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)