SGD New Issue Review : PT CIPUTRA PROPERTY 3Y
PT CIPUTRA PROPERTY SGD 3Y
– New PT Ciputra Property SGD 3Y announced
– Strong IOI received post roadshow and deal is anchored
– Initial Price Guidance: 6% area
– PB selling commission: 50cents
– Timing: This week’s business, as early as today
Lippo Mall 4.48 2017 – 100.25, 4.38%
Guocoland 3.6 2017 – 100.50, 3.39%
Centurion 5.25 2016 – 102.90, 3.44%
– PT Ciputra Property Tbk (Ciputra) is 58% owned by PT Ciputra Development and there is a COC put at 101%.
– Founder, Dr. (HC) Ir. Ciputra, is a pioneer in the Indonesian property market with the Ciputra name being a well-known brand name in the Indonesian market.
– Ciputra is listed on Indonesian Stock Exchange and has a market Capitalisation of Rp 4,350.9 billion as of 30 September 2014.
– Recurring income accounted for 46% of Ciputra’s revenue in 9M2014 and 37% in FY2013.
– Almost all of the group’s landbank is located in the high-value prime locations in Jakarta and Bali. Key projects include Ciputra World 1,2, 3 Jakarta and Ciputra Hotel and Mall Jakarta.
– Ciputra has established business relationships and long term contracts with strong tenants such as DBS, Lotte and L’Oréal
– Ciputra has strong partnerships with leading operators, property managers and contractors in the international property market, including The Ascott Limited, Frasers Hospitality, FRHI Hotels and Resorts, Intercontinental Hotels Group, Jones Lang LaSalle, the Lotte Group, Ritz Carlton Reserve, the Starwood Hotels and Resorts, and Swiss-Belhotel International.
Not an expert of Indonesian tycoons but this one is the 21st on the 2014 Forbes list of Indonesia’s richest. http://www.forbes.com/profile/ciputra/
Real estate is the way to go in India and Indonesia just like how Singapore became wealthy when Raffles Place started going at 2k psf.
Less leveraged than Guoco, I would say this is not a bad deal especially when the recent Guoco 3.6% 08/2017 is going at 100.50/100.75 (3.39/3.28%) today.
3 year interest rate is at 1.295% today which gives a comfortable premium of 4.7%.
Still this is in the high yield category if we have to be stern about it and a potential comparable would be the USD Modernland Overseas (B2/B) 11% 10/2016 which is going at about 100.875/101.875 (10.41/9.76%).
But Lippo Karawaci (Ba3/BB-) is perhaps a better candidate, the USD 6.125% 11/2020 (callable in 11/2018) is going at 5.43%.
I am not sure why Centurion was picked as a comparable because that is worker dorms in Singapore compared to office buildings and malls in posh districts of Jakarta.
Because I am lazy, I managed to get a good concluding write up by a friend who will, hopefully, be writing for us soon.
There are no good Indonesian real estate SGD comparables.
I have looked at Lippo Karawaci, Pakuwon Jati and Alam Sutera as the closest comps in the USD space.
Taking a cursory look at Ciputra’s financials, it has been profitable over the past few years, and leverage ratios look decent (Debt/EBITDA:1.59, EBITDA/Interest Expense:14.6).
Leaving out Alam which is a much smaller company, Lippo, Pakuwon and Ciputra are all roughly the same size in terms of market cap. Hence, I think applying a z-spread of 500 to Ciputra would be reasonable given it is a 3-year compared to 4.5 years for the other 2 issuers.
With current 3yr SGD Swap rate of 1.27%, I arrive at 6.27% on new Ciputra 3 year. Given that SGD bonds tend to trade tighter (in spread terms) than the USD issues of the same issuer, I have tightened in the fair value by another 50bps (CENCHI 17 (SGD) is tighter than CENCHI 18(USD) by 95bps).
That gives a FV of about 5.75% on new Ciputra.
Books approaching 150 mio.
Final coupon 5.625% SGD 65 mio. Books 350 mio.
Dear TH, when u say crap, something crossed my mind.
crap because of the company, or
crap because of the final coupon, or
crap because of the oversubscription?
Just wanna compare if our answers are the same.
Crap cos no meat but I am obviously wrong.
100.95 bid this morning and Indonesia rocks !!
>100 is probably because of the strong interests. Very often, many bonds manage to trade above 100 if the final coupon is more than 30bp lower than initial guidance. (not guaranteed)
Yes, and Indonesia is the theme now. Bond yields of the better (Note: better) Indonesian companies will drop in the next 2-3 weeks.
Book approaching SGD 350MM, 30 accounts
By Investor Type:
And it opens with a 100.95 bid this morning !!
Ciputra 5.625% 02/2018 high 101.20. Current 101.10/101.40.
I don’t understand why Ciputra bond was so well received TH – for all the reasons you state and in addition yesterday my RM – and others I understand – was much keener on peddling Tencent’s US$ 5 and 10 year notes. I understand that Singsporeans wre amongst the bigger buyers despite the lowish coupons. I also believe that Ciputra’s offering attracted a lot of interest from wealthy Chinese Indonesians………. But still???!!!
From a trader : 1. covenants look better than others. 2. Up market Indo developer with a good history.
But at 101 ? Beats me.
they probably got an indo tycoon to buy 80% of the issue. which was also probably why the issue size was alot smaller than what they intended for.
TH : if indo is so hot, what is happening to trikomsel or geo energy?
wahhh so many comments …
Ciputra is doing well at 101.20/101.80
Trikomsel, I like but unfortunately is owned by a VC group who usually over leverage.
Geo Energy, not my favourite, got hammered by commodity crunch and is a new company etc.
Geo Energy trading halted pending announcement.
GEO ENERGY ENTERS PACT WITH CHINESE CO. FOR POWER STATIONS