Indonesia: Cigarette Maker to Sell 30% Stake to Finance Expansion

Source from:  The Jakarta Post  11/21/2012

Cigarette manufacturer PT Wismilak Inti Makmur says that it will sell up to 30 percent of the company's enlarged shares during an initial public offering (IPO) next month to raise funds for business expansion.

"Shares of Wismilak are to be priced between Rp 575 and Rp 800 apiece," Iman Rahman, PT Mandiri Sekuritas director, said in Jakarta on Monday, adding that the price-earnings (PE) ratio of the shares would reach between 10 and 14 by 2013.

If the PE estimate holds true, the firm might raise between Rp 362.2 billion (US$37.6 million) and Rp 503.9 billion from the sale of 629.96 million enlarged shares to the public.

Wismilak has named PT Mandiri Sekuritas and PT OSK Nusadana Securities Indonesia as the underwriters of its IPO.

The firm will be the fourth cigarette company listed on the Indonesia Stock Exchange (IDX) after HM Sampoerna, Gudang Garam and Bentoel.

Iman said that book building for the IPO would be carried out between Nov. 19 and 29, while the IPO period would be held between Dec. 10 and 12, and the initial listing of shares on the bourse would follow on Dec. 18.

Iman said that in addition to offering shares to local investors, the company would go on a roadshow to Singapore, Malaysia and Hong Kong to court foreign investors.

Established in the 1960s, Wismilak manufactures hand-rolled cigarettes (SKT) and also manufacturers machine-rolled cigarettes (SKM) via subsidiary PT Gelora Djaja. Another subsidiary, PT Gawih Jaya, oversees distribution.

Iman said that 50 percent of the proceeds from the IPO would go to fund capital expenditures, with 30 percent allocated to working capital and the remaining 20 percent designated for refinancing.

Lucas Firman Djajanto, a director at Wismilak, added that the company had booked Rp 933 billion in revenue as net sales as of October, while recording profits of Rp 60 billion.

"In 2013, we are targeting 50 to 60 percent growth in profits and 40 percent growth in revenue," Lucas said.

In the firm's most recent financial statement, Wismilak reported that it had booked Rp 484.4 billion in net sales in the first six months of this year, up 8.1 percent from the Rp 447.8 billion it reported during the same period last year.

Wismilak's further reported operating income of Rp 49.2 billion as of June, up 35.8 percent from Rp 36.2 billion recorded in the same period in 2011.

Meanwhile, the company reported that it had booked total comprehensive income of Rp 38.9 billion in the first six months of the year, up 58.2 percent from the Rp 24.6 billion that was recorded in the same period last year.

Wismilak has reported annual production of almost 3 billion cigarettes in recent years.

The firm's production of machined-rolled cigarettes surpassed 1.2 billion as of the end of the first half of 2012, while its production of hand-rolled cigarettes topped 208 million.

Wismilak and subsidiary Gelora Djaja manufacture cigarettes under the Galan and Wismilak brands. Enditem