We visited the Pantai Indah Kapuk 2 (PIK 2) Waterfront City recently, the location of the maiden joint venture project by Matrix Concepts Holdings (MCH) in Jakarta, with target completion by end-2023. To recap, MCH first mooted the project back in 2018 when it invested to develop an initial 3.6-hectare plot of land in PIK 2, which is developed by PT Fin Centerindo Satu, a joint-venture company between MCH (30% stake) and PT Bangun Kosambi Sukses(40% stake); controlled by the Agung Sedayu Group and the Salim Group, and PT Fin Centerindo Dua (30% stake), who are well-established conglomerates in Indonesia. We came away impressed with the masterplan of PIK2, which is touted as the first metropolis by the sea in Indonesia. The master developer, we understand, has already invested in completing the infrastructure of the 5000-ha development, which is well connected by highways and public transport infrastructure, demonstrating its confidence in PIK2, continuing on from the success of PIK1. All told, we maintain our Outperform call, and a book-value based target price (TP) of RM1.80.

• Menara Syariah Twin Towers’ details. The said land is located at the area earmarked as an Islamic Financial District which forms part of the 23.5-hectare International Financial District. Menara Syariah Twin Towers, which is sitting on 1.4-hectares of the 3.6-hectare plot has gross development value (GDV) of USD250m. It is a commercial and retail building with two office towers, each 29- storeys high and is designed to promote a unique identity with modern, conducive and future-ready workspace as a world-class business hub. The two towers have more than a million square feet of gross floor area providing workspaces for 5,000 office workers with coastal views of Jakarta Bay complete with retail strip, landscaped observation deck, infinity pool, prayer halls and 23 floors of office space. 
  Menara Syariah Twin Towers is the first phase of MCH’s participation in developing the Islamic Financial District in PIK2. Upon completion, MCH is looking to either dispose one block or keep both for recurring income. We understand that MCH had initially expected at least 20% margins if it disposes the two towers outright. Now, we believe the value could be higher, given the land value alone is already transacted at 3x its original cost (MCH’s initial investment of USD31.75m for a 30% stake).

Source: PublicInvest Research - 15 Nov 2023