Textile giant PT Sri Rejeki Isman (Sritex) saw its shares climb during the first day of trading on the Indonesia Stock Exchange (IDX) in Jakarta, casting off doubts of its being in a sunset industry.

Sritex's shares opened at Rp 240 (2 US cents) on Monday, unchanged from its initial public offering (IPO) price. The shares peaked at Rp 290 after falling 2.1 percent to Rp 235 a few minutes after trading began.

The shares, sold under the code SRIL, closed at Rp 250 on Monday evening, 4.2 percent higher than the opening price.

According to Trust Securities' research head, Reza Priyambada, Monday's trading showed that
Sritex's shares were attractive for investors.

'Ending your first trading day at a level higher than the opening price is a good achievement. The company has managed to convince investors that textiles is not a sunset industry; at least not in this firm's case,' he said, adding that Sritex needed to keep its end of the bargain, as promised during its book-building period, to maintain investor interest.

Sritex, Southeast Asia's largest textile company, benefited from its wide network coverage, Reza said. As well as the domestic market, the company exports its products to major overseas brands, such as the US' GUESS and Swedish H&M. It also supplies military apparel to 30 countries.

During its IPO from June 10 to 12, Sritex collected Rp 1.34 trillion by selling 5.6 billion shares or 30.12 percent of its enlarged shares, to the public.

Following the IPO, ownership of the company by PT Huddleston Indonesia ' which is controlled by the Lukminto family ' was reduced from 80.24 to 56.07 percent, while the ownership stakes belonging to Estrada Trading Ltd and Muhammad Lukminto have been downsized from 19.69 to 13.76 percent and 0.07 to 0.05 percent, respectively.

Estrada plans to sell its shares through a private placement to institutional investors, which will increase public ownership to 43.88 percent.

Sritex will use 87 percent of the IPO funds, or Rp 1.17 trillion, to finance the expansion of its spinning division, with the remaining 13 percent going on its garment division. At the moment, the company operates nine spinning factories, three weaving factories, three finishing facilities and six garment plants in Sukoharjo, Central Java.

According to Sritex finance director Allan Moran Severino, part of the expansion will include acquiring 287,000 new spindles and 5,000 new sewing machines, and building new factories.

'It will take around four buildings to house the new spindles alone,' he said.

With the new equipment, the company hopes to increase its spinning capacity to 700,000 bales per year from the current 287,000 bales per year. Its annual apparel production capacity will also rise to 16 million pieces from 8 million pieces as of now.

It aims to book Rp 4.8 trillion in sales by year-end, rising by more than 60 percent from last year. It has set its net profit target at around Rp 330 billion, up 44 percent from 2012.

Overseas orders will be the driver behind the projected growth as the company has secured new garment orders from Japan's UNIQLO and H&M. Allan said that Sritex had also obtained a new European client for its military apparel.

' JP/Tassia Sipahutar

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