Indonesia's capital market struggling amid global crisis.
The global financial crisis has served a big blow to the world's financial market including the Indonesian capital market. Until now the capital market in Indonesia is still struggling amid the global financial crisis, which has caused a slowdown in the growth of the market, and delay in many plans to launch initial public offering (IPO) under market uncertainty.
Falling share price index was recorded by almost capital market s in the world in October, 2008. The composite share price index (IHSG) of the Indonesian Stock Exchange (BEI) sank to the lowest level forcing it to suspend trading for several days after recording a sharp fall. Suspension began 8 October 2008 when the IHSG dived 10.38% to the level of 1,451.669 points. Trading, however, was resumed on Oct 13, 2008. The suspension was to protect investors and the market. Later the capital market began to grow though thanks only to short term funds.
Optimism began to prevail that the country capital market will regain strength as indicated by plans to launch IPO in 2009. There were 15 companies planning IPO this year including those delaying plans in 2008. Among companies failing to launch IPO in 2008 included PT Prime Petroservices, PT Power Telecom, PT Mitrasurya Cemerlang, PT Wahanaartha Harsaka, PT Garuda Food., PT Bank Tabungan Negara (BTN), PT Krakatau Steel, PT Pembangunan Perumahan, PT Waskita Karya, PT Garuda Indonesia, and state plantation companies PT Perkebunan Nusantara (PTPN) III, IV, and VII.
A number of state companies (BUMN) also plan to launch IPO soon. Investors have indicated strong interest in buying the shares of state companies. The office of the state minister for state enterprises plans to divest shares of 11 BUMNs under privatization program through IPO in a bid to revitalize them. Among the state companies prepared to launch IPO include steel maker PT Krakatau Steel, Plantation Company PT Perkebunan Nusantara (PTPN) VII, and Bank Tabungan Negara (BTN).
The performances of listed companies (issuers) in the first quarter of 2009 were relatively goods improving from the last quarter of 2008. The improvement was thanks mainly to domestic oriented issuers, which remained as the main driving motor for growth amid the global crisis.
In number of issuers and capitalization, the BEI is still lagging far behind a number of other capital markets in Asia. According to data at the World Federation of Exchange per March 2009, BEI had only 396 issuers as against Malaysia's 968 issuers, Singapore's 765 and Thailand's 527 issuers.
With capitalization of US$113 billion, BEI is also behind compared to Singapore's capitalization of US$ 249 billion and Malaysia's capitalization of US$ 197 billion.
With smaller supply (issuers) and demand (investors) BEI, is more vulnerable to external effects.
This report presents details about the performances of capital market and market players including issuers, market capitalization, share transactions, etc.
Structure of Capital market
Capital market is a market for various long term financial instruments that could be traded including bonds, shares, mutual funds, derivative instruments and other instruments. Capital market is a financing facility for companies and other institutions and a facility for investment activities.
Capital market serves as a liaison agent between investors and companies or government institutions through long term financial instrument trade like bonds, shares, etc.
Capital market has an important role in the state economy through its two functions--economic and financial functions. Its economic function is to facilitate contact between investors and issuers needing funds. Its financial function is to provide opportunity to earn return for investors according to the characteristics of investment opted.
Te best known instrument of capital market is share or equity. There are two types of shares traded common stock and preferred stock.
Bonds which constitute documents stating commitment to repay a certain amount of money in the future.. Companies often utilize bonds to raise fund directly from investors by issuing promissory note (fixed income securities). The companies selling bonds will pay not only the debt principal but the coupon periodically. The investors will receive interest payment in fixed amount periodically.
Derivative is form of derivative of main securities in this case share. Derivatives which are more popular in the country are warrant and right. Warrant is a right to buy shares at a fixed price at a fixed time. Warrant, normally is issued by a company as an incentive for investor when issuing shares.
Right to buy shares at a certain price also at a fixed time. Right is given to old shareholders to buy more new shares issued by a company at the secondary offering. Different from warrant, the trading period of right shares is shorter around 1-2 weeks only. The normal prices of warrant and right shares are the market prices minus exercise prices. If the warrant or right sharer prices are higher than the normal prices, there will be premium to be paid.
The capital market players include issuers, Investors, Underwriters, Guarantors, Trustees, Brokers, securities companies, investment companies and the capital market watchdog Bapepam LK.
Issuers are companies which sell shares or bond to the public through capital market, in a bid to raise fresh fund mainly to finance business expansion and strengthen their capital.
The underwriters of the share issues are those preparing contract for the interest the issuers that launch public offer with or without buying the remaining shares unsold to the public.
Development of capital market players
Capital market in Indonesia was first launched in 1977. In the beginning there were two stock markets--Jakarta Stock Exchange (BEJ) and Surabaya Stock Exchange (SSX). Toward the end of 2007, the government merged the two stock exchanges for efficiency into one named Indonesian Stock Exchange (BEI).
By December 2008, the shareholders of BEI were 125 companies. It had 121 securities companies, including 118 active members and three suspended members. In 2008, BEI bough back 72 shares. It had 110 participants including 59 securities companies, 35 banks and 16 custodian banks.
Number of Issuers Sluggish in Growth
The number of issuers in Indonesia has grown sluggishly--growing by 4.9% annually on the average in the 2004-2008 periods. In 2007, the number shot up 18.6% to 408 issuers from 344 in the previous year. In 2008, the number even shrank to 396 companies as a result of delisting by a number of companies suffering operating losses.
In the first half of 2008, there were 16 companies listing, six other companies being in the pipeline of the target of 30 new issuers or higher than 22 companies in 2007. However, 13 companies delayed IPO plan in 2008 as the market condition was not favorable. Among those postponing IPO plans included state companies PT Bank Tabungan Negara (BTN), PT Krakatau Steel, PT Pembangunan Perumahan, PT Waskita Karya, PT Garuda Indonesia, and PT Perkebunan Nusantara (PTPN) III, IV, and VII.
In 2008, BEI targeted 30 companies to launch IPO, but the target was later revised down to 25 as a number of companies announced plan to postpone initial public offering (IPO), on declining performance of the financial market. However, in September 2008, the number of companies going public reached 18 companies with IPO value of Rp24.39 trillion. Among the issuers, BEI has a list of 45 most liquid stocks called LQ45.
With issuers of only 396 companies, BEI is relatively small compared with other regional stock exchanges. According to data of World Federation of Exchange per March 2009, Malaysia stock exchange had 968 issuers, Singapore 765 issuers and Thailand 527 issuers.
IPO 2008 valued at Rp24.39 trillion
In 2008, there were 18 companies launching IPO at BEI raising Rp24.39 trillion in fresh fund. Among major issuers were PT Bank Ekonomi Raharja Tbk and PT. Tabungan Pensiun Nasional Tbk, PT. Adaro Energy Tbk, PT. Bayan Resources Tbk and PT. Indika Energy Tbk.
Altogether, fresh fund raised by listed companies from share sales in 2008 totaled Rp82.45trillion including Rp24.39 trillion from IPO, Rp56.08 trillion from rights issue and Rp1.98 trillion from warrant issues. The total amount was much higher than Rp29.35 trillion in 2007. The surge in the amount was attributable mainly to IPO by PT Adaro Energy Tbk and rights issue by PT Bakrie & Brothers Tbk.
Bank Ekonomi Raharja Tbk (BER) of the Wings Group, launched IPO offering 270 million shares or 10.11% of its shares at a price of Rp1,080 per share with underwriter PT Dinamika Usahajaya. The bank earned Rp291.6 billion from the share sales.
The bank used 70% of the fund to strengthen its lending capacity for small and medium enterprises, 15% to finance expansion of operational network and another 15% to finance development of information technology and human resources.
After the IPO, the composition of its shareholders consists of Hendrik Tanojo (2.21%), Teddy Jeffrey Katuari (3.78%), Hanny Sutanto (4.01%), Finney Henry Katuari (2.45%), PT Lumbung Artakencana (38.84%), PT Alas Pusaka (38.60%) and investing public (10.11%). By August 31, 2007, the assets of the bank were valued at Rp15.051 trillion with net profit at Rp124.946 billion.
PT Adaro Energy Tbk launched IPO selling 31.7% of its share to the public and raised Rp12.252 trillion in fresh fund. PT Danatama Makmur was named as the underwriters (Lead Managing Underwriter) and UBS, Morgan Stanley and DBS as International Placement Agents.
Adaro Energy and its subsidiaries make up the country's largest integrated coal companies with business in coal production, coal trade, mining service, coal infrastructure service and logistic services.
Adaro Energy through Adaro Indonesia, is the largest operator of surface open cut coal mine in the world. Its coal mines is located in South Kalimantan with concession to last until 2022.
Its proven reserves are estimated to reach 876 million tons, with resources estimated at 2,803 million tons. Over a concession of 34,940 hectares. Currently its production capacity is 40 million tons per year and plans to expand the production capacity to 80 million tons in the next 5 years.
Bayan Resources through IPO sold 31.6% of its shares and raised Rp8.1 trillion in fresh fund. In 2007 its coal sales totaled 7.1 million tons at prices higher than the average price of US$ 51 per ton to reach US$ 362 million. Its coal production in 2008 totaled 4.7 million tons. In 2008 its coal production reached 9 million tons and sales at 9.9 million tons. With selling prices averaging US$ 76-US$80 per ton the company earned US$752 million -US$792 million form coal sales or an increase of 218% from the previous year.
Currently Bayan has 8 coal mines but so far only three of them are
operational. They are Gunungbayan, Wahana and Perkasa Inakakerta. The five other mines--Teguh-Firman and Fajar-Taba-Brian (FTB)--are still in the phase of development and construction of infrastructure.
Around Rp800 billion to Rp1.02 trillion of funds from IPO will be used to develop the Wahana, Perkasa and FTB mines. Teguh-Firman are still in the early process of building their infrastructure. Its coal production targets in 208 included 4.5 million tons from block II of Gunungbayan, 2 million tons from Wahana, 2 million tons from Perkasa and 500,000 tons from Taba. By the end of the first quarter of 2008, its proven reserves totaled 78.7 million tons with total reserve of 476.9 million tons. Its coal resources total 1 billion tons.
PT. Indika Energy (formerly PT. Indika Inti Energy) launched IPO in June 2008 selling 937.284 million shares worth Rp2.764 trillion.
The company used the IPO fund to finance its capital expenditures and expand energy business including coal mine acquisition. The company plans to spend up to US$ 580 million in the next five years In 2007, Indika reported Rp2.337 trillion in income and Rp265 billion in net profit.
After IPO, the shareholders of Indika included PT Indika Mitra Energi holdng 57.4%, PT Tunas Bhakti Manunggal 17.32%, Pandri Prabono-Moelyo 4.32%, Eddy Junaedy Danu 1.48%, Wadyono Suliantoro Wirjomihardjo 1.48%, and investing public 18%.
Indika was established in 2000 and became the parent company of Indika Group. It has a 46% stake in PT Kideco Jaya Agung, the country's third largest coal producer, 100% stake in the Triparta Group (PT Tripatra Engineers and Constructors and PT Tripatra Engineering).
Among the new issuers only four giving positive return to the investors. Until the end of 2008, other issuers gave negative return of 3.33% -83.79%
A report said since the first time its shares were traded until the close of the market in 2008, the shares of PT Bank Ekonomi Raharja Tbk gave the highest positive return of 106.02%. On the contrary the shares of PT Bayan Resources Tbk gave the lowest return of minus 83.79%.
The shares of PT Triwira Insanlestari Tbk, PT Kertas Basuki Rachmat Indonesia Tbk, and PT Hotel Mandarine Regency Tbk respectively gave positive returns of 50%, 32.69%, and 8.18%.
Meanwhile, the lowest market capitalization was recorded by PT Kokoh Inti Arebama Tbk with a capitalization of Rp42.50 billion and PT Verena Oto Finance Tbk with a capitalization of Rp50 billion. The shares of Bayan Resources gave a negative return because of this year performance expectation. The coal reserve of Adaro Energy are larger than that of Bayan Resources.
The few number of companies launching IPO in 2008 gave a positive return. New issuers could provide positive return with the number of shares sold, new issuers could manage to sell shares at fairly good prices as the capitalization was low.
A number of issuers get penalty in fine
A BEI rule requires all issuers to submit financial report every quarter, but not all issuers could meet the regulation on various reasons.
BEI served 15 issuers written warning with a fine of Rp50 million each for failing to submit financial report until a given deadline in the first quarter of 2009. Until June 1, 2009, there were still 24 companies, which had not submitted their financial report for the first quarter of 2009.
Among the 24 issuers, 15 companies had not submitted financial report and 8 companies to submit their audited reports and one company had different book year.
The 15 issuers punished with a fine of Rp50 million each included PT Eratex Djaja Tbk (ERTX), PT Indomobil Sukses Internasional Tbk (IMAS), PT Indah Kiat Pulp and Paper Tbk (INKP), PT Medco Energi Internasional Tbk (MEDC), PT Apac Citra Centertex Tbk (MYTX), PT Pabrik Kertas Tjiwi Kimia Tbk (TKIM), PT Alfa Retailindo Tbk (ALFA), PT Bank Century Tbk (BCIC), PT Bhuwanatala Indah Permai Tbk (BIPP), PT Sentul City Tbk (BKSL), PT Infoasia Teknologi Global Tbk (IATG), PT Leo InvestmentsTbk (ITTG), PT Mitra Rajasa Tbk (MIRA), PT Agis Tbk (TMPI), and PT Truba Alam Manunggal Engineering Tbk (TRUB)
IPO plans in 2009
With the condition improving in the market many companies plans to launch IPO in the second half of 2009, based on report received by BEI.
Optimism that the capital market will grow is indicated by the plans of many companies to launch IPO including by state companies. The shares of state companies have always attracted investors as they have larger capitalization.
In 2009, BEI is set to see 15 companies to launch IPO including 11 companies which were to launch IPO last year. BEI said 30 companies are expected to launch corporate actions launching right issue and 27 other issuing bonds this year.
BEI also hopes to record Rp2.75 trillion in daily transactions or lower than the daily transactions of Rp5.2 trillion in the first half of this year.
In 2008, BEI recorded 18 new issuers down 25% from 24 in 2007. Through declining in number of issuers, the IPO value rose 29.6% to Rp24.39 trillion from Rp17.18 trillion in 2007.
The number of companies launching rights issue in 2008 was 25 or the same as in 2007, but rose 46.8% in amount of fresh fund raised to Rp56.07 trillion from Rp29.8 trillion.
Investors have been long waiting for a number of state companies to launch IPO such as Garuda Indonesia, construction company Waskita Karya and plantation companies PT. Perkebunan Nusantara III, IV and VII as they are all large companies.
Meanwhile two large private companies PT Bumi Citra Permai and PT Source Alfaria Trijaya planned to launch IPO in January, 2009 but apparently they have failed to implement their plan as scheduled. A number of other private companies including PT Metropolitan Kencana, PT Inovisi Infracom, PT Katarina Utama, PT Profesional Telekomunikasi Indonesia (Protelindo), and PT Batavia Prosperindo Finance also plan IPO in 2009. Bank Tabungan Negara and Garuda Indonesia are to launch IPO in the last quarter of 2009.
The government has secured approval from the House of Representatives to sell part of the shares of state companies through IPO. The government plans to sell around 30% of the shares of the state companies on the average to the public.
The office of the state minister for state enterprises planned to privatize 11 BUMNs in 2008 through IPO in a bid to revitalize the companies but implementation of the plan was postponed as the condition of the market was not conducive.
Bank Tabungan Negara (BTN) plans IPO in the last quarter of 2009 to raise fund to strengthen its capital after being postponed last year. Currently the capital of BTN is relatively small and the government is not expected to inject it with capital.
In 2008, BTN recorded an increase in credit expansion from the year before. Its outstanding credit reached Rp32 trillion by the end of 2008, up from Rp22 trillion a year earlier. Its assets were valued at Rp42 trillion and non performing loan was 2.88%, and income at Rp1.95 trillion or up 20% from 2007.
PT Metropolitan Kencana is the developer of the Pondok Indah residential area. In Jakarta and will sell 15% of its share to he public.
PT Profesional Telekomunikasi Indonesia (Protelindo) is a provider of base transceiver station (BTS). This company is expected to sell 10% of its shares to the public.
PT Bank Jabar Banten is regional development bank owned by the west Java and Banten regional administrations planning to sell 20% of its shares to the public. It hopes to raise Rp385 billion from the IPO.
PT. Mayapada Hospital which operates in hospital service, hopes to earn Rp100 billion from IPO selling shares at a price of Rp 105 each.
PT Inovisi Infracom is a provider of product and service facilitating customers to conduct interaction in mobile telephone business. Inovisi plans to sell 400 million new shares (40%) in the market through IPO. The company hopes to raise Rp40 billion from the share sales. Around 85% of the IPO fund will be used to be invested in telecommunications infrastructure installing mirroring system and expanding infrastructure platform. The remaining 15% for working capital. Inovisi has named PT Relliance Securities and PT Investindo Nusantara Sekuritas as the underwriters.
PT. Katarina Utama is a Malaysian company selling telecommunication engineering service, installing service, and resin commissioning for telecommunication towers in Indonesia. This company plans to sell 40% or 400 million of its shares to the public and raise Rp100 billion in the IPO. The company has named PT. Optima Kharya Capital Securities as the underwriter.
Katarina plans to use the IPO fund for business expansion including to open new branches in Indonesia. Currently Katarina h has three branch offices--in Medan, Palembang and Jakarta. Katarina also plans to expand business network to China and Cambodia.
--Issuers going private
Generally publicly listed companies decide to go private on a poor financial performance and voluntary delisting.
In the first two months of 2008, BEI stopped the trading of the shares of PT Suba Indah Tbk and PT Surya Dumai Industri Tbk.
In June 2008, Bank UOB Buana announced voluntary delisting going private after it fell under a new majority shareholder. The small portion of only 12.12% of its shares held by the public also prompted the new shareholder to decide delisting. The result of share sales in the capital market was considered not significant to strengthen its capital and contribute to its expansion plan.
PT Bahtera Adimina Samudera Tbk (BAS) which operates in the fishery sector, had its status as a listed company revoked in August 2008 after it defaulted on a bond debt of Rp75 billion maturing in 2005. In 2006, BAS already stopped operation. Its assets by the end of 2008 was valued at Rp250.83 billion with total liabilities of Rp249.85 billion including the bond debt. BAS stopped operation after delay in securing fishing license for 20 units of its steel vessels from the fishery and maritime ministry.
PT. Apexindo in February 2009 announced delisting. Its majority shareholder Mitra International Holdings was to take over the shares, worth Rp142 billion or Rp2,875 per share, held by the public through tender offer. In January, 2009, the shares of Apexindo were traded at a price of Rp2,550 per share or higher than the price paid earlier by Mitra International when it acquired Apexindo at a price of Rp 2,450 per share.
The price offered by Mitra was also higher than the price of Rp2,207-Rp2,663 per share estimated by PT Zodiac Perintis Penilai, an independent appraisal company.
Mitra International Holdings Pte Ltd, a subsidiary of PT Mitra International Resources Tbk (MIRA) own 98.14% of Apexindo including 79.78% stake it acquired from PT Medco Energi International Tbk (MEDC) and Encore International on 10 September 2008 and shares it acquired in the tender offer.
Other shareholder include PT Hertech Kharisma holding 1.61% or 42.8 million shares. The rest are ones having not more than 500 shares each called odd lot. There are 15 holders of odd lot.
The fact that Apexindo and its majority shareholder are both a listed company requires one of them to go private. Apexindo, therefore, decided voluntary delisting with PT E-Capital Securities as the arranger. The securities company is also an affiliate of MIRA.
PT. Aqua Golden Mississippi Tbk plans to go private through voluntary delisting. The announcement was soon followed by suspension of its trading by BEI. Aqua has long planned delisting. It already announced voluntary delisting in 2001, but failed as its minority shareholders were against it as the price offered to the minority shareholder was considered too low. At that time Aqua offered a price of Rp35,000 per share or about the same as the market price by 21 December 2001. Four years later Aqua announced again delisting plan offering a price of Rp100,000 per shares to the minority shareholders.
Capitalization up again after shrinking in 2008
The capitalization value in the BEI grows 29.8% annually from Rp680 billion in 2004 to Rp2,539.04 trillion in 2007--an increase of 58% from the previous year's level of Rp1,982.70 trillion.
The capitalization value included market capitalization at Rp1,982 trillion and that of corporate bonds of Rp79.07 trillion and state bonds (SUN) of Rp477 trillion. The rise in the market capitalization has increased the contribution of the country's capital market to the country's Gross Domestic Product (GDP) from 37.42% in 2006 to 60%. It reflects growing confidence of foreign and domestic investors in the country's economy.
In order to improve the performance of the capital market in 2008, the government issued a regulation on tax incentive of 5% to company already launched or planning to launch initial public offering(IPO). Bapepam also will continue to issue new regulations such as on Secondary Mortgage Facilities (SMF)
However, the global financial crisis has resulted in capitalization nose diving by 46.4% to Rp1,065.36 trillion in 2008. Total capitalization of 14 BUMNs at BEI per 2008 reached Rp354.89 trillion or 33.3% of the capitalization at the BEI.
In 2009, capitalization surged again after shrinking earlier encouraging companies to contnue IPO plans postponed earlier. Until May 2009, capitalization rose to Rp1,517 trillion. The capitalization value constituted a contribution from state companies which accounted for Rp518.6 trillion or 34.2% of the total value of capitalization at the BEI. The increase was also attributable to additional capitalization from 15 new issuers to launch IPO soon this year
Currently, state companies still dominate the number of most active issuers with large capitalization. Therefore, if state companies leave the market the transactions would drastically decline.
BUMN largest contributors to total capitalization
The country's largest telecommunication company PT Telkom had the largest capitalization of Rp 159.3 trillion or 28.9% of the total capitalization of BUMN, followed by Bank BRI with a capitalization of Rp76.29 trillion (14.7%), PT PGN Rp68.88 trillion (13.3%), and 11 other BUMN accounting for 43.1% with a capitalization of Rp214.1 trillion by May 2009.
The state companies to be privatized by selling shares to the public plan to launch IPO when the IHSG reached 2,000 points.
The government wants a number of BUMNs to launch IPO in 2009 including Waskita Karya, Garuda Indonesia, Pembangunan Perumahan, BTN, Krakatau Steel, PTPN III, IV and VII, Asuransi Jasa Indonesia and Rekayasa Industri. However only privatization of Garuda, Waskita, BTN, and Pembangunan Perumahan has been approved by the House of Representatives.
A number of large foreign mining companies operating in Indonesia like PT Newmont Indonesia and PT Freeport Indonesia are listed in New York Exchange, Europe, Singapore and Australia but not in Indonesia.
In 2009, capitalization surged again after shrinking earlier encouraging companies to contnue IPO plans postponed earlier. Until May 2009, capitalization rose to Rp1,517 trillion. The capitalization value constituted a contribution from state companies which accounted for Rp518.6 trillion or 34.2% of the total value of capitalization at the BEI. The increase was also attributable to additional capitalization from 15 new issuers to launch IPO soon this year
PT. Telecommunication Indonesia Tbk (Telkom) had the largest capitalization among state companies valued at Rp150.2 trillion or around 28.9% of the total capitalization of all listed BUMN. Telkom is listed in three stock exchange including BEI, New York Stock Exchange (NYSE) and London Stock Exchange (LSE).
The performance of Telkom in 2008 less encouraging with net profit sinking 21.1% to Rp10.62 trillion from Rp12.86 trillion in the previous year. The decline in net profit followed with slight rise in income growing only 2.1% to Rp 60.69 trillion from Rp59.44 trillion in 2007.
The slowdown was a result of sharp competition among the telecommunications operators in the country including shrinking income from its fixed line operation. Migration from fixed line to mobile telephone service was larger than expected. In a bid to curb migration Telkom plans to slash fixed line tariff risking a cut in income.
Telkom sets aside the same amount of capital spending in 2008 and 2009 at USD 2.5 billion or around Rp.22.5 trillion. Telkom alone needs only Rp7 trillion. The rest is for its subsidiaries including Telkomsel, the country's largest cellular phone operator. The fund will be used for development of cellular sector of Global System for Mobile Communication (GSM) Rp14 trillion and for non cellular sector Rp.8 trillion.
Telkom raised Rp14 trillion of the fund including through bank loans. Telkom has secured club deal loan of Rp7 trillion with Bank BCA, Bank Mandiri, BNI, and BRI. There will be disbursement of Rp2.5 trillion of the loans from the consortium led by BNI, with BRI, Bank Mandiri, BCA, and the Investment Center of the e-government (PIP). The loan is for 3-5 years with interest rate based on Libor.
The company, however, is still considering other financing sources including issuance of rupiah bonds to finance construction of new towers and cable transmission system, procurement of STO batteries and base transceiver stations (BTS) for Flexi and Telkomsel.
In 2009, Telkom is set chalk up a 10% growth with market penetration of 45%50% in the telecommunication industry. Telecommunication service penetration in the country was estimated to reach 70% in 2008.
In 2009, market penetration target of Telkom is 64% for Telkomsel, 15% for Flexi and 9% for cable fixed line. Telkom also seeks to increase its market share in multimedia sector.
Earlier, Telkom planned to acquire telecommunication company Telecommunications Company of Iran (TCI) which is owned by the Iranian government to be put in tender in July, 2009. Telkom, however, finally dropped the plan although analysts said the acquisition would have been profitable as TCI has a market penetration of 45% in Central Asia. In addition, Telkom received the best offer from Iran Telecom, with payment term of 10 years.
The cancellation of his plan was linked to political motive as Telkom shareholders in the United States mostly pension fund and mutual fund managers are expected to be strongly against any involvement of Telkom in Iran and would likely sell their shares in Telkom. Telkom is listed on the New York Stock Exchange (NYSE) and London Stock Exchange (LSE) in addition to BEI.
Instead of acquiring Iran Telecom, Telkom plans to increase its domination on the domestic market.
Meanwhile, Telkom gained 2.77% or 200 points to Rp7,400 in trade on May 19 with transaction volume at 34,928, valued at Rp 129 billion and with frequency of 1.333 times. Its capital expenditure in 2009 is set at US$2.1 billion, therefore, Telkom has no problem in expansion.
Amid the global economic slow down, PT. Bank Rakyat Indonesia Tbk (BRI) reported a strong performance. In 2008 BRI led other top banks in the amount of net profit in Indonesia. Its consolidated net profit totaled Rp5.958 trillion or an increase of 23% from Rp4.838 trillion in the previous year. Other major banks like BCA reported net profit at Rp5.8 trillion, Bank Mandiri Rp 5.3 trillion, and BNI Rp 1.222 trillion.
In 2008 BRI chalked up Rp5.96 trillion up 23.16% from Rp 4.84 trillion in 207. The increase in net profit was attributable to credit expansion with credit interest income of Rp22.52 trillion or 80.20% of its total income of interest income of Rp28.08 trillion that year. Its interest income surged 20.81% from Rp 23.24 trillion in 2007.
Until the end of 2008, its outstanding credit reached Rp161.06 trillion or an increase of 41.46% from Rp 113.85 trillion in 2007. Third party funds it held totaled Rp201.5 trillion or up 21.77% from Rp 165.48 trillion in the previous year.
BRI strengthened its capital with Rp3.18 trillion in retained net profit in 2008 to support its credit expansion program of 18%-22%. BRI retained 53.5% of its last year's profit to strengthen its capital. Its capital rose to Rp23.89 trillion from Rp20.71 trillion.
In net interest income in 2008 totaled Rp19.647 trillion or up 17.7% from Rp16.687 trillion in 2007.
Its capital adequacy ratio (CAR) taking into account credit risk was 13.67% by the end of 2008 down from 16.66% a year earlier. It's CAR taking tin account credit and market risks was 13.18% down from 15.84% in 2007.
Its gross non performing loan (NPL) was 2.8% and Net NPL was 0.85% respectively down from 3.44% and 0.88% in 2007. Loan to deposit ratio (LDR) of the bank was 79.93%, up from 2007's LDR of 68.80%.
BRI had assets valued at Rp246.076 trillion in 2008, up 21% from 2007's Rp203.734 trillion. The increase in assets was supported by 41.46% growth in credit--from Rp113.85 trillion in 2007 to Rp161.06 trillion in 2008. With credit growth of Rp47.21 trillion its Loan to Deposit Ratio (LDR) reached 79.93% by the end of 2008 from 68.80% a year earlier.
Third party fund held by the bank was Rp 201.50 trillion in 2008, up 21.77% from Rp165.48 trillion in 2007. The third party funds included Giro amounting to Rp39.91 trillion (19.8%). savings Rp88.06 trillion (43.69%).
Bank BRI allocates 80% of its credits fro micro, small and medium enterprises. (UMKM). The UMKM sector has proved resistant to economic upheavals and contributed considerably to the country's economic growth.
In 2009, BRI sets aside Rp40 trillion for credit expansion in three sectors UMKM, construction and BUMN corporate. The credit expansion target grew 18%-20% from last year. Its net profit target is 15%-20% higher. BRI hopes to disburse up to Rp30 trillion in corporate credits to 90 BUMNs this year.
By March 2009, BRI had outstanding credit of Rp 165.299 trillion or 12.66% of the country's total bank credits relegating from the top Bank Mandiri (BMRI) which had only outstanding credit of Rp 158.066 trillion (12.11%).
BRI is eyeing a number of toll road projects to be financed. The bank allocates Rp2 trillion for toll road projects including the Semarang-Batang toll road.
Its network of branch offices, the largest in the country is the key to the success of BRI to becoming the fast growing banks among the country's top lenders. By December 2008, BRI had 35 branch offices and 107 auxiliary branches, 155 cash offices and 117 BRI units altogether a total of 5,369 working units.
In a bid to strengthen its position in the sharia banking, in 2009 BRI acquired 30% of the shares of Bukopin and Bank Jasa Artha at a price of Rp 60 billion to be converted into sharia banks. In June 2009, BRI spun off two sharia units to operate independently as sharia banks named BRI Syariah. A number of investors from Middle East are eyeing BRI Syariah seeking to become strategic partners in the bank. BRI Syariah, however, wants to rely only on its resources to reach its targets. BRI Syariah increased its capital from Rp500 billion to Rp1 trillion. Ideally, however, a sharia bank should have a capital of at least Rp2 trillion.
BRI Syariah also wants to increase its assets from Rp 1.5 trillion to Rp4 trillion through cooperation with its parent company BRI in financing BUMN projects.
In June 2009, the price of BRI share gained 13.6% or 900 points to Rp6,700 from Rp 5,900 in May 2009.
PT. Perusahaan Gas Negara (PGN)
PGN is the country's largest gas company without potential rival. Its income in 2008 rose 45% to Rp12.79 trillion from the previous year. In the first quarter of 2009, its posted Rp4.48 trillion in income up 62% from the same period last year.
In 2008, its sales totaled 578 million cubic feet per day (MMSCFD), up 37% from 2007, up again to 721 MMSSCFD in the first quarter of 2009. Increase in sales was recorded mainly in supply to industrial customers and PLN 's power generating plants.
In 2008. PGN reported Rp 4.7 trillion in operating profit up 51% from the previous year. It's earning before interest, tax, depreciation and amortization (EBITDA) rose 56% from Rp 6.4 trillion in 2007. In the first quarter of 2009, the company reported a 78% increase in operating profit with EBITDA up 65% from the same period in 2008.
In 2008, PGN recorded foreign exchange loss of Rp2.5 trillion, but in the first quarter of 2009, the loss on foreign exchange fell to 33% from Rp 134 billion in the same period in 2008 in rupiah strengthening lately.
In the first three months of 2009, PGN posted Rp1.2 trillion in net profit or an increase of 114% from the same period last year on improved performance and rupiah stability.
In April 2008. PGN signed a sales and purchase agreement for gas (900 MW) with PLN for its PLTGU Muara Tawar, a combined cycle power plant. The selling price followed the selling price to the industrial sector around US$ 5.5 per mmbtu with volume at 200 mmscfd (million cubic feet per day). It was also agreed upon PGN will increase the supply by up to 100 mmscfd if it has additional capacity. Delivery began with 200 mmscfd in December, 2008 after trial run in August. PGN also signed supply contract with PLTGU Tanjung Priok. The sales and purchase agreement was signed with PLN's subsidiary PT Indo Power.
In 2009 PGN allocated US$100 million for its subsidiary PT Transportasi Gas Indonesia (Transgasindo), which will use the fund to build 23 kilometer gas pipeline to replace a transmission pipe of 28 inches in diameter off shore between Grissik and Singapore.
PGN also will finance the development of terminal for liquefied natural gas (LNG) in Cilegon, Banten using internal cash. The project will cost around US$800 million (around Rp8 trillion ). The cost is lower than US$1.2 billion previously estimated. The project is to be built by a consortium led by PGN with members including Pertamina and PLN.
In June 2009 the price of PGN shares rose to Rp 4,400 each from Rp 3.400 earlier.
--IHSG up 18.3.% a year
In the 2004-2008 period, Jakarta composite index (IHSG) grew 18.3% per year on the average from 1,000. 23 points in 2004 to 1,355.41 points on the average in 2008.
In October, 2008, the IHSG fell to 1,451.669 points or the third sharpest fall in this regions after Shenzhen and Shanghai in China that fell 62.73% on the average and Mumbai in India than sank by 53.83%.
Singapore also suffered a sharp fall of 50.21%, Hong Kong down 49%. The Philippines by 48.29%. Taiwan by 47.98%. Thailand 47.95%. Japan 42.91%. And Malaysia 39.98%. In composite index of New York Stock Exchange (Dow Jones). Also sank 36.16%
The IHSG in 2008, dropped 50.6% with IHSG averaged 1,355.41 points from 2,745.83 at the close of 2007.
In 2008, the IHSG peaked on January 9 at 2,830.263 points but by the end of 2008, the index fell 15.17% from a year before.
Until mid 2009, the IHSG grew gradually to cross the level of 2,000, but analysts said the IHSG was still vulnerable to profit taking.
On June 9, 2009. IHSG gained 15.47 points or an increase of 0.75% to the level of 2,078.93. The LQ45 index closed higher by 3.03 points to 406,866 points and Jakarta Islamic Index (JII) also gained 2.505 points to the position of 333.705.
Trade value was recorded at 3.637 billion shares valued a Rp2.008 trillion with frequency of 55,186 transactions. There were 85 gainers, 82 losers and 61 stagnant.
Among top gainers were PT Astra International Tbk (ASII) gaining Rp1,300 to Rp25,000, PT Bank Tabungan Pensiunan Nasional Tbk (BTPN) gaining Rp350 to Rp1,900, PT Bayan Resources Tbk (BYAN) gaining Rp225 to Rp4,400, and PT Gudang Garam Tbk (GGRM) gaining Rp150 to Rp11,250.
Top losers included PT Bank Danamon Tbk (BDMN) losing Rp250 to Rp4,550, PT Astra Agro Lestari Tbk (AALI) down Rp250 to Rp18,650, PT PP London Sumatera Tbk (LSIP) down Rp200 to Rp6,800 and PT Excelcomindo Pratama Tbk (EXCL) down Rp100 to Rp1,200.
Short Selling and Margin Trading
Following the sharp fall of IHSG in October 2008, BEI bans short selling transactions and margin trading, which were believed to have jeopardized the market and triggered market instability in Indonesia. Stipulation on short selling is found in the Regulation of the capital market watchdog Bapepam--LK No V D6.
Transactions of short selling is a share transaction in which an investor, which sells share sells, has no share The investor hopes that the share price will fall at maturity that he could buy back the share at lower price and gains from the price difference.
Margin trading is a facility given to an investor to buy shares with value larger than capital with the transaction, a securities company would earn profit from the transaction and interest. The investor gains if the share price is high.
However, in May 2009, BEI allowed again transaction of short selling and margin trading triggering controversy among the market players, following the announcement of a new regulation on flagging (marking system on transaction) and uptic rule (price of short transaction is made on higher price compared with last closing price). The ratio of share and fund paid in advance by broker remains 1:1.
Short selling will benefit the market authority and the investors. Investors having no shares could reap capital gain if the share price fell. The investors lending the shares would also gain from interest from the transaction.
For BEJ, short selling would cause an increase in transaction volume and could create a healthier market as the share movements would tend to be determined by fundamental factors of the issuers and speculative element is small.
However, limit should be set for shares to be traded in short selling as short selling while could benefit the market could also disrupt the market.
Under a new regulation, an investor is required to pay initial guarantee of at least 50% of the transaction value or Rp200 million for short selling account. When short selling takes place fro the first time, the value of the guarantee is set at least 150%. Customers are required to maintain the value of guarantee at the level of least 135%.
For margin trading transaction, the value of initial guarantee is set at 50% of value of the share purchases. Securities Company is allowed to give financing to investors not more than 65% of the value of the financing guarantee.
Share average value that could be put in transaction is at least Rp10 billion per day. For newly listed shares he transaction is at least Rp50 billion, but if the market players are not ready the old benchmark is used with transaction value of at least Rp5 billion for three months and Rp20 billion for newly listed shares.
Number of stocks allowed to take part in margin trading is 21 and in short selling is 18 stocks.
Share transaction value up slightly 1.4% in 2008
The highest increase in daily transaction was in 2007 when transaction shot up 135.6% to Rp 1,050.15 trillion from Rp 445.71 trillion earlier. The increase in transaction was a result of growing number of listed companies that attracted more investors.
The transactions at the BEI plunged since the last quarter of 2008, followed the devastating global financial crisis, but the daily transactions rose because of the high transactions in previous months. The daily average transactions, therefore, still rose though slightly by 1.4% to Rp 1,064.53 trillion.
Until mid June 2009, the shrinking global stock markets affected the regional and local market. Share price index also shrank with the falling oil prices and profit taking by investors.
The Jakarta composite index (IHSG) in mid June, 2009 close lower by 5.401 points (0.27%) to the level of 2,024.965. The LQ45 index fell 3.118 points (0.79%) to the level of 390.990 and the Jakarta Islamic Index (JII) shrank 0.71% to 323.44 points.
Trading at BEI opened with share prices falling 0.89% to the level of 2,012 and fluctuated and hovered at 2.009, before finally rose to 2,024 on the mid day session. Despite the pressure of heavy selling began to recede, the IHSG could not lift itself from the red zone and finally closed at 2,024.
Correction of IHSG took place amid improvement in regional markets after being in the doldrums under the impact of the Wall Street crash. The DJIA Index in the US market fell again 1% after the release of data showing shrinking factory capacity utilization to below market expectation and seasonal correction entering the summer in July. Currently investors abandoned major stock markets resulting in shrinking transactions. The condition affected regional market including BEI.
The property and consumer goods sectors shored up IHSG in the second week of June 2009. In the previous week it was sustained by multifarious industries, financial and mining sectors.
The fluctuation of IHSG was also triggered by crude oil price that fell close to US$70 a barrel. The price of CPO also declined as a result of the falling price of oil. The trend affected the prices of shares of plantation companies in the market.
The value of trade transaction of shares in mid June 2009 was quite high at Rp 5.63 trillion. However, the high value was caused mainly by the crossing of 85.125% of the shares of PT Bentoel Internasional Investama (RMBA) valued at Rp5.003 trillion. The transaction took place four times handled by broker PT Credit Suisse Indonesia.
The Rajawali Group that controlled PT. Bentoel divested 3,834,660,182 shares or 56.96% of the shares of RMBA to British American Tobacco Plc (BAT) at a total price of Rp 3,35 trillion or Rp 873 per share.
RMBA closed Rp60 higher at Rp 810 the day after the transaction and PT BAT Indonesia (BATI) rose Rp 450 to Rp 6,050 per share.
Meanwhile, the basic industry and financial sectors, down 1.4% each, were the biggest contributors to weakening the market followed by the mining sector that sank 0.3% and infrastructure sector that fell 0.16%.
In the banking sector, stocks that suffered selling pressure included PT Bank Central Asia (BBCA) which was Rp 225 lower to Rp3,575, PT Bank Rakyat Indonesia (BBRI) down Rp 150 to Rp 6,200, PT Bank Danamon (BDMN) down Rp 50 to Rp 4,125, and Bank Mandiri (BMRI) down Rp 25 to Rp 3,175.
Other big losers included PT Sepatu Bata (BATA) down Rp3,000 to Rp28,000, PT Indo Tambangraya Megah (ITMG) down Rp300 to Rp20,550, PT Unilever Indonesia (UNVR) down Rp300 to Rp 8,300, PT Indocement (INTP) down Rp 250 to Rp6,900 and PT Petrosea (PTRO) down Rp 250 to Rp9,950, PT Astra Agro Lestari (AALI) falling Rp150 to Rp17,750, PT Telekomunikasi Indonesia (TLKM) falling Rp 100 to Rp7,450, PT Aneka Tambang (ANTM) down Rp25 to Rp 2,175, and PT Adaro Energy (ADRO) down Rp20 to Rp 1240.
Among gainers included PT Gudang Garam (GGRM) up Rp650 to Rp12,050, PT Medco Energi (MEDC) up Rp175 to Rp 3,400, PT United Tractor (UNTR) up Rp150 to Rp10,200 and PT Bayan Resources (BYAN) up Rp150 to Rp5,750, Perusahaan Gas Negara (PGAS) surging Rp75 to Rp3,025, PT Astra International (ASII) up Rp100 to Rp 23,300, PT Kalbe Farma (KLBF) up Rp 120 to Rp1,100, PT Mitra Rajasa (MIRA) up Rp 10 to Rp650, PT Timah (TINS) up Rp25 to Rp2,200.
The increase in the daily transaction value was followed with a rise in the trade volume, up by 40.8% per year on the average in the 2004-2008 period.
However, in 2008 the trade volume sank 24.2% from 1,039.5 billion to 787.8 billion on global financial crisis.
The trade volume until mid June 2009 reached 3,013 billion shares. The index of major shares in LQ45 shrank sharply 16.199 points to level 374.79 points. Similarly, the Jakarta Islamic Index (JII) dived 14.890 points to level 308.55 points.
Daily trade frequency grew 59.9% in the 2004-2008 period. The daily frequency was recorded at 4.011 million times in 2004, surging to 13.417 million times in 2008.
Until mid June 2009, the trade frequency surged to reach 65.344 million times.
With the use of share transactions through internet (online trading) starting February 2009, trade volume is increasing. Currently share transaction via online trading could reach 20%-50% of the total value of daily transaction.
Currently, more investors use online transactions as it is more efficient and transactions could be made any time and any place. Investors, themselves could check their portfolios through internet. In the conventional transaction an investor has to telephone the account officer.
Generally, a securities company sets initial investment fund lower than in conventional transaction at a range of Rp5 million to Rp50 million. In conventional transaction, an investor has to provide at least Rp 100 million.
In addition, online transaction the commission is lower. The fee of broker in conventional transaction is 0.3%-0.4% as against only 0.25% in online transaction online at buying time and 0.35% at selling time. Some online trading companies even set the broker's fee at 0.2% for buying and 0.3% for selling. The minimum transaction fee and monthly cost of online transaction is also lower. Therefore, more securities companies offering online service to increase income. For example, around 20% of the total transactions of PT. Samuel Sekuritas are online trading.
BNI Securities is ready to launch online transaction service in July 2009. BNI Securities sets target that online transactions will increase its customers from 5,000 to 10,000. In February 2009 during soft launching, the value of online transactions contributed 40%-50% to the total daily transaction which reached Rp300 billion-Rp400 billion. BNI Securities hopes that online trading would contribute 60% to total transaction.
Trimegah Securities also wants to launch the service in the second half of 2009. Phillip Securities Indonesia, since launching the Phillip Online Electronic Mart System (POEMS) in 2000, has around 10,000 customers with daily transaction averaging Rp600 billion. In January-April 2009, POEMS had only 2,500 customers.
However, online trading could also have negative effect on the market as an investor could easier manipulate the prices such as by opening account in a number of online trading websites and holding transactions between own accounts.
Foreign investors dominate BEI
Now is a good momentum for local investors to become market leaders in BEI. The rejection of US$14 billion bailout to save the US automotive industry by the Senate is expected to undermine the IHSG of BEI this year.
Other impact is hedge fund companies, which are mostly holders of US government securities will likely withdraw their funds to cover budget deficits in world markets including BEI. Apart from in Indonesia, foreign control of the market in Russia is also strong, therefore, vulnerable to capital outflow.
Currently foreign investors own 54% of BEI down from 70% earlier. The foreign control is expected to continue to decline to as low as 30%-40% by the end of this year as foreign investors will be more concerned with dealing with the financial crisis in their respective countries. After the foreign investors leave local investors such as pension funds, or insurance will begin to enter that will benefit local hedge funds as the prices will be lower.
Earlier based on data at PT. Kustodian Sentral Efek Indonesia (KSEI) by June 2007, around 67.34% of shares in the market were controlled by foreign investors with local investors having the rest including insurance (1.71%), mutual funds (1.95%), financial institutions (0.52%), securities companies (3.8%), companies (19.48%), foundations (0.08%), and individual investors (4.72%).
Foreign control of shares traded at BEI began to scale up after diving once in March 2003. There are a number of factors contributing to regaining the foreign confidence. First, signal from the government to raise the oil fuel prices by 10%-30%. Foreign investors see the decision to raise the oil fuel prices would reduce state budget deficit, therefore, increasing the government capacity in meeting its obligations such as in repaying its bonds. Second, amid the falling global markets, a number of stocks traded at BEI promise good prospects such as mining and agribusiness stocks. The two stocks have attracted foreign investors.
In the second week of June, 2009, foreign investors posted net sales of Rp700 billion, as against net buying of Rp2.36 trillion in the first week of June.
Based on statistical data weekly transactions at BEI, in the period of 8-12 June, 2009, foreign investors reported buying transactions valued at Rp8.86 trillion with volume 3.54 billion shares. The sale transactions recorded by foreign investors were valued at Rp9.36 trillion with volume 3.82 billion shares.
In the past two years, the government has issued a series of policies to boost trade in the market. Among the policies concerned :
In 2009, the government offered 5% tax incentive for companies already launching and one planning to launch IPO.
Bapepam-LK stressed that the regulation on market risk shortens share offering period from 3-5 days earlier to one day with standby buyers.
--Flexibility in declaration of being effective by Bapepam
After declaration of being effective from Bapepam, an investor is allowed to roll over its schedule from normally not longer than three months. Investor, however, has to see the condition in the market.
Issuers will no longer be allowed to publicly announce their performance before being examined by Bapepam LK to prevent misinformation of data. The old regulation allows issuers to publicly announce their performance before being reported to Bapepam.
A decision of Bapepam-LK No. KEP- 401/BL/2008 revised the stipulation IX.H.I on tender offer restricting share purchase through tender offers. Floating shares may not be less that 20% in the market. The goal is to expand the market, to prevent tender from taking all shares from the market and to discourage going private through tender offer.
The limit allowing new majority shareholders to make tender offer is 25% under the present regulation, but Bapepam wants to relax the restriction and set wider limit to 35%-50%.
Attempts to attracted new issuers
Bapepam-LK has issued a new regulation to attract more companies to go public such as :
Bapepam-LK has simplified procedures by cutting short the time to grant the declaration of being effective for companies seeking IPO from 45 days to 35 days after the registration has been received by the agency.
--Securing cheap financing
Through IPO, a company could get an alternative source of fresh fund to finance its business expansion amid the still high rates of bank credit interest.
--Incentive in 5% cut of corporate income tax (PPh)
The incentive was effective retroactive to January 2008, but those entitled to the incentive must meet certain requirements--the portion of shares to be divested to the public is at least 40% with at least 300 holders and one holder having less than 5% stake. The requirement must be maintained by the issuer for at least six months in a fiscal year. However, 5% tax incentive is not enough to attract some companies to enter the capital market and launch IPO as the 40% portion hat has to be divested to the public is considered too high while the market is facing the threat of the global financial crisis. The incentive will benefit only large companies and a number of banks. If the portion could be reduced to 20%-25%, the incentive could be enjoyed equally by all issuers.
--Cheap listing fee
BEI listing fee and share re-listing fee is set at Rp1 million for every Rp billion of the share capitalization with a minimum of Rp25 million and a maximum of Rp250 million. Under the previous regulation the minimum amount was Rp10 million with the maximum level of Rp150 million.
Annual listing fee is Rp500,000 for every Rp1 billion of latest paid in capital with minimum set at Rp20 million and maximum at Rp200 million. Earlier the minimum listing fee was at least Rp5 million and maximum Rp100 million.
The listing fee now is set at Rp25 million for all issuer. Earlier it was Rp15 million on the main board and Rp10 million on the development board.
Listing fee at BEI is relatively cheap compared with an annual listing fee of Rp600 million in Singapore.
--Flexibility in offering period
IPO offering period is extended to 3 days after receiving the declaration of being effective from Bapepam-LK from 1 to 2 days earlier an issuer, therefore, will have more time to start public offering time considered more conducive.
Investors in capital market enjoy greater benefits and facilities like:
--More varied investment alternatives
More alternatives are open for investors or the people where to invest their money, not only in bank (such as deposits and savings) but also in capital market such as shares, bonds, and mutual funds that could turn out profit faster and larger than bank products.
--Number of investors minimum
Currently the number of investors in the capital market is relatively small at around 300,000 persons as against the country's population of 220 million. BEI continues to seek to attract new investors. It sets a target to have active investors 1% of the country's population or 2.2 million people. The low number of investors open big opportunity for new investors to enter the market.
--Free to invest in prospective sector
Investors are free to select stocks they consider more profitable. Among the sectors such as telecommunications, mining, and banking have highly liquid issuers to be selected by investors.
--Easily to access
With the launching of the Remote Trading system under which any transaction order at the office of the broker (securities company) is sent to the trading system of the Stock Exchange (JATS system), without placing order at the trading floor. The system facilitates investors to make transactions from any place as long as it is connected with the trading system of the Stock Exchange. Investors, therefore, enjoy benefits such as in process of transactions and confirmation becomes faster and orders from investors who happen to be away from the city could be executed directly to the trading system of his stock exchange.
Conclusion and prospects.
The Indonesian Stock Exchange began to recover in the second quarter of 2009 from the crash in the last quarter of 2008. The performance of the stock exchange gradually improve with foreign funds began to enter the market.
The IHSG also scaled up and began to cross the level of 2,000 from 1,256 points in October, 2008 when the government was forced to suspend trading for several days to prevent larger losses.
Currently, transactions have fully recovered after monthly transactions in May 2009 reached Rp130 trillion, up from Rp34.8 trillion in December 2008. Recovery began in April 2009 when the rupiah value rose and the economy expanded 4.4% y-o-y in the first quarter of 2009.
In 2009, the capital market is predicted to remain profitable for both investors and issuers. The confidence of prospective issuers is still high to launch IPO. In 2009, there were 15 companies planning to launch IPO that will raise Rp12.39 trillion in fresh fund. In 2009, BEI targets to post daily transactions averaging Rp2.75 trillion in 243 trading days, up from Rp1.06 trillion last year. Among the 15 companies seeking IPO soon include a number of state companies PT. Bank Tabungan Negara (bank), PT. Krakatau Steel (steel maker), PTP Nusantara VII (plantation) and PT. Garuda Indonesia (airline).
The capital market in Indonesia also still have potential issuers among mining giants operating in the country. PT Newmont Indonesia and PT Freeport Indonesia have been listed on New York Exchange, Europe, Singapore and Australia but not yet in Indonesia. The local capital market will get a big boost if the government issues a regulation requiring listing of those foreign companies in Indonesia. The market capitalization would increase considerably giving a new attraction to investors strengthening the competitiveness of the Indonesian Stock Exchange in this region.
Table--1 Number of issuers, 2004-2008 Number of Years issuers Growth (companies) (%) 2004 331 -- 2005 340 2.7 2006 344 1.2 2007 408 18.6 2008 396 -2.9 Average growth 4.9 Source: BEI Table--2 Value of IPO launched by issuers, 2008 Name of issuers Line of business Value of IPO (Rp billion) Bank Ekonomi Raharja Bank 291 Tbk, PT Bank Tabungan Pensiun Bank 500 Nasional Tbk, PT Adaro Energy Tbk, PT Coal mining 12,250 Bayan Resources Tbk, PT Coal mining 8,100 Indika Energy Tbk, PT Coal mining 2,670 Triwira Insan Lestari General trading, technical 336 Tbk, PT hardware agent Pabrik Kertas Basuki Paper industry 354 Rachmat Tbk, PT Trada Maritime Floating storage 500 offloading (FSO) service Gozco Plantation CPO Plantation 337 Yanaprima Hastapersada Plastic bag industry 50 Kokoh Inti Arebama Ceramic distribution Elnusa Integrated upstream oil 620 and gas services Bumi Serpong Damai Developer 459 Source: BEI Table--3 Performances of the shares of issuers launching IPO in 2008 Issuers Share performance (%) Bank Ekonomi Raharja 106.02 Triwira Insanlestari 50.0 Kertas Basuki Rachmat Indonesia 32.56 Hotel Mandarine Regency 8.18 Bekasi Asri Pemula -3.33 Sekawan Intipratama -26 Verena Oto Finance -50 Destinasi Tirta Nusantara -50 Adaro Energy -55.90 BTPN -57.90 Trada Maritime -60 Gozco Plantation -62.2 Yanaprima Hastapersada -62.4 Indika Energy -63.1 Kokoh Inti Arebama -70.6 Elnusa -70.8 Bumi Serpong Damai -82.7 Bayan Resources Group -83.8 Source: Bloomberg Note: Return of IPO price until the market closure on 30 December 2008 Table--4 Issuers not yet submitting March 2009 financial reports Name of company Line of business Eratex Djaya Tbk Textile industry Indomobil Sukses International Tbk Automotive industry Indah Kiat Pulp & Paper Tbk Paper industry Medco Energy International Tbk Mining Apac Citra Centertex Tbk Textile industry Pabrik Kertas Tjiwi Kimia Tbk Paper industry Alfa Retailindo Tbk Supermarket Bank Century Tbk Bank Bhuwanatala Indah Permai, Tbk Property Sentul City Tbk Property Infoasia Teknologi Global, Tbk Information Technology & Solution Provider Leo Investment Tbk Investment services Mitra Rajasa, Tbk Transportation Truba Alam Manunggal Engineering Tbk Contractor Source: BEI Table--5 Number of new issuers and IPO values, 2006-2008 IPO value Year New issuers (Rp trillion) 2006 12 16.5 2007 24 17.2 2008 18 24.4 Source: BEI Table--6 Companies planning listing in 2009. Name of companies Line of business IPO value (Rp billion) Bumi Citra Permai, PT Developer 38.5 Mayapada Hospital, PT Hospital 100 Bank Tabungan Negara, PT Bank 2,000 Metropolitan Kencana, PT Developer 100 Inovisi Infracom, PT Mobile services 40 Katarina Utama, PT Telecommunication 50 service Bank Jabar, PT Bank 385 Profesional Telekomunikasi Telecommunication 68 Indonesia (Protelindo), PT Services Suara Prosperindo Finance, PT. Financial service 50 Bank Jabar, PT Textile 385 Source Alfaria Trijaya, PT Supermarket 136 Trikomsel Oke, PT Telecommunications 101 Kratau Steel, PT Steel industry 3,000 Pekebunan Nusantara VII, PT Plantation 1,500 Garuda Indonesia, PT Aviation service N.a Total Source: BEI Table--7 Issuers deciding delisting, 2008-2009 Name of issuers Line of business Delisting PT. Surya Dumai Tbk Woodbased industry February 2008 PT. Bahtera Adimina Samudra Tbk Fishery August 2008 PT. Texmaco Jaya Textile industry October 2008 PT. Bank UOB Buana Tbk Banking November 2008 PT. Jaka Inti Realtindo Property February 2009 PT. Apexindo Oil/ gas drilling service February 2009 PT. Asia Grain March 2009 PT. Aqua Golden Missippi Bottled mineral water June 2009 Source: BEI Table--8 Capitalization growth at BEI, 2004-2009 Year Capitalization Growth (Rp trillion) (%) 2004 680 -- 2005 801.25 17.8 2006 1,982.70 147.4 2007 1,988.30 0.3 2008 1,065.36 -46.4 Average growth 2004-2008 29.8 May 2009 1,517.23 42.4 Source: BEI Table--9 Market share in capitalization value, May 2009 Value of capitalization Market share Issuers (Rp trillion) (%) BUMN 518.6 34.2 Privtate : 998.4 65.8 Total 1,517.0 100.0 Source :ICN processed Table--10 IHSG growth, 2004-2008 Year IHSG (Rp) Growth (%) 2004 1,000.23 -- 2005 1,164.14 16.4 2006 1,805.52 55.1 2007 2,745.83 52.1 2008 1,355.41 -50.6 Average growth 18.3 Source : BEI Table--11 Growth of IHSG, January-June 2009 Month IHSG (Rp) Growth (%) January 1.325,66 -- February 1.285,48 -3,03 March 1.463,30 13,8 April 1.593,67 8,9 May 1.902,88 19,4 Average growth 9.8 Source : BEI Table--12 Stocks allowed to take part in short selling and margin trading Short selling Margin trading Astra International Astra International Astra Agro Lestari Astra Agro Lestari Aneka Tambang Aneka Tambang Bank Central Asia Bank Central Asia Bank Nasional Indonesia Bank Nasional Indonesia Bank Rakyat Indonesia Bank Rakyat Indonesia Bank Danamon Bank Danamon Bank Mandiri Bank Mandiri Bumi Resources Bumi Resources Bakrieland Development Bakrieland Development Indofood Sukses Makmur Indofood Sukses Makmur Medco Energi International Medco Energi International Perusahaan Gas Nasional Perusahaan Gas Nasional Tambang Batubara Bukit Asam Tambang Batubara Bukit Asam Semen Gresik Semen Gresik Timah Timah Telecommunication Indonesia (Telkom) Telecommunication Indonesia (Telkom) United Tractors United Tractors Indosat International Nickel Indonesia Unilever Indonesia Source: BEI Table--13 Share value, volume and trade frequency, 2005-2008 Year Value of daily Growth Volume Growth transactions (%) (billion (%) (Rp trillion ) shares) 2005 406.00 -- 401.9 -- 2006 445.71 9.8 436.9 8.7 2007 1,050.15 135.6 1,039.5 137.9 2008 1,064.53 1.4 787.8 -24.2 Average growth 48.9 40.8 Year Frequency Growth (million (%) times) 2005 4,011 -- 2006 4,810 19.9 2007 11,861 146.6 2008 13,417 13.1 Average growth 59.9 Source :BEI Table--14 Composition of investors in the market, 2007 Investors 2007 2009 Share (%) Share(%) Foreign 67.34 54.0 Local : 32.66 46.0 Total 100.00 100.0 Source : ICN processed
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|Title Annotation:||INDUSTRY PROFILE|
|Publication:||Indonesian Commercial Newsletter|
|Article Type:||Company overview|
|Date:||May 1, 2009|
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