JAKARTA. Group Ciputra will merge its subsidiaries PT Ciputra Surya Tbk (CTRS) and PT Ciputra Property Tbk (CTRP) under the entitiy of PT Ciputra Development Tbk (CTRA).

To date, the financial reports of CTRS and CTRP have included under CTRA consolidation. CTRA controls 62.66% and 56.3% of CTRS and CTRP shares.

The plan for merger, which was released on Monday (24/10), stated that the merger is expected to complete by 30 December 2016, with the merger ratio of 2.13 times and 0.54 times for CTRS and CTRP, respectively. Under the scheme, every CTRS shareholder will obtain 2.13 CTRA shares for a share of CTRS, which is collected before the effective date of the merger. Meanwhile, every CTRP shareholder will obtain 0.54 CTRA shares for a share of CTRP.

Ciputra Group has three scenarios for the merger that will be selected during extraordinary general meeting of shareholders on 2 December 2016. First, the shares of CTRP and CTRS will be converted to the shares of CTRA. This scenario is expected to increase the attribution of CTRA equities to the owner of its parent entity by 37.75% to IDR3.2 trillion.

Second, Ciputra Group will merge CTRS with CTRA.It is expected that CTRA may increase its equities by 14.2% to IDR1.2 trillion through the option. The third option is the merger between CTRP and CTRA. This scenario is expected to increase CTRA equities by 23.6% to IDR2 trillion.

The merger may also change the earing per share (EPS) of CTRA. Under the first and second scenarios, the EPS of CTRA may increase by 6.25% or IDR1, while the EPS may depreciate by 6.25% under the third scenario.

Director and Corporate Secretary of CTRA Tulus Santoso said that the shares trade of CTRS and CTRP within the last 12 months recorded low liquidity, with the average of daily trade value ranging at IDR3 billion – IDR6.4 billion. “The merger is an instrument for CTRS and CTRP shareholders to replace their shares with CTRA’s shares, which are more liquid”, he said.

The fundamentals remain unchanged

As an information, CTRA booked IDR24.1 billion of average daily trade value during the same period. After the merger, CTRA will have larger market capitalization so that the issuer may have bigger chance to list on the index of MSCI Indonesia.

Analyst at KDB Daewoo Securities Franky Riyandi Rivan said that fundamental performance of CTRA will remain unchanged, because the financial reports of CTRS and CTRP have been consolidated under CTRA. ”We expect that the shareholders may select the first scenario”, he said.

According to John, the ratio of the stock swap is quite profitable for investors, because the CTRP and CTRS shareholders will obtain CTRA shares, which are more liquid. “This will benefit the shareholders”, he added. Therefore, the shareholders are suggested to holf the shares until the effective date of the merger.

Franky mentioned that the merger will lead CTRA to have bigger chance to list on MSCI Index. “Foreign investors will expand to CTRA shares so that the liquidity may sharply increase”, he said.

Analyst at Recapital Securities Kiswoyo Adi Joe added that the stock swap ratio is reasonable. Therefore, there is plenty time for investors to buy shares of the property issuers.

The plan for merger has increased the prices of CTRS and CTRP shares. On Monday (24/10), the price of CTRS shares increased by 5.02% to IDR3,140 per a share, while CTRP booked a 12.86% increase in the shares to IDR790 per a share. However, the price of CTRA shares remain at the position of IDR1,560 per a share.

(Muhammad Farid/Translator)

Editor: Barratut Taqiyyah Rafie