11 firms to float shares despite bearish market

11 firms to float shares despite bearish market

By Aloysius Unditu

JAKARTA (JP): At least 11 companies will launch initial public
offerings (IPO) within the next three months despite the bearish
condition of the market.

They are PT Humpuss Intermoda Transportasi of the Humpuss
Group, Surya Inti Permata, Impact Permata, Pakerin and Elnusa, a
subsidiary of state-owned company PT Pertamina.

Other companies which will also launch IPOs soon include PT
Ricky Putra Globalindo, Bank Global International, Ristia Bintang
Mahkota, Makindo, Aneka Tambang and Astra Agro Lestari, which are
set to make their capital debut later this year.

According to securities analysts, there has not been much
choice for those companies but to sell shares to the public in
order to get investment funds.

Loans, which carry interest rates of above 25 percent per
annum, were very expensive for them. "So they don't have much
choice but to sell their shares to the public, even though the
market is nonconducive," an analyst said.

The analysts likened the bearish condition in the stock market
to stormy waters.

Like sailors who struggle through stormy waters on rainy days,
these companies have to sell their shares, even at a discount, to
acquire much-needed investment.

The analysts said that raising funds from the public through
the capital market seemed to be the best solution nowadays
because finding bank loans in the tight liquidity market would be
difficult.

"It's difficult to obtain bank loans. Banks are more cautious
because of the growing number of loan defaults," Socgen Crosby's
head of research Goei Siauw Hong told The Jakarta Post recently.

But selling shares to the public would also be difficult for
companies right now due to the lack of public demand, he said.

"There has been no success story so far for companies which
have gone ahead with their IPO in this bearish market," Goei
said. He said the price of shares of several companies which had
launched their IPOs in the last few months had fallen below their
offered prices.

Two finance companies went public in September this year -- PT
Bank Universal, a subsidiary of Astra International, and
multifinance company PT Maharani Inti Finance.

The share price of Bank Universal, which floated its shares on
the Jakarta Stock Exchange (JSX), had dropped by more than 50
percent to Rp 400 Monday from Rp 700. The IPO price of Maharani
Inti Finance had also fallen by over 60 percent to Rp 275.

The analysts believed buying sentiment would remain low and
doubted if there would be a strong demand for new IPOs in the
next few months.

Stock prices on the JSX reached their highest level on July 8
when the main price index reached 740.08. But the market has
since continued to decline due to the continued drop in the value
of the rupiah and other regional currencies.

But Gunawan Yusuf, president of Makindo, was optimistic. He
said some investors would find opportunities in the bearish
conditions.

"The global and Indonesian stock markets are still bearish.
Some foreign institutional investors will seek value stocks in
the bearish market. It's the best time for them to buy," he said.

Makindo is one of 11 companies which have received the go-
ahead from the Capital Market Supervisory Agency (Bapepam) to tap
the local equity market.

Several other securities analysts said the fact that many
investors still preferred to buy quality stocks in secondary
markets rather than the primary market would become a problem for
newcomers.

An analyst with Rashid Hussain Securities said recently that
some quality stocks on the JSX, such as Daya Guna Samudera,
Tambang Timah and Indosat, indicated good performances despite
the fall of other shares.

He said these companies' stocks were better than others
because most of their revenue was generated in U.S. dollars.

The share price of Tambang Timah rose to Rp 4,050 Monday from
Rp 3,725 in late June and Indosat's share price increased to Rp
8,275 from Rp 7,175, while fish exporter Daya Guna Samudera's
share dropped to Rp 4,175 compared to Rp 4,350.

"Companies which generate their revenue in dollars continue to
make gains in the market," the analyst said.

Of the 11 companies to go public this year and next year, PT
Astra Agro Lestari and Aneka Tambang generate their revenue in
dollars.

PT Astra Agro Lestari plans to offer 125.8 million shares to
the public late this year and PT Aneka Tambang started its public
offering on Monday.

State-owned nickel and gold mining company PT Aneka Tambang
will sell 430.76 million shares and expects to raise about Rp
603.07 billion from its IPO.

The president of ABN AMRO Hoare Govett Indonesia, which became
the lead managing underwriter for PT Astra Agro Lestari,
expressed optimism that the IPO of Astra International's
subsidiary PT Astra Agro Lestari would be successful.

"Astra Agro Lestari's prospects are quite favorable as the
price of crude palm oil (CPO) in the global market has continued
to increase over the past few months," Agnes Safford said.

Edi Widjojo, a mining analyst from Mashil Jaya Securities,
predicted that the IPO of PT Aneka Tambang would be successful
because its stock price had continued to increase over the past
few months.

"Investors are interested in Aneka Tambang because similar
mining companies have performed well during this gloomy market,"
he said.

He said the share price of PT Inco continued to increase
closing at Rp 6,200 Monday against a year-low of Rp 2,300 in late
August and a year-high of Rp 8,800 in late July.

Tambang Timah, also listed in London, made strong gains,
closing at Rp 4,050 yesterday against a year-low of Rp 3,000 in
late July.

"I think this factor can boost investors' sentiment for Aneka
Tambang," he said.