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JAKARTA. A number of issuers are ready to raise funds in Indonesia Stock Exchange (IDX) by issuing shares without preemptive rights. Investors may see the rights issues as investment opportunities. However, the investors need to monitor the business’s fundamentals of each issuer.
An issuer PT Evergreen Invesco Tbk (GREN) plans to release 200 billion new shares. The issuer, who develops spinning yarn, fiber, and cotton businesses, expects to raise Rp 40 trillion funds from the right issues.
Initially, GREN targeted to raise Rp 30 trillion funds by releasing 150 billion shares. GREN would allocate the funds to settle its debts and develop its business.
After General Meeting of Shareholders (RUPS) on Monday (17/10), President Director of GREN Handi Suryanto said that the company will allocate the funds obtained from the right issues to settle the debts from asset purchases.
However, to date, the precise number of the assets remains indefinite, since GREN is still calculating the future assets. The assets include a 5.8 hectare warehouse area in Pandaan, Surabaya (East Java). “Other assets may be in the forms of properties and others,” Handi said.
Since August 2016, GREN had terminated its spinning yarn, fiber, and cotton businesses. Commissioner of GREN William Kayhatu said that the company will allocate the funds obtained from rights issue to various purposes, including developing livestock enterprise.
Meanwhile, PT Centratama Telekomunikasi Indonesia Tbk (CENT) also plans to release at maximum 20.79 billion new shares in the early of January 2017. CENT targets to raise Rp 2.03 trillion funds from the rights issue. CENT plans to allocate 4% of the funds to buy the shares of PT Network Quality Indonesia (NQI), while 93% and the rests of the funds will be allocated for settling principal debts and the issuer’s working capitals.
Investors have to be tactical
In an immediate time, the producer of frozen foods PT Sekar Bumi Tbk (SKBM) will also issue its rights. SKBM plans to release 2.3 billion shares or equal with 71.06% of paid-up capitals. The issuer itself targets to collect Rp 1.2 trillion from the rights issue.
SKBM plans to allocate the funds to increase its business growth and conduct some acquisitions. SKBM will also allocate the funds as equity participation of its subsidiaries to develop brackish water fish and shrimp farms.
Analyst at Koneksi Kapital Alfred Nainggolan said that investors need to observe several things, such as the information related to the allocation of funds obtained from the rights issues. Alfred said that the investors may be attracted to buy shares of issuers, which have clear performance histories during the last two or three years.
On GREN, Alfred estimated that the issuer does not have clear information about the allocations of right issues funds, despite it will issue its rights in a massive number. “Information has it that the funds will be allocated for the debts settlement, while the total debts amounted to Rp 20 billion. There is possibility for backdoor listing”, Alfred said.
Meanwhile, Alfred estimated that SKBM has proper track records on right issues. Therefore, the shares of SKBM have higher growth potential compared with blue chip shares. “They (SKBM) launch expansions, while government boosts fisheries sector. In a long term, the shares may have higher growth potential compared with blue chip shares. However, investors need to monitor their consistencies,” he added.
Administrator at Association of Indonesia Stock Exchange Analyst Reza Priyambada said that investors have to observe the main purposes of the rights issues. In this case, investors have to be critical on the purposes. If an issuer declares that the funds will be allocated for operational purposes, then the investors need to have sufficient information about the purposes.
Meanwhile, Head of Research Department at Universal Broker Satrio Utomo suggested Financial Service Authority (FSA) to be selective in providing effective licenses to issuers in order to protect investors’ interests. “We need to learn from the case of RIMO’s rights issue, which did not have effective license. Investors also have to be tactical. This is the role of FSA, since the public funds rising must have clear purposes”, he said. (Translator: Muhammad Farid)
