Summarecon Agung Targets Higher Recurring Income

Indonesia Finance Today - 01/06/2012

PT Summarecon Agung Tbk (SMRA), property company, plans to raise its recurring income contribution to around 50 percent of total revenue.

Michael Young, Corporate Secretary of Summarecon Agung, said that the company’s recurring income portion is around 24 percent of total revenue. The remaining portion is from land and land plot sales. Summarecon Agung will increase its recurring income through the operation of several hotels.

“We are managing the Harris Hotel Kelapa Gading, and there are more hotels in the pipeline,” he said.

Johanes Mardjuki, President Director of Summarecon Agung, said that the company is conducting a feasibility study for two locations in Bali. Construction of the hotels is scheduled for 2013. “There are two hotels that will be built in Bali and this is in partnership with landowners,” he said.

One hotel will take up 3.5 hectares of land, while the other hotel will sit on a one-hectare land. The two hotels are expected to operate in 2014.

According to Michael, the two hotels will be a four-floor building with 200 to 300 exclusive rooms. The company allocates Rp 750 billion (US$ 79.5 million) for the development of the two hotels.

The company’s recurring income is generated from retail lease in Mal Kelapa Gading, La Piazza, Gading Food City and Summarecon Mal Serpong. The company’s recurring income from commercial lease is obtained from office lease and Hotel Harris Kelapa Gading.

Meanwhile, PT Agung Podomoro Land Tbk (APLN) plans to develop a hotel and villa in this midyear in Gadog, Bogor. Construction phase will start in the second half of 2012. Justini Omas, Corporate Secretary of Agung Podomoro Land, said that the company will build a five-star hotel and villa in that area. “The company has land bank of 84.6 hectares in Gadog,” she said.

Dividend Payout

Summarecon Agung plans to distribute dividend of Rp 155.6 billion, or around 40 percent of the total net profit of 2011. The dividend per share will be at Rp 23 per share. The company’s pet profit in 2011 is at Rp 389 billion.

The company will also increase its capital without preemptive rights, of a maximum of 10 percent from the company’s shares.

According to Johannes, the approved share price limit is at Rp 1,550 per share. The company will obtain additional capital of around Rp 1.07 trillion, and 9.09 percent of its stake will be diluted