Jan 6, 2011

Lonsum to hold 1:5 stock split?

Palm oil player PT PP London Sumatra Indonesia Tbk (Lonsum) is expected to hold a 1:5 stock split in a bid to increase its stocks liquidity. 
In an equity daily published by Kim Eng Securities yesterday, the brokerage expected to hold a 1:5 stock split in the upcoming extraordinary of shareholders' general meeting on January 28 2011.  
Endah E. Madnawidjaja, Lonsum Corporate Secretary, declined to comment about the stock split ratio. "Our view on management’s plan to conduct stock split is positive, which will increase trading liquidity in the
market. While theoretically stock split does not change the fundamental of the company, investors typically reacts in favor to such move," the equity daily said.
Indofood Agri Resources Ltd, Singapore-listed company and the parent company of Lonsum divested 109.52 million shares in Lonsum at Rp11,600 or Rp1.27 trillion. About 42.11 million shares or 3.1 stake were sold to PT Salim Ivomas Pratama and 67.41 million shares were sold to certain investors.
Post divestment, IndoAgri and subsidiaries shareholding interest in Lonsum shrink to 59.5% from 64,4%. "We are maintaining our target price at Rp14,500 per share with 15% upside potential," said Kim Eng.

Disclosure: No position at the stock mentioned above.  

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