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Noodle Giant Indofood Sizzles On Market Debut
JAKARTA - Shares in Indonesian noodle maker Indofood Consumer Branded Products (ICBP) soared on its debut Thursday after last month's massively oversubscribed initial public offering, dealers said.
The IPO sold 1.17 billion shares for 6.2 trillion rupiah (695 million dollars) and was seven times overbooked in the latest sign of strong foreign interest in Southeast Asia's biggest economy.
Investors who missed out on the IPO snapped up the stock as soon as the Jakarta stock exchange opened, pushing its value 12 percent higher than the offer price of 5,395 rupiah by mid-morning trade.
It closed 10.29 percent percent higher at 5,950 rupiah on an otherwise flat day for the local bourse.
"Most of the buyers today are foreign funds, which could mean that the company is quite attractive for long-term investment," one fund manager told Dow Jones Newswires.
Investors gobbled up Indofood even as the rest of the market fell 17.22 points or 0.48 percent to 3,586.18 in line with regional sentiment.
Dealers said investors took profits after a hectic period of record-breaking highs, which have seen the main index grow 40 percent this year.
ICBP produces 15.7 billion packets of instant noodles a year and exports noodles, baby food, seasonings, pasta and flour to countries such as Australia, Hong Kong, the Netherlands, New Zealand and the United States.
It contributed almost half of the net sales recorded in the six months to June by parent company PT Indofood Sukses Makmur Tbk, which posted an operating profit of 3.12 trillion rupiah during the period.
The profit result was an increase of 40.3 percent, thanks largely to higher domestic consumption in the Southeast Asian country of 240 million people, Indofood said.
"Investors are interested in shares related to consumer products because Indonesia's economy relies on domestic demand," Mandiri Sekuritas analyst Yohan Setio said.
A survey of business leaders from 523 companies by UK Trade and Investment and the Economist Intelligence Unit, published last month, put Indonesia fourth behind China, Vietnam and India as a destination for investment capital over the next two years.
Analysts said concerns about corruption and the rule of law made equities a more attractive entry point than direct investments in plant and infrastructure.
Around 20 local companies will have raised billions of dollars on the sharemarket by the end of the year if current plans come to fruition. Many say they want to pay off debt and cash up for expansion.
Fourth-ranked lender Bank Negara Indonesia is targeting 10 trillion rupiah in a December rights issue, while another state-owned bank, PT Bank Mandiri, is marketing a 14-trillion-rupiah issue early next year.
The government had planned an initial public offering this year of up to 30 percent of its shares in national carrier Garuda Indonesia, but the sale has been postponed until 2011 because of auditing delays, officials said.
AFP
