Nov 10, 2010

Trikomsel, Fajar Surya in hot placement

Along with bullish trend in the stock market, several stocks have steeply gone up. PT Trikomsel Oke Tbk (TRI), a mobile phone distributor and partly owned by private equity company Northstar Pacific, today skyrocketed 24.39% to Rp510 per share during the first trading session.
Coinciding with Trikomsel, industrial paper producer PT Fajar Surya Wisesa Tbk (FASW), also soared.
Several sources said owners at both companies are in queue to unload their shares into the market via private placement.
"In order to obtain a maximum proceed, stocks price usually lifts up," the sources told Insider Stories today.
However, it also depends on with the valuation of the company.
Trikomsel, which made a 72.83% increase in its earning during  the first 9 months ended September 30 2010, is now traded at 12.13x of price to earning ratio.
If you look at TRIO's September book value at Rp181.41 per share, the current price, Rp510, is still cheap, 2.81x of its book value. The sources said Trikomsel has mandated Credit Suisse as its placement agent.
Who wants to place Trikomsel?
It seems Northstar Pacific, which currently owns 25% stake in Trikomsel, aims to dispose TRIO with the target price of Rp600 per share.
Northstar's key executive namely Glenn T. Sugita now sits in the TRIO's board of commissioner and the company's founder Sugiyono Wiyono Sugialam is President Commissioner.
Northstar Pacific owns 25% stake in Trikomsel via Canopus Finance Ltd, while Sugiyono controls via PT Delta Sarana Perdana with 62.31% shareholding.
September performance
Trikomsel posted a 72.83% jump in net income as of September 2010 to Rp156.95 billion from Rp90.81 billion a year earlier.
Income from operations advanced  39.78% from Rp206.04 billion in 9M 2009 to Rp288.01 billion, reflecting a slight rise in operating margin from 5.04% to 7.54%.
Gross margin inched up 28.08% from Rp416.61 billion to Rp533,58 billion in 9M 2010, resulting a higher margin from 10.19% to 13.97%.
Trikomsel booked a slight decrease from Rp4.09 trillion in 9M 2009 to Rp3.82 trillion in 9M 2010.
Fajar Surya placement
A source said the seller plans to dispose 4% stake in Fajar Surya in a bid to snap up US$70 million.
"Fajar Surya has mandated two stellar lead arrangers CLSA and Morgan Stanley," the source said.
Considering to the current price today, FASW is traded at 4.13x of September's book value of Rp720 per share, more expensive than TRIO stock.
The company posted a 44.27% increase in net profit in 9M 2010 from Rp177,78 billion to Rp256,48 billion in 9M 2010.
Operating profit soared 50.67% from Rp272.14 billion in 9M 2009 to Rp410.03 billion in 9M 2010. Net sales rose 24.5% from Rp2 trillion in 9M 2009 to Rp2.45 trillion in 9M 2010.
PT Intercipta Sempana is controlling shareholder at Fajar Surya by holding 52.4% stake, PT Intratata Usaha Mandiri holds 17.5%, and PT Garama Dhananjaya owns 5.8%.
Club deal

The company  also just seized US$120 million club deal loan on October 22 2010 with The Hongkong and Shanghai Banking Corporation Ltd (HSBC), PT UOB Buana, and Oversea-Chinese Banking Corporation Limited (OCBC).
The loan facilities will be used by Fajar Surya to repay US$100 million principal amount of guaranteed senior notes maturing in October 2011. The remaining loan is available for general corporate purposes.
Fajar Surya is underway to hold construction of new paper machine facility 5 (PM 5), which is nigh completion.
PM 5 will produce corrugated medium paper with the capacity of 300,000 tons per annum and is expected to be operational by January 2011.
Adding to this, Fajar Surya also plans to modify two of its existing paper machinese, paper machine 2 (PM 2) and paper machine 7 (PM 7).
PM 2 will have 140,000 tons annually of production capacity and need US$30 million cost.
A US$40 million cost is required to establish PM 7 with 200,000 tons capacity per annum.
Both modifications are expected to take around 2 months each to complete, enabling Fajar Surya to keep up with the latest technology. This will reduce energy and raw material cost, improving the quality of its final products and increase the production capacity to keep up with growing demand.
Fajar Surya is currently in talks with Export Credit Agenciees and HSBC regarding the financing of both modifications. The proposed financing will be around US$40 million to US$54 million with an expected tenor of 10 years and interest of around 4% per annum.  

Disclosure: No position at the stock mentioned above.

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