Several sectors perform well on the JSX

Several sectors perform well on the JSX

JAKARTA (JP): The Jakarta Stock Exchange (JSX) remains
attractive for investors as most companies listed on the market
posted significant increases in net profits last year and
promised better growth this year.

PT Vickers Ballas Tamara said in its Corporate Earning Review
1995 that the growth rate of the earning price per share will
reach approximately 26 percent this year, while the market is
trading on the price earning ratio of 15 times.

Vickers Ballas tracked 69 companies, or 30 percent of the 238
listed on the JSX, which contribute about 86 percent of the
market capitalization, in its research for the report.

"They (69 companies) recorded a strong 38 percent of after tax
profit growth in 1995, which is in line with our forecast," the
review said.

The predominant sectors last year were pulp and paper,
textiles, glass and ceramics, infrastructure, (well-diversified)
conglomeration and cement.

Pulp and paper

The integrated pulp and paper producers pushed the sector's
profits up by 149 percent through aggressive capacity expansion
and higher pulp and paper prices.

The net profits of the sister companies, PT Indah Kiat Pulp &
Paper and PT Pabrik Kertas Tjiwi Kimia grew by more than 200
percent to Rp 469 billion (US$208.7 million) and Rp 169 billion
respectively last year, from Rp 147 billion and Rp 51 billion in
the previous year.

Indah Kiat is the biggest pulp and paper producer in the
country and one of the lowest cost pulp producers in the world.
Tjiwi Kimia produces high margin paper and stationary.

The earnings growth of 139 percent recorded by PT Inti
Indorayon -- from Rp 65 billion in 1994 to Rp 135 billion last
year -- was caused mainly by increases in pulp and rayon prices.
Indorayon has switched its pulp production to dissolving pulp as
the raw material of rayon.

"The outlook for the integrated companies looks favorable as
they control the biggest market share and procure raw materials
at low costs," the report said.

It added that the integrated companies' profit margins are
above 35 percent, higher than the 30 percent margins of non-
integrated companies such as Fajar Surya Wisesa, Surabaya Agung
Industri Pulp & Kertas and Suparma.

Vickers Ballas forecasted that Indah Kiat's net profits would
rise to Rp 534 billion this year, Rp 636 billion next year and Rp
756 billion in 1998, while Tjiwi Kimia's profits would increase
to Rp 198 billion, Rp 236 billion and Rp 280 billion
respectively.

Indorayon's net profits are estimated to drop to Rp 124
billion this year before recovering to Rp 141 billion next year
and Rp 165 billion in 1998.

Textiles

The textile sector's steep profit increase of 88 percent was
due to capacity expansion, corporate restructuring and improved
selling prices.

The 198 percent increase of Polysindo Eka Perkasa's impressive
net profits to Rp 211 billion last year from Rp 108 billion in
1994 was driven by the company's divestment of subsidiary Texmaco
Engineering, which contributed 95 percent to its earning growth.

Indorama Synthetics' earning of Rp 120 billion last year, up
from Rp 62 billion in 1994, included contributions from its resin
plant, which produces raw materials for polyester.

"The outlook, however, is not promising. Indonesia has lost
its competitive edge vis-a-vis its competitors from China,
Pakistan and India," the report said.

The government recently made some tax concessions to encourage
textile and garment exports. It also plans to introduce a new
package of deregulations next month to boost exports, including
from the textile sector, which has been the backbone of the
country's non-oil exports for a long time.

Vickers Ballas estimated that Polysindo's net profits would
increase to Rp 247 billion this year, Rp 286 billion next year
and Rp 321 billion in 1998. Indorama's profits are expected to
surge to Rp 131 billion, Rp 146 billion and Rp 164 billion
respectively.

Glass and ceramics

The glass and ceramics sector recorded a 71 percent increase
in profits last year from increased production capacity, as well
as strong domestic and foreign market demand for their products.

The sector's strong growth last year was boosted by the strong
performances of both Asahimas Flat Glass and Mulia Industrindo.

Asahimas' 65 percent increase in net profits to Rp 74 billion
last year from Rp 45 billion in 1994, was helped by its higher
sales volume and increases of prices across the board.

Mulia's 78 percent increase in net profits to Rp 68 billion
last year from Rp 38 billion in 1994 resulted from its capacity
expansion.

"The outlook is promising. Demand for the sector's products
will not only be boosted by the domestic construction sector, but
also exports. Indonesian producers are the lowest cost producers
in the region," Vickers Ballas' report said.

Vickers Ballas estimated that Asahimas' net profits would
increase to Rp 92 billion this year, Rp 107 billion next year and
Rp 124 billion in 1998, while Mulia's would rise to Rp 127
billion, Rp 209 billion and Rp 260 billion.

Infrastructure

The infrastructure sector is represented by one firm -- the
politically-well connected toll road developer Citra Marga
Nusaphala Persada, which recorded a 63 percent increase in net
profits to Rp 95 billion last year from Rp 58 billion in 1995.

"We expect good earnings growth prospects from the cash-rich
Citra Marga," Vickers Ballas said in its report. It predicted
that Citra Marga's net profits would increase to Rp 113 billion
this year, Rp 139 billion next year and Rp 160 billion in 1998.

Vickers Ballas said Citra Marga's earnings would rise in
accordance with the rise in traffic volume and toll tariffs, as
well as the completion of its new toll road projects in Jakarta.

Conglomerate

The conglomerate sector is represented by Bakrie & Brothers
and politically-well connected Bimantara Citra, which contributed
largely to the sector's earnings growth of 58 percent last year.

Bimantara's net profits shot up by 148 percent to Rp 118
billion last year from Rp 48 billion in 1994. The high profit
increase was resulted from the combination of the write-off of Rp
52 billion in 1994 of television equipment, and interest income
in 1995 which was boosted by the proceeds from its initial public
share offering.

Bakrie & Brothers' net profits increased moderately by 17
percent to Rp 120 billion last year from Rp 103 billion in 1994.
The increase was boosted by the contribution of its
telecommunications division.

"The outlook is favorable for Bimantara, with contributions
from media and broadcasting, automotive and chemical sectors,
while Bakrie will see the continued progress of its
infrastructure support, plantation and telecommunications
divisions," Vickers Ballas' report said.

It forecasted that Bimantara's net profits would rise to Rp
155 billion this year, Rp 199 billion next year and Rp 229
billion in 1998, while Bakrie & Brothers' would also surge to Rp
150 billion, Rp 183 billion and Rp 211 billion.

Cement

The cement sector's earnings rose by 54 percent, mainly from
Semen Cibinong and state-owned Semen Gresik.

Semen Gresik's strong profit growth of 197 percent to Rp 163
billion last year from Rp 55 billion in 1994 was due to the
three-month inclusion of contributions from acquired companies
Semen Tonasa and Semen Padang -- both of which are state firms.

Semen Cibinong's 73 percent increase in net profits to Rp 92
billion last year from Rp 53 billion in 1994 was boosted by
increases in production capacity, utilization rate and cement
prices.

Indocement Tunggal Prakarsa, the country's largest private
cement producer, recorded net profits of Rp 476 billion last
year, up from Rp 368 billion in 1994.

The outlook is promising, Vickers Ballas said. The government
has allocated about 60 percent of its budgeted development
expenditure for the current 1996/1997 fiscal year, or Rp 20.7
trillion, for infrastructure.

Vickers Ballas projected that cement demand in Java will
continue to be buoyant, accounting for over 40 percent of the
country's total need for cement.

According to Vickers Ballas' estimates, Semen Gresik's net
profits will surge to Rp 286 billion this year, Rp 351 billion
next year and Rp 453 billion in 1998. Semen Cibinong's profits
are also expected to rise to Rp 110 billion, Rp 137 and Rp 176
billion respectively. Indocement's profits are predicted to shoot
up to Rp 570 billion, Rp 688 billion and Rp 822 billion
respectively.

Tobacco

The tobacco sector's profits jumped by 46 percent last year.
Gudang Garam's net profits rose by 47 percent to Rp 367 billion
last year from Rp 249 billion in 1994 because of ex-factory price
increases of 7.6 percent in hand-rolled and 16.1 percent in
machine-made cigarettes.

H.M. Sampoerna's net profits increased by 45 percent to Rp 352
billion last year from Rp 243 billion in 1994 due to ex-factory
price increases of 4.9 percent in Dji Sam Soe cigarette brand and
18.3 percent in A-Mild.

Gudang Garam's market share in hand-rolled cigarettes rose
slightly to 19.4 percent last year from 18.6 percent, while its
machine-made cigarettes share was maintained at 60.1 percent.

Sampoerna increased its share of the hand-made cigarette
market from 18.3 percent to 22.8 percent and doubled its machine-
made cigarette share to 5.5 percent.

The recently introduced excise tax categorizes the four major
producers -- Gudang Garam, Sampoerna, Djarum and Bentoel -- in
one tier. Gudang Garam is believed to benefit most from the new
structure.

"Our estimate shows that Gudang Garam's excise and value-added
tax, as a percentage of costs, will drop from 55.3 percent to
52.8 percent in 1996. The impact for Sampoerna, however, is not
significant," Vickers Ballas said.

It predicted that Gudang Garam's net profits would rise to Rp
548 billion this year, Rp 658 billion next year and Rp 789
billion in 1998, while Sampoerna's would increase to Rp 428
billion, Rp 525 billion and Rp 635 billion respectively.

Heavy equipment

The heavy equipment sector's earning growth stood at 42
percent last year, with Komatsu Indonesia's net profit increasing
by 81 percent and United Tractor's by 28 percent.

Komatsu's good results, from Rp 18 billion in 1994 to Rp 32
billion last year, were mainly attributed to the 28 percent
growth in the sales of heavy equipment and a 9 percent price
increase.

United Tractors' net profits reached Rp 59 billion last year,
up from Rp 46 billion in 1994.

The main push for the sector's growth came from four main
sectors, namely the construction industry, which grew by 55
percent, the forestry sector by 23 percent and the mining and the
agriculture sectors by 22 percent.

The government's 1996/1997 budget for infrastructure
development benefits the heavy euqipment sector.

Vickers Ballas estimated that Komatsu's net profits would
increase to Rp 38 billion this year, Rp 45 billion next year and
Rp 52 billion in 1998, while United Tractors' would rise to Rp 69
billion, Rp 83 billion and Rp 100 billion. (rid)