Rights issue, WIKA shares price stands at Rp 2,180

JAKARTA. PT Wijaya Karya Tbk (WIKA) finally decided an Rp 2,180 price for a share for rights issue. The price is higher than the previous prices, which were ranging at Rp 1,525-Rp 2,505 per a share.

The prospectus of preemptive rights issue, Friday (4/11), mentioned that WIKA will release 2.82 billion shares with an Rp 100 nominal value per a share.
The ownership dilution levels of shareholders, who do not claim their rights, also become lower.

Previously, dilution effect was expected to hit the level of 39,63%. The prospectus also mentioned, “If the existing shareholders do not exercise their rights to buy the shares of preemptive rights issue, the percentage of shares ownership of the existing shareholders will decrease at maximum by 31.45%”.

Every 80,000 old shares are equal to 36,697 shares of preemptive rights issue. WIKA targets to raise Rp 6.15 trillion funds from the rights issues. WIKA will allocate 70.77% of the funds to cover the needs for capital expenditure for supporting infrastructure projects, which are the priorities of government. The projects include the constructions of several toll road lanes, power plants, and industrial zones. WIKA will allocate the funds through the scheme of equity investment in special purpose vehicle in several projects.

The equity investment will be allocated to the construction projects of Balikpapan-Samarinda, Manado-Bitung, Soreang-Pasirkoja toll roads, as well as the constructions of Jatiluhur water treatment plant and power plants. The equity investment will also include the development of industrial zones.

The state-owned issues will also allocate 29.23% of rights issue funds to cover working capitals for developing business in infrastructure sector, including power plant and toll road.

The cum rights at regular market and negotiation market will be determined on 10 November 2016, while cum rights at cash market will be determined on 15 November 2016. The due date for the registration for preemptive rights issue will be on 15 November 2016, while the preemptive rights issue is scheduled from 17 November 2016 to 23 November 2016.

Analyst at Recapital Securities Kiswoyo Adi Joe said that the price of Rp 2,180 per a share is quite attractive. Investors, who are WIKA’s shareholders, may execute their rights. Let alone, WIKA is active in the prospective sector, namely infrastructure.

Kiswoyo said tha status as a state owned enterprise is an advantage of WIKA. Usually, the shares of state owned enterprises are more attractive.

Kiswoyo estimated that the market price of WIKA shares will decrease following the rights issue price. WIKA shares closed up by 5.74% to Rp 2,850 per a share. For a short term period, Kiswoyo recommends ‘sell’ for WIKA shares.

The income of WIKA during the nine months of 2016 has increased by 15.45% to Rp 9.34 trillion compared with the same period in 2015, while the issuer’s net profit also slightly increased by 2.82% to Rp 401.52 billion. As of the end of September 2016, WIKA secured a worth of Rp 40.13 trillion new contracts. The number consists 76% of Rp 52.8 trillion target of new contracts.

(Muhammad Farid/Translator)