Lippo Karawaci: Buyback Wonâ€™t Hurt Growth
Francezka Nangoy. The Jakarta Globe, Jakarta - 14/10/2011
Lippo Karawaci, the country’s largest listed property developer, said its plan to repurchase shares would not disrupt its 2012 expansion plans that include the construction of hospitals and shopping centers.
“This spending will not interrupt Lippo’s expansion plan, like the plan to build six hospitals and three malls,” Danang Kemayan Jati, vice president and head of corporate communication at Lippo Karawaci, said on Friday.
Lippo Karawaci is planning to spend Rp 600 billion ($67.8 million) to buy back 3.82 percent, or about 882.35 million, of its total outstanding shares. That would put the purchase price at Rp 680 a share.
Lippo Karawaci shares rose 1.6 percent to Rp 650 on Friday. It has lost 4.4 percent this year, compared with the 1.1 percent decline for the main stock index.
The stock repurchase is intended to improve the company’s capital structure and stabilize the share price, Danang said.
With fewer shares in circulation after the buyback, earnings per share are forecast to rise to Rp 14.23 from Rp 13.65, and the return on equity is expected to climb to 6.87 percent from its current 6.43 percent, Danang said.
He added that the company would seek shareholder approval for the buyback plan in a Nov. 15 extraordinary stockholders meeting. The buyback would be completed within 18 months following shareholder approval.
Lippo Karawaci said last week that it planned to spend $275 million next year to build malls and hospitals in major cities across the nation. It would fund the expansion with $250 million it raised from last year’s rights issue. The company has seven hospitals and plans to build another 20 though 2015. It has 25 shopping malls across the archipelago.
Earlier this month, Lippo Karawaci’s president director, Ketut Budi Widjaja, said that sales marketing — sales of property that have not yet been recorded in the company’s books — from January to September reached Rp 2.3 trillion, and it is targeting Rp 2.8 trillion by the end of the year.
Its net income rose 40 percent to Rp 357.10 billion from January to June compared with the same period last year. Revenue climbed 29 percent to Rp 1.88 trillion.
Lippo Karawaci is controlled by the Lippo Group, which owns the Jakarta Globe.