Target, Amazon Furniture Supplier to Float Shares in June
Jakarta. Furniture producer Integra Indocabinet is seeking to raise up to Rp 847 billion, or around $64 million, in an initial public offering next month as the company plans to expand its business this year.
The company will sell 2.69 billion new shares, equivalent to 35 percent of its enlarged capital of between Rp 210 to Rp 315 per share, the company said on Wednesday (24/05).
The prices are 8.5 to 12.7 times the company's estimated earnings for 2017, Andi Sidharta, Bahana Sekuritas investment banking director, said.
In comparison, another listed furniture company Chitose Internasional is now traded at around 15 times of its earnings.
Aside from Bahana, the furniture producer also appointed DBS Vickers Sekuritas Indonesia and BCA Sekuritas as the underwriters for the IPO.
Integra scheduled a book building period from May 24 to June 6 and will offer the shares on June 19-20 before listing them on the Indonesia Stock Exchange (IDX) on June 23.
Integra has five factories in East Java to manufacture its furniture products, including knock-down furniture, fully-assembled furniture and building components, including wooden door and related products.
Around 78 percent of Integra's products are sold in the overseas market, with companies in the United States, European Union and China among the company's biggest clients.
Integra ships knockdown furniture from wine racks to king-size beds to major customers in the US, including Target, Costco Wholesale and e-commerce giant Amazon.com.
Domestically, Integra distributes its products to 170 third-party stores across the archipelago through three distribution hubs in Surabaya, Yogyakarta and Bogor. The company also has two forest concessions in East Kalimantan.
"We believe the market will respond positively to our IPO as the proceeds will mostly be allocated to expand our business," Integra Indocabinet President Director Halim Rusli told reporters.
At least 56 percent of the company's proceeds will be allocated for its capital expenditure, 33 percent to refinance its debt and the remainder for its working capital, including buying new materials and paying for production costs.
"Our capital expenditure will mostly be spent on expanding two new products, wooden flooring and wooden window blinds," Integra Indocabinet's Wang Sutrisno said. He added that most of the money will be spent on buying new machines.
The company also plans to build a new warehouse in the Greater Jakarta area to improve distribution in Java and Sumatra and also to open six retail stores — under the Thema Home brand — in major cities in the western part of Indonesia by 2019.
Currently, the company's distribution is concentrated in the eastern part of Java. "We want to expand our distribution to the western part of Indonesia. We see a huge demand in that region," Wang added.
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