P

roperty developer PT Sentul City (BKSL) reported a net profit increase of more than six times in the first half (H1), thanks to a share acquisition.

The company, which builds and operates premium housing in Bogor, West Java, said on Friday that its acquisition of more shares in property firm PT Bukit Jonggol Asri (BJA) had helped the company book net profits worth Rp 886.41 billion (US$79.14 million) in the first half, surging more than 500 percent from the same period in 2012, according to a statement published on the Indonesia Stock Exchange (IDX).

Sentul City increased its stake in BJA, which runs the Sentul Nirwana complex in Jonggol, Bogor, to 65 percent from the previous 50 percent by acquiring 15 percent of additional shares, owned by listed developer PT Bakrieland
Development (ELTY), for Rp 300 billion in April.

Following the deal, Bakrieland now controls a 35 percent stake in BJA, while Sentul City'€™s total land mass in Sentul Nirawana has grown to 7,800 hectares from 6,000 hectares.

BJA claims to be the property firm in possession of the largest land mass in Indonesia, with a total area of 12,000 hectares.

Besides housing, Sentul Nirwana also comprises shopping facilities and a theme park.

Sentul City vice president director Andrian Budi Utama said that after the acquisition, a revaluation was conducted on its additional land in the complex.

'€œApparently, the land'€™s value is worth more using today'€™s market measurements,'€ he said during the telephone interview.

The margin between real and paid values, worth a total Rp 725.93 billion, was recorded in the firm'€™s '€œother income'€ section in its financial report.

The figure ultimately boosted Sentul City'€™s bottom line, even though its revenue only rose 27 percent to Rp 536.09 billion year-on-year, Andrian said.

Sentul City previously set its 2013 revenue and net profit growth targets at 30 percent, or Rp 809.52 billion and Rp 287.46 billion, respectively. '€œNow that our net profits have exceeded the target, we have not yet set a new target,'€ he added.

He said the company was optimistic that it would be able to meet the revenue target it set, supported by growing demand for residential properties.

Between January and June, the company saw its marketing sales from its own complex increase more than twice year-on-year to Rp 750 billion. By the end of August, marketing sales had exceeded Rp 1 trillion.

According to Andrian, demand remained high despite a recent increase in mortgage rates. Of all transactions recorded so far, only 30 percent was generated from mortgages, while the rest came from cash and cash installment loans. '€œBut we'€™re still keeping an eye out for any market changes,'€ he said.

The company is also expecting to attract potential buyers for its upcoming facilities, as it aims to start operations of its hospital project at the end of this month, in collaboration with state-owned oil and gas firm PT Pertamina.

It will also be launching a superblock project between October and November, and its second floating market in November. The superblock will comprise a hotel, apartments, shopping center and office complex, and is scheduled to be fully operational in early 2017.

As of June this year, Sentul City'€™s total assets amounted to Rp 10.26 trillion, with liabilities of Rp 3.1 trillion and equities at Rp 7.16 trillion. Its shares closed at Rp 183 on Friday, unchanged from the day before.

Echoing Andrian, Trust Securities research head Reza Priyambada said property developers such as Sentul City had a good chance to reap higher revenues this year, citing their hold over the medium- and upper-scale customer segment. '€œCustomers [in those segments] are relatively unaffected by the higher mortgage rates,'€ he said.