Another cigarette maker to enter bourse

JAKARTA. Cigarette maker PT Wismilak Inti Makmur, maker of clove cigarettes and premium cigars such as Wismilak, Diplomat and Galan, says it will hold an initial public offering (IPO) later this year.

Wismilak would be the fourth cigarette firm listed on the Indonesia Stock Exchange (IDX), after PT Gudang Garam (GGRM), PT HM Sampoerna (HMSP) and PT Bentoel International Investama (RMBA).

The company has appointed PT OSK Nusadana Securities and PT Mandiri Sekuritas as underwriters for the IPO, Wismilak corporate secretary Surjanto Yasaputera said at the IDX.

Wismilak will sell a maximum 30 percent of its shares to the public and hold a global offering covering the Asian region, according to Surjanto.

He did not say how much the firm expected to generate from the IPO nor an intended range for share prices.

Wismilak will use IPO proceeds to boost production of cigarette producer PT Gelora Djaja Gelora, which along with distributor company PT Gawih Jaya is one of the firm’s two subsidiaries, Surjanto said. 

Gelora, which currently operates three factories in East Java that produce 3 million cigarettes a year, is aiming at booking Rp 1 trillion (US$104.24 million) in revenue by year end.

“It’s a double-digit growth from last year,” Surjanto said, adding that Wismilak’s biggest markets were in Central Java, East Java, Kalimantan and North Sumatra.

Separately, Trust Securities analyst Reza Priyambada said he doubted Wismilak’s IPO would generate the funds expected considering the bleak prospects for the tobacco industry.

“The government’s plan to increase the tobacco tax next year and growing public health campaigns against tobacco have become obstacles for industry players,” Reza said over the telephone.

The government plans to raise the tobacco tax from 7 to 10 percent in 2013, expecting to book Rp 85 trillion from tax in 2013, up an expected Rp 84.4 trillion in 2012. 

Reza added that he suspected investors would be more cautious in investing in tobacco as higher costs have hindered publicly listed tobacco firms in booking profits, as shown by the first-half financial reports of Gudang Garam and Bentoel.

Gudang Garam reported that its profits declined on an increasing costs of goods sold, while Bentoel cited higher operating costs behind its lackluster performance.

THE JAKARTA POST