State-Owned Cement Maker Baturaja Sets IPO in October
State-owned cement maker Semen Baturaja plans to float its shares on the Indonesian Stock Exchange in November, its president director Pamudji Rahardjo said
“Our target for the initial public offering date is October, so the shares can be listed in November,” said Pamudji .
Baturaja maintains its target of raising up to Rp 1.2 trillion ($128 million) from the public offering, he added.
“We, however, are still considering the amount of shares to be offered to the public, whether we stick with 35 percent [as previously planned] or not.”
A government-appointed privatization team had previously agreed for a planned sale of a 35 stake in Baturaja.
Semen Baturaja will use the capital from the IPO to finance its expansion, to meet increasing demand for cement. Rising cement demand indicates strong economic growth.
The company plans to build a Rp 2.3 trillion cement factory with projected annual production capacity at 1.5 million tons of cement this year.
The new plant is part of Baturaja’s plans to boost total production to 3 million tons per year in the next six years.
It expects production at 1.27 million tons this year with 39.2 percent of that amount having already been delivered in the five months through May.
Pamudji said that he expects cement sales will increase in the third and fourth quarters when most of the results on construction tenders are announced.
Its net income in the January-May period was Rp 103 billion.
Baturaja’s share of the domestic market is small, taking into account the Indonesian Cement Association cement production forecast of 60 million tons this year.
Total industry cement sales rose 12.4 percent to 49.25 million tons in 2011 from 43.69 million tons in the previous year.
The cement industry has experienced a boom in the past few years due to low borrowing costs for Indonesians seeking property credit and rising purchasing power. Total cement consumption is expected to reach 52 million tons this year, up from 48 million last year. Rising cement and vehicle sales suggest Indonesia’s economy will continue to perform strongly amid global economic woes.
Indonesia’s cement consumption per capita, however, was among the lowest in the region, indicating that companies like Baturaja still have plenty of room to grow.