Massive buy into Astra<\/p>\n
The identity of buyers of large shares of PT Astra
\nInternational, Indonesia's largest automobile company, came to
\nlight yesterday when tobacco tycoon Putera Sampoerna, as required
\nby stock exchange regulations, reported all his deals to the
\nCapital Market Supervisory Agency (Bapepam).<\/p>\n
Sampoerna's report to Bapepam on Monday about his 9.81 percent
\nacquisition of Astra through transactions between June and Sept.
\n24 failed to shed light on large trading in Astra shares from
\nSept. 25 to Sept. 27. Yesterday's disclosure about an additional
\npurchase of 2.85 percent of Astra seems to answer the question.<\/p>\n
Separate from the 9.81 percent acquisition by Sampoerna and
\nhis son, the latest purchase of 2.85 percent was by Sampoerna
\nInvestment Corp., the Virgin Islands-based subsidiary of the
\npublicly listed PT Hanjaya Mandala Sampoerna cigarette company,
\nwhich is also controlled by the Sampoerna family. With an
\nownership of 12.66 percent of the US$7.46 billion company, the
\ndeals worth an estimated $242 million automatically make the
\nSampoerna family the largest single shareholder of Astra.<\/p>\n
Details as to which of the Astra shareholders sold their
\nshares to the Sampoernas may not come to light until the
\nSampoernas register their shares with the Astra securities
\nadministration bureau, or the sellers voluntarily disclose their
\nsales.<\/p>\n
However, judging from Sampoerna's letter to Bapepam, the
\nacquisition was made for investment purposes which, we think, are
\nquite rational even though the new investment looks too far away
\nfrom his core business-- cigarette manufacturing. Assuming that
\nhis deals were really motivated by investment, that move is a
\nsmart one in view of the promising outlook of Astra and the
\nassessment by most analysts that Astra's share price has largely
\nundervalued for some time.<\/p>\n
Most securities analysts are indeed bullish about the long-
\nterm prospects of Astra in view of its well-planned and executed
\nbusiness diversification programs. Though the automotive division
\nstill contributes more than 66 percent of Astra's income, the
\nproportion has declined sharply from the 80 percent of a few
\nyears ago.<\/p>\n
Instead, the contributions of its heavy equipment,
\nagribusiness and financial service divisions have been increasing
\nsteadily. Its latest diversification into the high-growth
\ntelecommunications sector has also been hailed as quite strategic
\nin coping with any negative impact from the keener competition
\nposed by the Timor car, which is being sold at a far lower price
\nthan Astra vehicles due to duty and tax exemptions. It is
\nprecisely its rational business diversification which has made
\nmost securities analysts optimistic about the long-term outlook
\nof Astra despite the fiercer competition in the car market.<\/p>\n
On top of its good business prospects, Astra also boasts
\nperhaps the best management team in the country. The team has
\nsucceeded in leading Astra to win numerous awards both from
\ninternational institutions and the Indonesian government. Its
\nhuman resources development is seen as one of the most excellent
\nin the country's corporate world and the quality of its
\ntransparency is praised greatly by investors and analysts. No
\nwonder the new shareholders, who entered Astra after the majority
\nowner Soeryadjaya family had to sell their stake in 1992, have
\ndecided to maintain the old management team which was built up by
\nWilliam Soeriadjaya, Astra's founder.<\/p>\n
Apart from the rosy outlook, doubts still linger over the
\nfuture ownership of Astra. Amid the large acquisition by the
\nSampoerna family, there have been strong rumors that a
\npolitically powerful business group is also moving in to acquire
\na large stake in Astra. Several informed sources have confirmed
\nthe rumors, saying that group will take over the 10.61 percent
\nequity currently held by state-owned banks and their pension
\nfunds. Prajogo Pangestu. currently the second largest shareholder
\nwith 10.68 percent, is also rumored to be pressured by financial
\nneeds to divest of his equity in Astra.<\/p>\n
We are not saying the entry of a politically well-connected
\ninvestor would be bad for Astra, but the fact is that Astra's
\nbenign distance from any political connections since its founding
\nin 1957 has been praised by investors as quite positive for its
\nlong-term prospects.<\/p>",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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