Pelangi Indah Canindo to go public
JAKARTA (JP): PT Pelangi Indah Canindo, a metal packing manufacturer, said yesterday that it would offer 27.5 million new shares to the public to raise about Rp 19.25 billion (US$8.2 million).
Pelangi's president, Dandy Ko, told journalists yesterday that 42 percent of the proceeds from the initial public offering would be used to purchase machinery to support its expansion plans.
The tentative schedule for the share offering is Sept. 2 to Sept. 4.
"We should have gone public in 1994 when we planned to buy new machines to expand our capacity. We bought new machines but the transactions were financed by bank loans," Ko said.
Ko denied speculation that the company would use fresh funds to repay the old bank loans which were used to buy machinery. "We have planned another expansion project," he said.
Ko said that 31 percent of the proceeds would be allocated for debt repayment, 20 percent for increasing the company's working capital and 7 percent for expanding its production plants.
Established 12 years ago, Pelangi now has three production lines at its industrial complex in Tanggerang, West Java, and one plant in Surabaya, East Java. These have a combined production capacity of 15 million metal containers a year.
The company can produce 1.4 million cans, 35,000 drums and 20,000 liquefied petroleum gas tanks a month.
"Early this year, our plant in Surabaya started producing car oil filters," Ko said.
Hendra Kustarjo from PT Panin Securities, the lead underwriter of the share offering, said that Pelangi's shares would be priced from Rp 600 to Rp 700.
"The price will represent a price earning ratio of 6.5 to 7.6 times the 1996 projected profit of about Rp 10 billion," Hendra said.
The projected profit is 150 percent higher than last year's figure of only Rp 4 billion.
Ko said that the company expects Rp 91 billion in revenue this year. This is 32 percent higher than last year's revenue of Rp 69 billion.
"Fifty percent of the revenue target had been reached in the first six months of this year," he said.
Commenting on Pelangi's financial projection, Hendra said, "We actually doubted whether the projection was realistic or not. But we then considered it reasonable based on the number of contracts for this year's deliveries, which have been signed by the company."
In terms of the size of the initial public offering, Pelangi's offering is the smallest this year. Therefore, foreign investors may not be interested in it because of liquidity problems.
"The company has anticipated this situation. Therefore we will focus the offering on domestic investors," Hendra contended.
Pelangi is now 70 percent owned by PT Citrajaya Perkasa Mulia and 30 percent by PT Saranamulia Mahardika. After the sales of the new shares, Pelangi will be 55.79 percent owned by Citrajaya Perkasa Mulia, 23.91 percent by Saranamulia Mahardika and 20.30 percent by the investing public.(alo)