Nuts and bolts automotive parts manufacturer PT Garuda Metalindo made a strong debut on the Indonesia Stock Exchange (IDX) on Tuesday as its shares soared 50 percent thanks to strong investor appetite.

Listed under the code BOLT, Garuda Metalindo'€™s shares traded at Rp 700 (5 US cents) in morning trade, or 27 percent higher than its initial public offering (IPO) price of Rp 550.

The shares closed on Tuesday at Rp 825, a 50 percent surge from their IPO price, and the maximum gain the company can book under existing bourse regulations. The trading of shares with prices between Rp 200 and Rp 5,000 are automatically rejected when they soar 25 percent within a day and 50 percent for trading debuts.

'€œInvestor response was good and met our expectations,'€ said Bernardus Sumargo, vice president of corporate finance at PT RHB OSK Securities, which underwrote the IPO.

Garuda Metalindo, the ninth firm to list its shares on the bourse this year, saw its IPO twice oversubscribed during the June 29-30 offering.

It pocketed Rp 258 billion from the initial shares offering, representing 20 percent of its enlarged capital, of which 52 percent will be for debt refinancing, 28 percent for capital expenditure (capex) and 20 percent for working capital.

Garuda Metalindo director Erwin Wijaya said the company planned to pay half of the company'€™s liabilities to banks and suppliers to which its loans will be due this year.

'€œThe [debt] payment amount is around Rp 100 to 200 billion, or approximately half of the company'€™s total debts,'€ he told reporters on the sidelines of the listing event at the IDX.

 '€œMeanwhile, the capex will be used to improve the company'€™s productivity through several actions, such as automation in some manufacturing processes and new product development to meet customer demand.'€

Garuda Metalindo supplies automotive manufacturer giants such as Astra Honda Motor, Indomobil Suzuki Internasional and Toyota Motor Manufacturing Indonesia with a total production capacity of 2,000 tons of nuts and bolts per month.

The company also exports 2.5 to 3 percent of its production to Brazil, Japan, Vietnam and Thailand, among others, and plans to expand its export volume by 25 percent in three to four years, cumulatively.

With a weak domestic economy, Erwin said the company might only book revenues similar to last year'€™s Rp 900 billion, which helped it earn Rp 114 billion in net profit.

Indonesia saw 4.7 percent annual economic growth in the first quarter of this year, a level unseen since 2009. The automotive industry has been among the hardest hit, with sales contracting 18.4 percent year-on-year in May. (prm)

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