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)