Q1 Earnings Indonesia's Property & Industrial Estate Firms Remain Weak
The performance of those Indonesian property companies and industrial estate managers that are listed on the Indonesia Stock Exchange is not very encouraging so far this year. When we take a look at the corporate earnings of 17 listed property firm and industrial estate managers, then we see a combined 37.6 percent year-on-year (y/y) fall in net profit in the first quarter of 2017 (from their net profit in the same quarter one year ago). Meanwhile, their combined revenue fell 0.6 percent (y/y) in Q1-2017.
Of these 17 listed companies only nine posted growing sales in the first quarter of 2017, while only six managed to record growing net profit. It is a strong indication that the property sector of Indonesia is yet to show a significant recovery. This is confirmed by weaker-than-estimated marketing sales. In the first quarter of the year, only 17 percent of total estimated (full-year) marketing sales were realized.
Read more: Analysis of the Property Sector of Indonesia
The only company that posted significantly improving corporate earnings was Modernland Realty, with a 54.5 percent (y/y) jump in revenue and a staggering 262.9 percent (y/y) increase in net profit in Q1-2017.
According to NH Korindo Sekuritas the bleak corporate earnings of Indonesian property developers so far this year is the result of consumers preferring to buy existing houses (in contrast to the new houses that are delivered by the developers) as prices of the older houses are more competitive.
This trend is not expected to change before the end of the year and therefore we may not see an improvement in earnings of Indonesian property developers in 2017. While Indonesians' consumer purchasing power has been improving in line with the country's accelerated macroeconomic growth, most consumers are not ready to purchase (costly) property yet. Rather, they focus on other basic needs such as food.
Selection of Listed Property & Industrial Estate Companies:
| Company |
Q1-2017 Sales Growth (Y/Y) |
Q1-2017 Net Profit Growth (Y/Y) |
| Metropolitan Land | -5.69% | 0.00% |
| Lippo Cikarang | -18.13% | -17.04% |
| Modernland Realty | +54.34% | +262.90% |
| Alam Sutera Realty | -16.73% | -66.73% |
| Summarecon Agung | +17.50% | +157.14% |
| Puradelta Lestari | -62.24% | -54.78% |
| Pakuwon Jati | +10.60% | -35.91% |
| Bekasi Fajar Industrial Estate | +0.54% | -33.06% |
| Cowell Development | -4.44% | -95.24% |
| Megapolitan Developments | +14.29% | +6.67% |
| Jaya Real Property | +2.23% | +5.35% |
| Kawasan Industri Jababeka | +21.47% | -59.26% |
| MNC Land | +5.98% | -99.76% |
| Metropolitan Kentjana | -6.35% | +11.03% |
| PP Properti | +6.32% | +1.11% |
| Lippo Karawaci | -2.50% | -54.02% |
| Intiland Development | -32.26% | -80.20% |
| Total | -0.63% |
-37.63% |
Various sources