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)