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)