JAKARTA: In the midst of gloomy stock market and the plentiful rights issue at the secondary market, investors still demand for a big discount in the stock valuation of a company that will go public in the second half of 2011.Among 10 IPOs in the first half, only 5 companies shares, until July 1, at the Indonesia Stock Exchange that booked hiking share prices, one stagnant stock in the position of initial offering, while the rest experienced narrower price than initial position.Mandiri Sekuritas viewed such condition as a challenge for market players particularly for companies who plan to conduct IPO in this second half, Director Kartika Wirjoatmodjo told Bisnis.The attractive IPO prices and good fundamental, she believed, are the keys to successful corporate action.Market may not be as bullish as last year. That was why investors asked for a big valuation cut. They even asked for IPO ratio price under 10 times price to earnings (PE).On the average, companies that entered the market last year fixed their initial price above 10 times PE. To date, most investors demanded for 9 times PE due to the less prospective global market although it started to rebound over the weekend.With an average 15 times PE, she continued, potential listed companies has to cut their valuation price to 30% to attract investors. Such condition is unfavorable for companies.PE ratio is a common valuation method used by underwriters to determine the fair position of initial stock price. The ratio is calculated by dividing the company's initial price with its estimated net earnings per share.The higher PE ratio, the more expensive initial price valuation is and vice versa. Jakarta Composite Index (JCI) in the past 3 days rose 2.95% to a new high at 3,927.09 after previously declining by 0.91% last Monday.US-based Dow Jones rallied last week to book 5.33% growth. Dow Jones, last Friday, rose 1.36% to 12,582.773; the biggest gain in the past 2 years. Such improvement was triggered by the hiking US manufacture index to 55.3 last month from 53.5 in May.PT Danareksa Sekuritas President Director Marciano Hersondrie believed a stable real sector should be government's main concern in attracting foreign inventors.Capital market reflects a country's real sector, as investors will consider the sector before entering and investing in a country.I hope government will develop real sector, infrastructure in particular. With a good infrastructure, our country is a promising investment destination.Investment gradeMarciano further highlighted investors higher expectation over Indonesian market. Moreover, most rating agencies indicated to include Indonesia into investment grade category by the end of this year.The vigorous fundamentals of most companies in Indonesia still become the main factor to succeed IPO, said IDX Corporate Assessment Director, Eddy Sugito.Companies with strong fundamentals and attractive IPO structure are estimated to still appeal investors.Indonesia market still becomes global investment destination as it has strong commodity base and high consumption level, Eddy added.He is optimistic that IDX may meet IPO target of 25 companies by this year. In the second half, 10 companies had been listed their stocks on domestic market.As the market authority, we will not impede the intention of a company to go public although the current market is somewhat soft. As long as the fundamentals are solid, the price attractive and the stock distribution is proper, I think IPO will work out.Referring to Bloomberg data, seventeen IPO and rights issue in the first half of 2011 valued IDR33.1 trillion or rose by 9% compared to 14 offering valuing IDR30.3 trillion in the first half of 2010.The rights issue of PT Bank Mandiri Tbk, valuing IDR11.7 trillion happened to be the largest in the first semester while the IPO of PT Salim Ivomas Pratama Tbk, costing IDR3.5 trillion turned out to be the largest action in the second quarter.Analyst at PT Samuel Sekuritas Indonesia, Josep Pangaribuan estimated IPO value to reach IDR12 trillion in the second half this year, with prospective five until seven companies.The capital market outlook by the second semester is somehow better compared to JCIs target at 4,500, he said. (T02/T05/NOM)
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