Property supporting companies ready for IPO

JAKARTA. Property sector remains attractive. Recently, some property supporting companies are ready to conduct initial public offering (IPO).

For an example, the paint producer PT Avia Avian plans to rise as much as Rp 3 trillion funds through IPO at the end of 2017.

Aside of PT Avia Avian, PT Wavin Duta Jaya also plans to conduct IPO in the first semester of this year. This PVC pipe producer sees for Rp 2.5 trillion funds. Wavin Duta even has appointed some underwriters, including RHB Securities to support the IPO.

Meanwhile, the producer of household appliances and PVC pipe PT Maspion also plans to raise Rp 2 trillion funds through IPO.

The moment of IPO

Analyst at Asjaya Indosurya Securities William Surya Wijaya estimates that some factors have encouraged some companies to conduct IPO this year. “One of the factors is moment,” he told KONTAN.

Recently, the government is boosting infrastructure sector so that the property sector becomes a favorite sector. Moreover, the demands for property are increasing. Unfortunately, the property supplies have not yet been able to cover the demands. This has created the backlog. “The backlog reflects that property sector remains attractive,” said Head of Research of MNC Securities Edwin Sebayang.

The backlog in housing always occurs. According to the data of National Statistic Agency (Bappenas), the demands for housing reach 800,000 units per year, while the supplies only 400,000 units. This gap is continuously accumulated in the subsequent year. Therefore, the backlog would just have been zero in 2029.

Analyst at KDB Mirae Asset Sekuritas Indonesia Franky Rivan said there are at least two scenarios of the property business prospect in 2017. First, the government seriousness to encourage property sector, which has been ‘half asleep’ in the recent three years. Indeed, this factor has become positive sentiment for the sector.

The second scenario is related to the positive sentiment for property, namely the potential increase in BI (the Central Bank) 7-day repo rate. Franky estimates that BI is likely to increase the 7-day repo rate by 100 bps in 2017.

Aside of reducing purchasing power, the increase in BI 7-day repo rate will suppress the demands for properties due to the increase in mortgage rate. “At the end, this will suppress the aggressiveness of property developers,” he wrote in his research.

(Muhammad Farid/Translator)