Indonesian miner Indo Tambangraya jumps 40 pct on debut
JAKARTA (Reuters) - Shares in Indonesian coal miner PT Indo Tambangraya Megah jumped 40 percent in the market debut of a 3.16 trillion rupiah ($336 million) initial public offering aimed at raising funds for growth and to pay back debt.
Indo Tambangraya (ITMG.JK), the third-biggest coal producer in Indonesia, has said it plans to use 70 percent of the proceeds from the share sale to develop its coal business and power plants, and the rest for other needs, including repaying debt.
The company, a unit of Thailand's Banpu PCL BANP.BK, saw its shares open 14.3 percent up at 16,000 rupiah, before extending gains to finishing at a high of 19,600 rupiah.
At that share price, Indo Tambangraya is worth nearly $2.4 billion, making it the smallest among three coal miners listed on the Indonesia Stock Exchange.
"We forecast strong earnings growth for ITM during 2007-2009, driven by rising coal prices. Volume growth during the period is expected to be limited. However, with a cash surplus, we see opportunities for growth through acquisitions," Credit Suisse analyst Paworamon Suvarnatemee said in a report.
The firm had total production of 19.6 million tons in 2006.
The strong debut came despite a 0.7 percent fall in the broader index .JKSE, as fresh investor worries about the health of the U.S. economy weighed on markets across Asia.
PT UBS Securities Indonesia is the lead underwriter for the offer with other brokerage houses -- PT Mandiri Sekuritas, PT Bahana Securities, PT Danareksa Sekuritas, BNI Securities and Ciptadana Securities -- helping underwrite the issue.
The company's net profit plunged to $24.9 million last year from $74.6 million in 2005 due to rising costs. But the firm's President Director Somyot Ruchirawat has said he expects net profit to rebound to $40 million this year.
Indo Tambangraya is a big shareholder in a number of Indonesian coal miners, including PT Trubaindo Coal Mining, PT Indominco Mandiri, PT Kitadin, PT Jorong Barutama Greston and PT Bharinto Ekatama.
PT Bumi Resources Tbk (BUMI.JK) is the biggest coal miner in Indonesia as well as the biggest listed coal mining firm on the exchange, with state-owned PT Tambang Batubara Bukit Asam second in terms of market value.
Indonesia's mining sub-index .JKMING has gained more than 230 percent since the start of the year, driven by coal prices surging to record highs on the back of strong demand, particularly from China.
(Additional reporting by Nury Sybli, editing by Ed Davies and Jan Dahinten)
