offered at a premium price. The same thing can be seen in terms of PBV, for example, with a listing price of IDR 100, it means that the PBV is 1.7 times. This figure includes a fairly expensive price because the average PBV of the real estate property sector is still below 1.

Fundamentally, VAST EPS is growing, judging from the 2019 financial reports to the third quarter of 2022, especially since the 2021 period is quite high, with EPS at 57.04. Then from the GPM (Gross Profit Margin) of 75%, that’s a pretty big number, which means the difference or gaps between income and hpp quite far, efficient in generating profits.

In terms of debt to capital, DER (Debt to Equity Ratio), below 1, VAST is still 0.41, meaning that the ability of capital to pay off debt is still good. Apart from that, VAST also gave a statement that it would distribute cash dividends of 30% of profits in 2022.

In terms of cash flow (cash flow) also continues to grow, one of which is supported by operational cash flow from customer acceptance, which means there is an increase in revenue from customer.

As another reference, the comparison of competitors for VAST is PT Mega Manunggal Property Tbk (MMLP) which has the same business. If we fundamentally compare VAST and MMLP, it is quite different, for example, if we compare the PER, it is quite far away, MMLP is at PER 34 while VAST PER is 16, but if we look at it from a PBV perspective, it is still cheaper. MMLP is in the 0.80 range, still below 1 .And MMLP has client Yamaha Indonesia Motor.

For other comparisons, in terms of assets, MMLP is indeed superior with assets of IDR 7 trillion, which is far different from VAST, which only has assets of IDR 276 billion. However, MMLP also experienced a decline in performance in the second quarter of 2022 based on financial reports on the IDX, in contrast to VAST whose performance continued to grow during the 2022 period.

VAST will spread its shares to the public in the amount of 7 million lots or equivalent to 700 million shares with an offering price in the range of 100-109. The estimated fresh funds that VAST will receive is around 70 billion. From these fresh funds, VAST plans to use them to buy assets in the form of land and buildings of around 33 billion, pay off debts to related parties of around 16 billion, and the remaining 30% for working capital.

VAST also issued 140 million warrants, which means that for every purchase of 5 VAST shares, 1 series 1 warrant is free. So, these warrants can be exchanged into 1 share in a 1:1 ratio. The results of the warrants will also be used for working capital.

VAST Business Overview

VAST has a warehouse rental business in the form Built-To-Suit (warehouse designed requirement client) And General Warehouses. This rental is like a warehouse for the needs of Fast Moving Consumer Goods (FMCG), commodity trading, 3PL (Third Party Logistics) providers, namely third party logistics service providers.

What’s interesting about VAST, it has several client such as PT Tiga Raksa Satria Tbk (TGKA), PT Coca-Cola Distribution Indonesia, PT Bank Tabungan Negara Tbk (BBTN), PT Indomarco Adi Prima (distributor of Indofood products), PT Tirta Investama (aqua products).

Seeing para client VAST is a consumer company, so this is an attraction in itself. It is known that data from the BPS (Central Statistics Agency) reports that Indonesia’s gross domestic product (GDP) grew 5.72% in the third quarter of 2022 compared to the third quarter of 2021 (year-on-year/ yoy). GDP growth in the third three months of this year was triggered by the maintained purchasing power of the grassroots group due to social assistance and energy subsidies. Likewise the activities of middle-upper class community groups, especially for tertiary needs.

If broken down further, the GDP for the household consumption expenditure component grew 5.39% (yoy) in the third quarter of 2022 and made the largest contribution, namely 50.3% to national GDP growth.

The consumption expenditure component of household non-profit institutions (LNPRT) grew 6.09% (yoy). LNPRT expenditure contributes 1.15% to GDP. The government consumption expenditure component in the third quarter of 2022 contracted by 2.88% (yoy) with a contribution of 7.57%, the gross fixed capital formation (PMTB) component grew 4.96% (yoy) with a contribution of 28.55%, then the exports of goods and services grew 21.64% (yoy) with a contribution of 26.23%. Then the component minus imports of goods and services grew 22.98% (yoy) in the third quarter of 2022, with a contribution of 21.65% to national GDP.

From the data above, it means that the level of consumption of the Indonesian people continues to grow, this has become one of the drivers for the consumer sector to increase its sales, which has an impact when the consumer companies above experience an increase in demand, they will need much larger booths for their products, this will encourage VAST performance that will add to their revenue from warehousing leases.


Disclaimer: This article is a journalistic product in the form of views from CNBC Indonesia Research. This analysis does not aim to persuade readers to buy, hold, or sell related investment products or sectors. The decision is entirely up to the reader, so we are not responsible for any losses or profits that arise from that decision.

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