Nelly sets sail on the stock exchange

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Shipping company PT Pelayaran Nelly Dwi Putri (NELY) was floated on the Indonesia Stock Exchange (IDX) on Thursday. Its launch went well as the price of its shares steamed ahead by 10.1 percent to Rp 185 (0.02 US cents) during its stock market debut.

Nelly’s shares were offered at Rp 168 apiece during the initial public offering (IPO) and climbed soon after trading started at 9:30 a.m. Nelly appointed PT Lautandhana Securindo as underwriter for the IPO and it became the 18th firm to go public so far this year.

The company, which was established in 1977, concentrates mainly on timber shipping, according to Nelly president director Tjahtja Tjugiarto.

The company raised Rp 58.8 billion by releasing 350 million shares, almost 15 percent of its enlarged shares. It will use about 20 percent of the total funds raised from the IPO as working capital and the remaining 80 percent to purchase 11 tugs and barges.

Each tug and barge pairing requires around $2.5 million in investment, Tjahtja said. At the moment, Nelly operates 31 tugs and 37 barges, and transports around 1 million tons of timber every year.

“We transport timber from several regions in Kalimantan, Papua and Sumatra to Riau province for the pulp paper industry there,” he said, adding that the company’s clients included paper producers PT Indah Kiat Pulp & Paper and PT Raja Garuda Mas.

The timber trade accounts for more than 80 percent of the company’s business; the remainder comes from coal transportation and shipping consulting services.

“Our coal transportation segment is still very small. We do not do it on a contract basis, but rather on the spot when it is possible. Some of the coal is transshipped from other vessels,” he said.

According to Tjahtja, Nelly does not have any plans yet to expand its coal transportation business, citing the current volatility in coal prices.

The company is aiming for Rp 190 billion in revenues by year end, up 11.1 percent from 2011. It also expects to book Rp 62 billion in net profits this year, an 8.8 percent increase from the year before.

Tjahtja said the company set modest targets for revenue and net profits to prevent a sudden growth surge that might blowback on them.

During the first six months of this year, it earned Rp 105 billion and Rp 31.37 billion in revenue and net
profits, respectively.

Nelly finance director Budi Tjahjadi said the company allocated Rp 70 billion for capital expenditure in 2012. During the first half of this year, it spent Rp 60 billion on purchasing tugs and barges.

“We took delivery of three pairs of tugs and barges in May, July and October from our previous orders,” Budi added.