PTPP offers discounts on shares prices

JAKARTA. State owned construction issuer PT PP Tbk (PTPP) targets to raise an Rp 4.4 trillion through limited public offering with pre-emptive rights issue.

PTPP will release 1.23 billion-1.71 billion shares, with the prices ranging from Rp 2,580-Rp 3,583 per a share. We have not yet decided the definite price", said Financial Director of PTPP Agung Purbianto.

Management of PTPP Tbk plans to allocate 76% of the obtained funds from rights issue for capital expenditure to support infrastructure projects. The rests will be allocated to support working capital for business development in the sectors of infrastructure, such as power plant, toll road, industrial zone, and sea port.

During the third quarter of 2016, the income of PTPP increased by 23.60% to Rp 10.85 trillion compared with the same period in 2016, while the net profit increased by 49,91% on year-on-year basis to Rp 566,82 billion.

New contracts

The PTPP's achievements in income and net profit of are followed by the achievement of the company in terms of new contracts.

"As of the beginning of November 2016, we have booked a worth of Rp 25.4 trillion new contracts", said Corporate Secretary of PTPP Agus S Kana.

Analyst at Kresna Graha Investama Fahresi Fahalmesta said that PTPP aims at increasing liquidity by issuing rights. In the future, the company will boost the business expansion, including at the segment of property through its subsidiary PT PP Properti Tbk (PPRO).

"PTPP has a larger potential to join bidding process. The rights issue will reduce the gearing ratio of the company, as the equities have increased from an Rp 6 trillion initial target to Rp 10 trillion", said Fahresi.

Fahresi estimates that market will absorb the PTPP's shares, as the issuer offers discount of the shares price. Let alone, the government will be the standby buyer. The prices of shares during the rights issue that are ranging from Rp 2,580-Rp 3,683 per a share reflects a 11%-36% discount compared with the prices of PTPP's shares during the close of trading on Thursday (3/11).

It reflects that my prediction is in line with PTPP' achievement", said Fahresi, who predicted that the segments of EPC and property had driven increase in PTPP's income. This has subsequently increased the margin of PTPP.

In the third quarter of 2016, the gross margin and net margin of PTPP have increased from 13.4% and 1.4%, respectively in the same period in 2015 to 14% and 5.2%, respectively.

Fahresi recommends buy for the shares of PTPP. He estimates the normal price of the company's shares will stand at the price of Rp 5,400 per a share.