PT Vastland Indonesia Tbk to List on Indonesia Stock Exchange in February 2023

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The real estate and property sector is set to welcome a new public company. PT Vastland Indonesia Tbk (VAST) will list on the Indonesia Stock Exchange on February 7, 2023. 

Fundamentally, the stock's offered price is considered expensive, both in terms of price-to-earnings ratio (PER) and price-to-book value (PBV) ratio.

The prospective issuer is offering shares at a range of Rp100 to Rp109 per share. Using VAST's PER calculation, for example, if the listing price is Rp100 and the earnings per share (EPS) is 5.96, then the PER is 16. 

This is considered quite expensive, as the average PER for the real estate sector is relatively low at around 10. However, VAST is still a growing company, so the PER is not the only reason to evaluate the fairness of the price.

The same is true for the book value, VAST's book value is Rp60 (fair value by book value) while the IPO price offered is Rp100-109, meaning the shares are offered at a premium. The same is also evident from the PBV, for example, with a listing price of Rp100, the PBV is 1.7 times. This is considered a relatively expensive price as the average PBV for the real estate property sector is still below 1.

Fundamentally, VAST's EPS has grown as seen in the financial statements from 2019 to Q3-2022, especially in 2021 with a high EPS of 57.04. Also, the GPM (Gross Profit Margin) is 75%, which is a relatively high number, indicating a significant difference or gap between revenue and cost of goods sold, indicating efficiency in generating profits.

In terms of debt-to-equity ratio (DER), VAST's DER is still good at 0.41, indicating that the company's capital is still able to pay off its debt. Additionally, VAST also stated that they will distribute cash dividends of 30% of the 2022 profits.

In terms of cash flow, it is also increasing, supported by customer receipts, indicating an increase in revenue from customers.

As another reference, a competitor for VAST is PT Mega Manunggal Property Tbk (MMLP) which has the same business. If we compare fundamentals between VAST and MMLP, it is quite different, for example, the PER is quite different, MMLP is at 34 while VAST is at 16, but if we look at PBV, it is still cheaper for MMLP at 0.80, still below 1. And MMLP has Yamaha Indonesia Motor as a client.

As another comparison, in terms of assets, MMLP is superior with assets of Rp 7 trillion, which is far different from VAST which only has assets of Rp 276 billion. However, MMLP also experienced a decline in performance.

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