Unlike other property stocks, Cowell Development (COWL) gained almost 100% since September 2013 to close at Rp575 on Friday (July 11). At this price, Cowell currently has market capitalization of Rp2.8 trillion or about 2.4 times equity as at March 31, 2014. Has the stock been overcooked?
Well, the company’s performance in the first quarter of 2014 was not convincing at all. Sales revenue, like other property companies, declined to Rp64.7 billion, while earning per share (EPS) dropped significantly by 31% to Rp1.59. If annualized, Rp6.36, the current price of COWL represents PE multiple 90. Compared to peers, COWL might be considered overcooked.
Others, including controlling shareholder, won’t agree with such view. They would point to the company’s prospect as it is working on some projects namely The Oasis, Lexington Residence, and refurbishment of The Atrium Mall and Cowell Tower acquired from PT Plaza Abadi Lestari two years ago. COWL plans to spend Rp200 billion to Rp400 billion for The Oasis (Cikarang, West Java) and Lexington (South Jakarta). It has secured Rp205 billion from state bank BTN for The Oasis, and is reportedly working on another bank loan facility with Bank DKI.
Other projects being prepared by COWL include La Verde (Serpong, Banten province) and Borneo Paradiso (Balikpapan, East Kalimantan province). La Verde sits over 12 hectares of land, while Borneo Paradiso is a residential complex over 126 hectares.
COWL’s flagship project at the moment is, of course, The Oasis, which sits over 13.4 hectares of land in Cikarang, West Java province. In this area, COWL plans to build office tower, condotel, apartments, mall & shopping center, international hospital, private club house, high end apartment, and hotel.
Lexington Resicence, meanwhile, sits over 1.1 hectares of land nearby Pondok Indah compex, South Jakarta. In this area, COWL builds two apartment towers.
On June 30, 2014, COWL acquired 84.99% shares of PT Nusantara Prospekindo Sukses (NPS) for Rp503 billion from Smarthome Properties Limited (Rp592 billion is 100% value of NPS). COWL, which already owned 15% shares before the acquisition, said the acquisition is part of the company’s plan to develop superblock in Cikarang, West Java.
NPS had total assets of around Rp160 billion as at December 31, 2013. Its main assets are three parcels of land in CIkarang of 13.5 hectares. According to NPS’ valuation report, COWL will only use 9 hectares for apartment project, while the balance (4.5 hectares) will be sold at Rp6 million per m2. In theory, COWL would book gain of around Rp1.6 million/m2 from the acquisition. Still, for some people, the land price paid by COWL is considered expensive. Others, however, believe the price paid by COWL is fair given the fact that land price for residential area in Lippo Cikarang is now around Rp6-6.5 million/m2.
Key persons at Smarthome Properties, a company registered in Seychelles, are Stella Pe Peck Luan and Andy Pe Yong Woon. But, Nusantara Prospekindo Sukses (NPS) CEO Edhi Sutanto is also key person at COWL. Indra Leonard is listed as chairman of NPS, while I Ketut Suparta is commissioner.
Whether acquisition of Atrium and NPS justify the current valuation of COWL, time will tell. Some believe, however, property stocks would recover once the new national leadership is confirmed.
DISCLAIMER: NO POSITION IN STOCKS MENTIONED IN THIS ARTICLE
