The leading property developer, PT Intiland Development Tbk showed an improvement in business performance for the first three quarters of 2016. The operating revenue indicator grew despite less favorable property market.
The Company’s financial statement for the third quarter of 2016, as of September 3, 2016, booked operating income of Rp1.7 trillion. This is an increase of 5.3 percent from the operating income in the same period last year, which was recorded at Rp1.6 trillion.
Executive director of Capital and Investment, Archied Noto Pradono said the improvement in the operating income followed the completion of several new projects. They are the high rise residential projects of 1Park Avenue and Regatta, as well as the landed residential projects of Serenia Hills and Graha Natura.
“The increase notably comes from revenue recognition of several projects in the landed residential and mixed-use & high rise sectors, like Serenia Hills and Regatta,” Archied further said.
From the standpoint of profitability, Intiland booked gross profit of Rp709.3 billion—an increase of 6.7 percent from the same period in 2015. And the company’s operating profit is recorded at Rp273.1 billion, showing an increase of 6.4 percent.
Intiland reported net income of Rp205.3 billion, a slight decrease from the same period last year at Rp214.9 billion. Increasing total operating expenses and other expenses were the main factors for the decrease of the net profit.
Based on the development segmentation, the mixed-use & high-rise projects remain the major contributors, with Rp916 billion or 55.2 percent of the total income. The next major contributor is residential areas with Rp484.3 billion or 29.2 percent.
Archied said that the property investment segment, namely lease of office space, retail space, sports club and golf course, and warehouse contributed Rp250.3 billion or 15 percent to the income. The industrial estate segment recorded income from land sales of Rp7.8 billion.
Based on the types, development income contributed Rp1.41 trillion or 85 persent of the total income. The rest or Rp250.3 billion came from recurring income.
Archied explained that recurring income jumped 53.6 persent compared to that in the same period last year which was recorded at Rp163 billion. The operation of the mixed-use office area, South Quarter, and income from industrial estates contributed significantly to the recurring income.
Marketing Sales Performance
The first nine months of the year has seen the Company gained Rp1.4 trillion from marketing sales. This is the same as 55 percent of the target set at the beginning of the year. Projects which contributed the highest to sales are the two projects launched this year—Graha Natura Phase II and The Rosebay, both located in Surabaya.
Mixed-use & high-rise development segment was the biggest contributor with Rp571 billion or 40.6 percent of the total sales. Next was the residential area segment with Rp530.7 billion or 37.7 percent. The industrial estate segment recorded sales worth Rp81.3 billion or 5.8 percent, and the property investment segment contributed Rp223.6 billion or 15.9 percent.
“If we look at the type, income from sales is still the biggest contributor, which reached Rp1.18 trillion or 84.1 persent. The rest is from recurring income, such as lease of office space and sports facilities, which reached Rp223.6 billion or 15.9 percent,” Archied explained.
He admitted that throughout 2016, property sector is facing an uphill battle. The weakening property market is happening throughout the year and this has a direct impact on the sales performance.
Nevertheless, he said that Intiland was optimistic the macroeconomic condition would be more bullish next year. The issuance of Government Regulation (PP) No. 103 Year 2015 on Home Ownership by Expatriates, and Regulation of Minister of Agrarian and Spatial Planning/National Land Agency No. 13 Year 2016 is deemed to bring positive impact to the property sector.
This will further be strengthened by the government policies which are said to be pro-market, including tax amnesty program, reduction of central bank (BI) interest rates, the loosening of the policy for loan to value (LTV)—all of which are expected to act as catalyst to restore and improve the national property sector.***