Stock Recommendations: Petrindo Jaya Kreasi (CUAN) Moves Up to Large Cap

STOCK MARKET - JAKARTA. FTSE Russell has announced changes to the constituent composition of the FTSE Global Equity Indonesia Index in the semi-annual review series of March 2024.

Prajogo Pangestu's affiliate issuer, PT Petrindo Jaya Kreasi Tbk (CUAN) has entered the FTSE Russell global index. CUAN has successfully moved up from the micro-cap category to the large-cap category.

CUAN managed to kick out PT Adaro Energy Tbk (ADRO) and PT Merdeka Copper Gold Tbk (MDKA). Both had to downgrade to the category of stocks with medium capitalization, also known as mid-cap.

Recently, CUAN also plans to use bank loan funds to finance the acquisition of shares in PT Petrosea Tbk (PTRO). The value of PTRO share purchases by CUAN reached IDR 940 billion. The source of funds used for this acquisition comes from loans from PT Bank Negara Indonesia Tbk (BBNI).

The funds will later be deposited by CUAN to its subsidiary, PT Kreasi Jasa Persada, as a form of capital increase.

CUAN will buy 342.92 million PTRO shares owned by the old PTRO shareholders, PT Caraka Reksa Optima. This number represents approximately 34% of all shares placed and fully paid in PTRO.

CUAN's shares have also been suspended several times by the Indonesia Stock Exchange (BEI). CUAN's shares have strengthened by thousands of percent since listing on the Exchange on March 8, 2023. According to Kontan.co.id's records, BEI has temporarily halted trading of CUAN shares five times.

Head of Customer Literation and Education at Kiwoom Securities Indonesia, Oktavianus Audi, believes that one of the factors for CUAN's entry into the FTSE Russell global index in the large-cap category is because, in the last three months, CUAN has entered the ranks of issuers with the largest market caps on BEI.

"As of January 2024, CUAN's market caps were recorded at IDR 73.92 trillion and ranked 25th largest. This was also driven by the acquisition of PTRO shares," Oktavianus told Kontan.co.id, Monday (19/2).

CUAN is currently aggressively acquiring three mining companies, namely PT Multi Tambangjaya Utama, PT Borneo Bangun Banua Bestari, and PT Borneo Bangun Banua. This acquisition is predicted to have a positive impact on CUAN's long-term performance.

Until the end of trading on Monday (19/2), CUAN shares soared by 19.25% to a price level of IDR 7,900 per share. Oktavianus sees that the nearly 20% increase in CUAN shares is a positive response from investors.

Associate Director of Pilarmas Investindo Securities, Maximilianus Nicodemus, said that if you want to look at the stocks in FTSE Russell, you must still assess them based on their prospects because some stocks are still not good this year.

"When looking at prospects, it will certainly be closely related to the global situation and conditions and the sector of each issuer. Therefore, the sector also needs to be considered because it will affect the stocks in it," Nico told Kontan.co.id, Monday (19/2).

Nico said, when a stock enters the global index, foreign investors have the potential to enter the stock. This is considered to provide a positive sentiment for stocks entering the FTSE Russell.

"Although sometimes not all will move positively today. CUAN is one of the stocks that received positive sentiment from CUAN's entry into the FTSE Russell," said Nico.

Head of Investment at Reswara Gian Investa, Kiswoyo Adi Joe, added that the soaring of CUAN shares today was driven by the factor of CUAN's entry into the large-cap category, but he sees a risk of profit taking for CUAN shares.

"So there is indeed an influence of foreign funds pegged to the FTSE Russell and investors usually adjust, the influence is very much and very massive," Kiswoyo told Kontan.co.id, Monday (19/2).

Kiswoyo recommends a hold on CUAN shares with a target price of IDR 10,000 per share.