Bakrie Group Dominated Trading

Jakarta. The shares of Bakrie Group companies, which engage in commodity sector, booked a worth of of trillions rupiah transactions in only one day.

After suspension is lifted, the price of PT Bumi Resources Tbk (BUMI) hiked by 34.67% to the level of Rp 202 per share during the trade on Wednesday (26/10). BUMI became the top gainer by booking an Rp 1.38 trillion of transactions during the trade yesterday.

Aside of BUMI, other Bakrie’ subsidiaries also booked shares prices rise. PT Bumi Resources Mineral Tbk (BRMS) recorded a 27,78% of shares price rise to the level of Rp  92 per a share and booked an Rp 1.03 trillion of transaction. Meanwhile, the price of PT Energi Mega Persada Tbk (ENRG) shares increased by 4% to Rp 52.

Analysts assumed that the current conditions of Bakrie Group’s issuers have caused the shares move unpredictable.

BUMI is now undergoing trial process over the postponement of debt payment obligation (PKPU). Voting for BUMI’s proposal is delayed until 9 November. It is predicted that creditors will agree on restructuring BUMI’s debts. Rumors circulating that debt equity swap of BUMI is high. Apparently, this has driven the increases in BUMI’s shares price during the recent days.

Analyst at First Asia Capital David Sutyanto said that the amount of BUMI’s debts is higher than its assets value. This led to negative equity so that it is difficult to estimate the valuation of the shares. “Creditors will unlikely to have the overall values of the debts if the company is bankrupt”, he said.

Head of Research Department at Universal Broker Indonesia Satrio Utomo said that market still expect that BUMI can settle the restructuring process. Meanwhile, the momentum of increase in coal price also drove BUMI’s shares price rise.

It is assumed that the increases in the prices of BRMS and ENRG shares are only the side effects of the BUMI’s shares price rise. However, market have positive sentiment over the plan for settling BRMS debts by selling Newmont shares.

Investor Relations at BRMS Herwin Hidayat said that the divestment value of 24% of Newmont Nusa Tenggara’s shares in PT Multi Daerah Bersaing (MDB) is as much as US$ 425 million.

The selling is expected to complete before the beginning of November 2016. The funds raised from the sale of shares will be allocated to settle debts to Credit Suisse. “After the transactions, BRMS will have zero debt”, he told KONTAN.

The debts will be settled in this year. The financial report of BRMS for the first semester of 2016, which was released yesterday reveals that BRMS suffered US$150 million of net loss, due to a US$183.8 million decrease in the assets value of Newmont.

However, Herwin said that the asset reduction will only be recorded once. "It's just a matter of accountancy, so actually there is no cash flow coming out," he said.

According to Satrio, the price of BUMI’s shares is still in an uptrend. But he warned that these stocks are only suitable for professional traders, who are already aware of the risks very well.

David did not dismiss that the shares of Bakrie Group often yield high profits for traders. However, the high returns also have high potential risks. If the restructuring fails, the prices of Bakrie Group shares may drop. Let alone, the expansion plans of the issuers remain unclear due to equity problem.

(MUHAMMAD FARID/Translator)