Suparma expects to raise Rp 90b from public offering

Suparma expects to raise Rp 90b from public offering

JAKARTA (JP): PT Suparma, a paper manufacturer based in
Surabaya, East Java, expects to receive around Rp 90 billion
(US$42.8 million) from its initial public offering next month.

Company president Welly said here yesterday that around 40
percent of the public offering proceeds would be used to pay
long-term debts to state-owned Bank Rakyat Indonesia (BRI), 40
percent to finance the purchase of new machines and another 20
percent for strengthening working capital.

Welly said that Suparma, which produces printing and writing
paper for domestic and overseas markets, would sell 26 million
common shares or 30 percent of its enlarged shares.

The stocks, with a face value of Rp 1,000, would be priced
around Rp 3,600 each, nine times the company's projected profit
per share in 1994.

The public offering, underwritten by PT Gadjah Tunggal DBS
Securities, will be launched late next month.

Agus Projosasmito, the vice president of the underwriting
company, was enthusiastic that Suparma's public offering would be
successful even though Indosat's public offering is to occur the
same month.

"We still have a chance since Indosat's shares will be
available during the first week of the month and Suparma's at the
end of the month," he said.

Indosat, the state-owned international telecommunications
company, will sell around 10 percent of its stocks on the
domestic market and 25 percent overseas.

Drying up

The Indosat shares, which will be cross listed on the Jakarta
and New York stock exchanges, have been long awaited by both
foreign and local investors. Their shares are in high demand and
thus it would not be surprising if Indosat's public offering
dried up investors's funds on the domestic market, he said.

"This is why Suparma will carry out its overseas presentation
in Singapore and Hong Kong rather than in New York," he said.

He believed that Indosat's public offering would be
oversubscribed, allowing investors to have more funds to buy
Suparma's stocks.

Investors will receive refunds if their order is not entirely
met.

Agus said that the price of Suparma's shares, which will be
set at Rp 3,300 or 3,600, are relatively cheaper than those of
similar shares now already traded on the exchange.

"Under that pricing scenario, Suparma's price earning ratio
(PER) will be 8.92 or 9.71 times of the company's 1994 projected
profits, he said. "PERs of similar companies, which are already
listed on the market, have already reached 20 and 21 times their
1994 projected earnings."

Suparma's sales rose 65 percent to Rp 75.48 billion last year
from Rp 45.97 billion in 1992. Its net profits increased by 76
percent to Rp 10.84 billion from Rp 6.15 billion.(hen)