STARTED TO GENERATE

Indonesia 2018 | TRANSPORT & INFRASTRUCTURE | COLUMN

TBY talks to Bonny Budi Satiawan, CEO, Mega Manunggal Property, on the sector.

Bonny Budi Satiawan

After a year of aggressive expansion, what drove your returns?

In 2017, we had a significant project come online that increased revenues considerably. That project was a 30,000-sqm warehouse for Lazada, an Indonesian e-commerce company. The margin for each individual built-to-suit warehouse is high because our cost is only insurance, property, building taxes, and technicians' salaries; hence, our profits increased. Another key move that allowed us to increase profitability was efficiency in payroll.

As a capital-intensive business, do you prefer banks or capital markets?

We have not taken on much bank debt. As a result, we have kept our debt low and opted for the rights issue. There is something interesting that we do when we need to borrow: we build a warehouse using equity money, wait until we have started to generate cash flow, and then we borrow money using the assets as collateral. This lowers the rate.