JSX expects 30 companies to go public next year
JSX expects 30 companies to go public next year
JAKARTA (JP): The Jakarta Stock Exchange (JSX) expects about
30 companies to list next year, including some state-owned firms,
despite a planned tightening of listing requirements.
JSX president Hasan Zein Mahmud said yesterday that four
state-owned enterprises which are expected to go public next year
are tollroad operator PT Jasa Marga, electricity company PT
Perusahaan Listrik Negara, steel manufacturer PT Krakatau Steel
and Bank Negara Indonesia.
This year saw 22 new listings on the JSX, raising a total of
Rp 5.5 trillion (US$2.38 billion), bringing the total number of
listed companies to 239.
"New listings will increase on the back of more foreign funds
which will return to Indonesia following the recent cut in the
U.S. Federal Reserve's interest rates," Hasan said.
He predicted that foreign investors would find most stocks on
the JSX quite attractive because, he said, they are currently
undervalued.
Hasan said the return and more active participation of foreign
funds is crucial since domestic investors have a tendency to
follow the lead of foreign investors.
Hasan projected that the net profits of the listed companies
will grow by an average of 75 percent next year, while their
earnings per share will rise by 57 percent.
For the first nine months of this year, the average net profit
rose by 34.5 percent, while earnings per share dropped by 4.4
percent.
Hasan said that, although the market growth might be higher,
investors must be careful to make comprehensive analyses of
companies' performance.
He said that growth in the banking, property and retail
sectors will be flat next year because most companies in those
sectors have over-expanded in the last two years.
He said that banks cannot maintain their credit expansion,
which reached 27 percent this year because of the government's
tighter monetary policies. The reserve requirement was increased
from 2 percent to 3 percent in February.
Excessive bank lending to the property sector is one of the
main reasons for the economic overheating of this year, Hasan
said.
However, he said that the residential segment of the property
business and tourist-related property developments are still
promising.
Hasan said that consumer goods companies will likely continue
to grow but the retail sector may not grow as much as this year,
due to tighter competition among major retailers.
He noted significant growth this year in the number of new
listings by infrastructure-related companies, including PT
Telkom, PT Citra Marga Nusaphala Persada and PT Bukaka Teknik
Utama.
He foresaw further robust growth in initial public offerings
by infrastructure-related companies next year.
Meanwhile, the chairman of the Indonesian Capital Market
Supervisory Agency (Bapepam), I. Putu Gede Ary Suta, said
yesterday that the JSX's estimate of new issues was realistic. At
the same time, he underlined the need for quality issues as a key
factor in creating market liquidity.
He said that, although fewer companies are listed on the
Manila Stock Exchange, its market capitalization of $80 billion
is higher than the JSX's $50 billion.
Putu said that Bapepam can only create a conducive situation
for quality listings; while securities companies, with their
marketing force, are in a better position to help launch quality
listings.
Furthermore, Putu said, fair business practices on the part of
securities companies could contribute to market growth.
"Even one instance of unfair practices will hurt the market
for a long time," he cautioned.
The JSX's chief commissioner, Marzuki Usman, suggested that
more pension funds and insurance companies should be encouraged
to be more active on the stock market.
"One way of attracting them to the stock exchange is the
development of mutual funds," Marzuki added.
Marzuki said that when open-ended mutual funds, allowed by the
new capital market law, are set up next year, the number of
domestic investors will increase.
Hasan said that, in line with the enforcement requirements of
the new capital market law, the JSX is now preparing new listing
rules which will become effective in March.
A director of the JSX, Stanyslaus Say, told The Jakarta Post
that one of the new requirements may be an increase in the
minimum paid-up capital of listed companies from Rp 2 billion now
to Rp 10 billion.
Furthermore, the new law increases the minimum number of
shareholders in a listed company from 200 to 300.
Stanyslaus added that the minimum volume of shares in initial
public offerings is also likely to be increased from one million
now as many as five million.(08)