Analysts expect JSX share prices to remain strong
Analysts expect JSX share prices to remain strong
JAKARTA (JP): Jakarta Stock Exchange (JSX) prices would remain
strong, especially with the performances of big capitalized
stocks and second line stocks, securities analysts have
predicted.
Vickers Ballas Tamara securities said JSX prices rose 7
percent in January, making the country's share market one of the
region's strongest.
The strong market was because of Indonesia's macroeconomic
fundamentals, it said.
Vickers Ballas Tamara said the rise was partly driven by
foreign institutional investors buying blue chips like Bank BNI,
Astra International, Gudang Garam, HM Sampoerna, Indosat, PT
Telkom and liquid stocks such as Davomas Abadi, Sekar Bumi, Kalbe
Farma, Ramayana, Jakarta International Hotel Development, Fiskar
Agung and PT Steady Safe.
The liquid stocks, which were grouped with second line stocks,
were said to be still undervalued and expected to perform
strongly.
Chocolate producer PT Davomas Abadi was one mid-sized stock
mentioned. Vickers ballas said Davomas Abadi's shares would
remain upbeat as world demand for chocolate products, especially
in Eastern Europe and Asia, remained strong.
Although the company's share of the world cocoa butter
production is only 2.3 percent, it is helped by cheap labor and
an abundant supply of cocoa beans meant Indonesia's cocoa
processing industry would remain competitive.
Furthermore in view of its 1997 projected price earnings ratio
(PER) of 7.9, as against the sector's average PER of 15.2 times,
the company's shares are still attractive, the analysts said.
The company's net profit in 1995 was Rp 23 billion and its
1996 projected net profit was Rp 40 billion and net earnings for
1997 are tipped to be Rp 58 billion.
Surabaya shrimp processor PT Sekar Bumi's shares were
projected to perform well as world demand for shrimp rose.
Vickers Ballas Tamara said Sekar had a strong growth record
and had secured an adequate shrimp supply from its partner which
was developing a 500-hectare shrimp pond in Sumbawa, West
Tenggara.
The firm posted a Rp 25.3 billion net profit in 1995, was
expected to earn Rp 26.6 billion in 1996 and Rp 32.3 billion in
1997.
As Indonesia improves its infrastructure, telecommunication
stocks will benefit.
PT Indosat's stock remained attractive and its earnings per
share growth was projected to be about 10 percent this year.
Indosat recorded a net profit of Rp 459 billion in 1995 and
expected to earn Rp 493 billion in 1996 and RP 543 billion in
1997.
PT Steady Safe is projected to be strong with the operation of
its new ferries and trains.
The company recorded a net profit of Rp 35.2 billion in 1995
and was projected to earn of Rp 43.7 billion in 1996 and Rp 90.3
billion in 1997.
The strong performance of the transport sector was attributed
to the government's deregulation measures which allowed private
operators in land, sea and air transportation.
But the overall situation in the Indonesian stockmarket was
supported by the relocation of funds from other countries into
Indonesia.
Other than that, the country's price earning ratios are still
low compared to other markets, analysts said.
Edwin Syuhrizal of Amsteel Securities said: "Indonesia's PER
is among the third lowest in Asia,".
He said that with such low PER, the country's share market had
room for the share prices to rise.
The strong performance of some second line stocks pushed the
Jakarta Stock Exchange (JSX) composite index to a record high.
The JSX recorded a market capitalization of Rp 237.55 trillion
(about US$101.05 billion) Thursday.
The new market capitalization of $101.05 billion saw the JSX
surpass the Thailand Stock Exchange's record market
capitalization of $96.69 billion and the Philippine Stock
Exchange's $80.67 billion.
The JSX composite index recorded its new high of 694.28, up
56.85 points from 637.43.
However, the highest index recorded in seven years was in
April 1990 when the country's largest automaker, PT Astra
International, listed on the stockmarket pushing up the index to
681.99. (09)