Apr 6, 2011

Salim Ivomas to sell 20% stake via IPO

Palm oil-based liquid cooking oil producer PT Salim Ivomas Pratama (SIMP), a 64.4%-controlled by Singapore-listed parent company Indofood Agri Resources Ltd (IndoAgri), is aiming to sell 20% stake during initial public offering scheduled in June or Juli 2011.
Vice President Director of PT Indofood Sukses Makmur Tbk (INDF) Franciscus Welirang said the IPO proceed will be used by Salim Ivomas to expand business.
A source close to the matter said Salim Ivomas IPO is expected to raise US$240 million-US$280 million proceed. Director Eddy Sugito at Indonesia Stock Exchange said Salim Ivomas had a limited presentation explaining the IPO. "We had set a mini expose for Salim Ivomas. They said the proceed will be used to expand business," he said. 
Indofood Sukses, Indonesia's largest noodle instant maker and palm plantation company, is holding 8.38% stake in Salim Ivomas and 68.95% stake in IndoAgri. IndoAgri and its subsidiaries control 64.4% shareholding in Salim Ivomas.
Salim Ivomas has mandated Mandiri Sekuritas and Kim Eng Securities as joint lead IPO underwriters, while Deutsche Bank are acting as global coordinators.
Indofood Sukses to sell Salim Ivomas?
A market speculation said Indofood Sukses is expected to sell 8.38% shareholding in Salim Ivomas during IPO, while the remaining are new shares. However, Werianty Setiawan, Indofood Sukses Director, didn't respond the confirmation about the speculation.
Eddy Sugito confirmed that Salim Ivomas will issue new shares during the IPO. "As far as we know, there is no plan of Indofood Sukses to sell Salim Ivomas," he told Insider Stories.
Salim Ivomas is group manufacturer owned by IndoAgri. The group is consisting of three categories of palm oil-based liquid cooking oil dubbed branded consumer pack, branded semi-consumer pack, and unbranded industrial type. Branded consumer pack cooking oil is targeted at consumers in retail outlets and are sold in packages of up to five litres. 
Branded semi-consumer pack cooking oil is sold in containers of 15 kilograms to 18 kilograms and is generally targeted at merchants which resell the cooking oil to end-users.
Unbranded type cooking oil is sold mainly to PT ISM Group and other industrial users for their manufacturing purposes. With the exception of industrial cooking oil, all products are sold under brand names. The group’s consumer brands for cooking oil include Bimoli, Bimoli Spesial, Delima, Happy Salad Oil, and Mahakam.
Approximately 95% of the group’s domestic cooking oil sales value of consumer and semi-consumer packs for FY2008 was under the Bimoli and Bimoli Spesial brand names.  
Dissapointing result
As a company eyeing an initial public offering (IPO) in June this year, Salim Ivomas does not to come with a glossy financial performance last year. With a slight increase in net sales and slight decline in earning, Salim Ivomas performance was so so. Nothing special! SIMP recently reported a slight decrease in net income last year as other charges ballooned 174.32%.
The company posted Rp970.98 billion net income or Rp383.69 per share last year from Rp1.01 trillion or Rp398.58 per share in the previous year.  
The company booked Rp525.11 billion other charges from Rp191.42 billion. Operating profit increased 19.25% to Rp2.54 trillion from Rp2.13 trillion, enabling SIMP to augment its operating margin to 26.79% from 23.56%. 
In line with operating profit, gross profit rose 16.01% to Rp3.55 trillion from Rp3.06 trillion, while COGS was flat to Rp5.94 trillion from Rp5.98 trillion. Net sales slightly increased 4.86% to Rp9.48 trillion from Rp9.04 trillion.
Pay debt
Salim Ivomas in January had made early payment on its debt of US$21.25 million or Rp184.88 billion to ING Bank Singapore. Salim Ivomas in September 2009 obtained the loan facility of US$25 million from ING Bank Singapore and used it as working capital.

Disclosure: No position at the stock mentioned above.

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