Initial Public Offerings on the Indonesia Stock Exchange in 2017
So far in 2017 there has been limited enthusiasm of companies to conduct an initial public offering (IPO) on the Indonesia Stock Exchange (IDX). However, there is now some more activity visible. On Friday (05/05) bottled water producer Sariguna Primatirta was officially listed on the IDX, while three other companies - Cahayasakti Investindo, Pelayaran Tamarin, and Terregra Asia Energy - are to follow soon.
Sariguna Primatirta became the fifth company to be listed on the IDX in 2017, implying an average of one IPO per month in Southeast Asia's largest economy so far this year, a mediocre score but understandable given the presence of persistent global and domestic uncertainties and tensions. Externally, investors are cautious due to looming further monetary policy in the USA and US President Donald Trump's economic, trade, diplomatic and political policies. Moreover, several elections in Europe test the stability of the European Union, while geopolitical conflicts plague Korea and Syria.
Domestically, there was a lot of tension in Indonesia surrounding the 2017 Jakarta gubernatorial election as well as the blasphemy case of Jakarta Governor Basuki Tjahaja Purnama (better known as Ahok), a Christian of Chinese descent. These cases test the degree of racial and religious tolerance in Indonesia. Matters are complicated because certain political actors actually use (encourage) these tensions for their personal benefit in the political arena.
Read more: Rising Influence Hardline Islam & Billionaires Club on Indonesian Politics
It are challenging times indeed and surely this impacts on Indonesia's investment and business climate. Therefore companies that want to conduct an IPO need to offer shares at an attractive price to encourage demand. For example, property development company Cahayasakti Investindo (that is scheduled to list on the Indonesia Stock Exchange on 10 May 2017) initially planned to offer its shares at the price range of IDR 650 - IDR 960 a piece to investors in the IPO. However, after its underwriter (Ciptadana Sekuritas Asia) detected bleak demand, the offering price was adjusted to IDR 300 per share, a significant cut.
Considering Cahayasakti Investindo plans to sell 207 million new shares, equivalent to 16 percent of the company's enlarged capital, the huge decline in offering price implies it will not collect IDR 198.7 billion (approx. USD $15 million) as originally planned but will only manage to collect IDR 62.1 billion (approx. USD $4.7 million).
For Cahayasakti Investindo it is also problematic that the property sector of Indonesia remained under pressure so far in 2017, reflected by generally weak first quarter earnings of listed property developers. On the long term, however, property developers are still considered to have a very promising future in Indonesia supported by the country's huge housing backlog (about 12 million, specifically for the lower-middle income segment) and expanding middle class population.
Read more: Q1 Earnings Indonesia's Property & Industrial Estate Firms Remain Weak
Another factor that needs to be taken into consideration is that the May-June period is usually a quiet period for the stock market ("sell-in-May-and-go-away strategy"). In the case of Indonesia there is additional "quietness" because of the Ramadan and Idul Fitri festivities. Lastly, Indonesian stock valuations have been rising high after the benchmark Jakarta Composite Index touched record high levels over the past few weeks.
Earlier this year Sanurhasta Mitra, Forza Land Indonesia, Industri dan Perdagangan Bintraco Dharma, and Nusantara Pelabuhan Handal went public in Indonesia. Late last year, the management of the Indonesia Stock Exchange said it targets to see 30 IPOs in 2017. However, we expect this is a much too ambitious figure. Most likely it will fall in the range of 12 - 17.
Last Update: 29 Mar 2021
Portfolio IPO 2017
| Company | P: 29 Mar 2021 | P: 28 Mar 2021 | Gain/Loss | P/E ttm | Yield % | Gain/Loss YTD |
| Sanurhasta MitraMINA | 79 | 64 | 23.44% | N/A | 0.00% | 58.00% |
| Forza Land IndonesiaFORZ | 50 | 50 | 0.00% | N/A | 0.00% | 0.00% |
| Industri dan Perdagangan Bintraco DharmaCARS | 50 | 50 | 0.00% | N/A | 0.00% | 0.00% |
| Nusantara Pelabuhan HandalPORT | 490 | 498 | -1.61% | N/A | 0.00% | 16.11% |
| Cahayasakti Investindo SuksesCSIS | 80 | 76 | 5.26% | N/A | 0.00% | 25.00% |
| Combined Total | 749 | 738 | 1.49% | 17.77% |
Green colour indicates upward movement
Red colour indicates downward movement
P = price; E = earnings; D = dividend; Yield = D/P
"N/A" indicates P/E < 0 (negative earnings)
"-" indicates E,D,P or YTD is not available