P H
Jan 19, 2017 20:31:18

MNC to increase its reliance on the property business to 50 percent of revenue by 2020
 
Tanoesoedibjo to attend Donald Trump’s inauguration tomorrow
MNC Group seeks to reduce its reliance on the media business to 40 percent of revenue in the next five years
MNC Group to invest US$2 billion on Trump’s related projects in Indonesia
 
MNC Group owner Hary Tanoesoedibijo will attend Donald Trump’s inauguration in Washington DC tomorrow. Hary had also planned to meet with Donald Trump’s sons Donald Trump Junior and Eric Trump to hold talks about the $2 billion projects in Indonesia. Hary is one of few Indonesians invited to Donald Trump’s inauguration.
 
Tanoesoedibjo’s MNC Land ($KPIG) plans to spend US$2 billion, to develop a lake resort and golf course in Lido, West Java as well as a resort in Tanah Lot, Bali. Both resorts will be managed by the company owned by U.S. President-elect Donald Trump. Trump Hotel Collection will manage about 700 hectares of the Lido site to operate a resort, a golf course by golfer Ernie Els, and a country club. Trump Hotel will also manage 100-hectare resort in Bali set across the water from Tanah Lot Temple, including its existing hotel and country club, and talks are being held with golfing champion Phil Mickelson to redesign the course, he said. Villas in the property will be renamed Trump Residences.  
 
The real estate developments are the main focus of Tanoesoedibjo, to diversify from his media business that now make up 80 percent of sales. The group aims to reduce its reliance on the media business to 40 percent of revenue in the next five years.
 
While some shares of MNC group’s listed companies advanced after Trump’s surprise win, they have since pared gains (see table 1). The only MNC group shares that retain its gain was Bank MNC International ($BABP) which increased 22% since November 8th, 2016. Shares of MNC Land, now remain unchanged to it’s pre-election level at ~Rp1,400, which we believe it’s a big opportunity for investment considering property will become the key revenue growth engine for the growth over the next five-years. The company will spend US$400 million for the first phase of the development (2016-18) in 2 Trump’s related projects in Indonesia, with our expectation is the company should get US$2 billion (Rp30 trillion) pre-sales over 2017-20F. This would bring property segment to contribute 50% of MNC Group’s revenue in 2020F.

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