Dynaplast, Makindo plan to buy back stocks

JAKARTA (JP): Publicly listed plastics components manufacturer Dynaplast and securities company Makindo have said they plan to buy back up to 10 percent of their shares to prop up their ailing stock prices.

Dynaplast said on Friday that it planned to buy up to 29.7 million of its shares, or approximately 10 percent of the total shares listed on the Jakarta and Surabaya stock exchanges.

The company said the current price of its shares did not reflect its strong fundamentals and was far below the true value.

"Through the buy back, Dynaplast's earning per share and the book value of shares will increase," the company said in a statement.

Dynaplast said that its shares have been trading below their book value and far below their replacement cost, which is estimated to be Rp 2,000 per share. The company's shares gained Rp 25 to close at Rp 925.

Even in the face of the economic crisis, Dynaplast said it had continued to show strong prospects and turned in a positive financial performance, adding that in 1998, its operating profit increased by 57 percent and net profit increased by 41 percent to Rp 22.1 billion.

The company said that the buy back would begin after shareholders gave their approval to the plan in a meeting scheduled for June 22.

Dynaplast and Makindo will be the first publicly listed companies to carry out stock buy back programs. Such measures were previously banned to protect the investing public, however the ban was lifted last year to help prop up falling stock prices in the country.

Makindo also announced early this week that it would buy back up to 10 percent of its shares.

The securities company said shareholders had agreed to allocate the net income for 1998 to buying public shares, after first deducting Rp 2 billion for a reserve account.

"The founding shareholders have decided not to sell their stocks through the stock buy back plan," the company said in a statement issued after its annual shareholders meeting early this week.

Makindo, which is 43 percent owned by private investors, posted a net profit of Rp 118.8 billion in 1998, a 47.3 percent increase on 1997.

The company's shares lost Rp 50 to Rp 1,950 at the close of the trading. (hen)