DGS poised to perform well despite crisis

DGS poised to perform well despite crisis

JAKARTA (JP): Indonesia's only locally listed fishing company,
PT Daya Guna Samudera (DGS), will perform well despite the
monetary crisis due to its strong export earnings, a joint
venture security company has reported.

ABN AMRO Hoare Govett Indonesia said yesterday that it was
optimistic DGS's net profit would increase to Rp 423 billion
(US$42.3 million) this year and about Rp 448 billion next year
from last year's estimated net profit of Rp 164 billion.

DGS's turnover was projected to reach Rp 1.81 trillion in 1998
and Rp 1.91 trillion next year, up from last year's estimated
turnover of Rp 655.63 billion, ABN AMRO said.

"The company is a safe haven in the country's economic
turmoil," the securities company said.

ABN AMRO pointed out that DGS, which exports 98 percent of its
products, had benefited from the rupiah's sharp depreciation
against the U.S. dollar.

The rupiah closed yesterday at around Rp 10,600 against the
American dollar, a drop of about 75 percent from its pre-crisis
rate of 2,450 last July.

ABN AMRO also forecast the company's rapid fleet expansion
would translate into impressive earning growth in the coming
years.

The securities company predicts DGS's gross margin will remain
healthy at above 55 percent from 1997 to 1999 while the operating
margins should be around 45 percent during the same period.

DGS, which reported a cash position of $70 million in December
1997, would benefit from the rise in the weighted-average price
of the company's products in overseas markets, ABN AMRO said.

The weighted-average price was around $1.22 per kilogram in
the first nine months of 1997, the securities company said.

"The average price rise to $1.60 per kilogram in November and
December," it said, adding that the average full-year price would
increase to $1.34 per kilogram.

The price rise was mainly attributed to escalating demand from
its main export market Hong Kong and China which was the hardest
hit by bird flu.

"The bird flu outbreak in Hong Kong has shifted consumption in
Hong Kong and China from poultry to seafood," the securities
company said.

The economic crisis which has hit Thailand should not affect
DGS's performance as the company does not sell directly to
Thailand consumers, ABN AMRO said.

The fishing company exports fish products through distributors
which in turn sell them again to several Thai processing
companies. These companies export the finished goods to the U.S.
and Europe, ABN AMRO said.

"Thailand's economic turbulence should not have a significant
impact on DGS's revenue because the revenue of both Thai
distributors and the processing companies are denominated in
American dollars,' the company said. (aly)