Property developer PT Binakarya Jaya Abadi made a strong debut on the Indonesia Stock Exchange (IDX) on Tuesday as its shares achieved a 50 percent surge over their initial public offering (IPO) price despite an economic slowdown.

Binakarya'€™s shares, listed under the code BIKA, traded at Rp 1,400 (10 US cents) on its opening morning trade, 40 percent higher than its IPO price of Rp 1,000. The price then rose to Rp 1,500, a 50 percent surge above its IPO price, which is the maximum gain the company can book under the existing bourse regulations, before it decreased to Rp 1,010 on the close of the trading.

'€œThe investor response during the IPO was good. Around 90 percent of subscribers are institutions, with around 80 percent of them foreign institutions,'€ said Shiantagara, corporate finance director of RHB OSK Securities Indonesia, which underwrote the IPO.

Binakarya, the 11th firm to list its shares on the bourse this year, saw its IPO twice oversubscribed during the offering from July 2 to 8.

The company pocketed Rp 150 billion from its initial shares offering, of which 40 percent will be used for capital expenditure (capex), 45.02 percent for refinancing its debt with state-owned lender Bank Tabungan Negara (BTN) and 14.98 percent for working capital.

'€œAround 40 percent of the IPO funds will be used to acquire land and develop our projects in Kalimantan and Yogyakarta,'€ he said.

Meanwhile, the company also would also manage to pay off an estimated Rp 62 billion debt to BTN even though it is only due in December.

Binakarya issued 150 million shares, or 25.34 percent from its enlarged capital, less than its initial target of selling 238,15 million new shares, to anticipate the slowing economy.

'€œWe adjusted to the condition of the market. The economy in general has not improved. Even though the government has tried to improve the property sector through some policies, the effect has not yet been felt,'€ Binakarya corporate secretary Raymond Hartono told The Jakarta Post after the launch.

Recently, the government has attempted to boost the attractiveness of the local property sector by relaxing the loan-to-value (LTV) ratio and allowing foreigners to own properties.

Last year, the company reaped Rp 957.41 billion in revenues, which are mainly driven by property sales.

The company aimed to achieve Rp 1.3 trillion in revenues this year and an increase in profits of between 20 and 25 percent over last year'€™s Rp 170 billion.

Binakarya president director Budianto Halim said that the company also planned to expand its business to Samarinda and Balikpapan, East Kalimantan.

'€œThe project in Samarinda will be real estate development with an investment of Rp 100 billion in 240 hectares of land and the project in Balikpapan will be the development of apartments and offices,'€ he said.

Currently, the company focuses on developing six apartment projects, three residential and 11 commercial areas, totaling 689,625 square meters of land.

Binakarya develops, operates and sells apartments, hotels and landed houses, as well as commercial complexes in Greater Jakarta, West Java, and Bali, including Bekasi Town Square.

Binakarya, which has 19 subsidiaries, lowered its marketing sales target to between Rp 500 billion and Rp 600 billion this year compared to last year'€™s total marketing sales of around Rp 900 billion in the wake of the slowing economy, Raymond said.

The property sector has seen sluggish demand in the past year because of the lower-than-expected 4.7 percent economic growth in the first quarter of 2015. (fsu)

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