Feb 19, 2011

After ICBP, Salim Ivomas is next IPO

PT Indofood Sukses Makmur Tbk (INDF), Indonesia's largest instant noodle, surged 38.46% last year. But, look at its subsidiary PT Indofood CBP Sukses Makmur Tbk (ICBP), a maker of noodles, food seasonings, snack foods, nutrition, and special foods,  which showed the second worst newly listing stock with 13.34% loss.
Many still remember that Indofood Sukses Makmur stocks steeply rose before Salim Group aimed to list Indofood CBP at Rp5,395 per share, enabling Salim Group bagged Rp6.31 trillion.
Today, ICBP was closed at Rp4,725 per share. Still, the market price remains below the IPO price.  In fact, the market is still bullish.
What was wrong?
There is no wrong with the market bullish. So, investor should ask ICBP underwriters or Salim Group. Was it fair enough to sell ICBP at Rp5,395 per share?
Despite dull performance, INDF today announced several purchases of Indofood CBP as published in a public statement at Indonesia Stock Exchange (IDX) today.
In the statement, INDF bought 26.87 million shares. Assuming at Rp4,725 per share, INDF spent Rp126.67 billion during a period of December 20-December 29 2010.
INDF might think that Indofood CBP was too low. Or Did Indofood try to cheer up investors who bought ICBP at the IPO price? Is it a sign that Salim Group intends to enter the equity market aggressively? The bullish market is still there. Don't miss the train.
What asset to be divested by Salim Group after ICBP, Indopoly Swakarsa Industry, and Nippon Indosari Corpindo? Is it Indosiar Karya Media to TV5?
If you check Indofood Sukses Makmur website, it has four main business pillars, consumer branded products (via ICBP), flour mill (Bogasari Flourmill), agribusiness or palm oil (via Indofood Agri Resources Ltd/IndoAgri and PP London Sumatra Indonesia/Lonsum), and distribution.
During uptrend CPO price, the most easiest way for Salim Group is now to unlock value of PT Salim Ivomas Pratama, palm oil producer. Similar to INDF and ICBP, will Lonsum price go up?
A source close to the deal said Salim Ivomas has picked a local brokerage PT Mandiri Sekuritas and PT Kim Eng Securities, a foreign brokerage which is usually picked by Salim Group to do corporate actions.
"Salim Group plans to list Salim Ivomas Pratama in the first half of this year with a total size of US$240 million-US$280 million," the source said.
Werianty Setiawan, Director and Corporate Secretary of Indofood Sukses Makmur, said if the company plans to do a corporate action, the management would inform the market authorities as regulated by capital market regulation.
Lonsum's President Director Benny Tjoeng, former Astra Agro President Director, also are not familiar with Salim Ivomas IPO.  "I didn't hear about it," he said.
Shareholding restructuring
Referring to Lonsum's September financial statement, Salim Ivomas Pratama controlled 32.21%. But, On December 8 2010,  IndoAgri together with its subsidiaries disposed 109.52 million shares or 8% shareholding in Lonsum at Rp11,600 or Rp1.27 trillion.
About 42.11 million shares or 3.1% stake were sold to Salim Ivomas Pratama and 67.41 million shares were sold to certain investors. Post divestment, IndoAgri and subsidiaries shareholding interest in Lonsum had shrunk to 59.5% from 64.4%.
The 3.1% sale to Salim Ivomas is a strategy toward consolidating all of the Group’s shareholding interest in Lonsum into Salim Ivomas Pratama. This will streamline the corporate structure of the Group (IndoAgri and subsidiaries)
Indofood Sukses Makmur is a controlling shareholder in IndoAgri with 68.95% shareholding interest. INDF has also a 8.38% direct shareholding in Salim Ivomas Pratama. In turn, IndoAgri controls 90% shareholding in Salim Ivomas Pratama.
Chain listing?
With 35.31% shareholding in Lonsum, Salim Ivomas IPO won't generate a chain listing problem. Chain listing will take into effect if Lonsum has contributed 70% revenue to Salim Ivomas Pratama.
At the end, would IndoAgri or Lonsum prices go up? Let's see.

Note: I have published the story above at http://theinsiderstories.com on January 3 2011. Please login or register to read other stories.  

Disclosure: No position at the stock mentioned above.

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