It is reported in newspaper last Friday that CTRA will increase its stake in CTRS by another 22%. We have spoken with management regarding this transaction and the key point is that the 22% includes the 7.9% stakes bought earlier from Castleridge Enterprise. Purchase price is Rp825/share, more than 20% of the current share price. The whole 22% will be done by year end.
CLSA sales desk in Jakarta struggles to understand why CTRA uses their cash to increase stakes in CTRS. The official explanation from CTRA is that market is not valuing CTRS properly hence the family is reluctant to put in new projects under CTRS. CTRA management has also said that there is no direct family ownership in CTRS. Whatever it is, this deal will provide support for CTRS share price, at least temporarily.
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