Shares in the largest steel pipe maker, PT Steel Pipe Industry of Indonesia, known as Spindo, closed slightly down on initial stock trading on Friday, while the composite index reached another all-time high.

Spindo’s shares, which are traded on the Indonesia Stock Exchange (IDX) under the code ISSP, opened 1.69 percent higher at Rp 300 apiece on Friday from its initial public offering price of Rp 295.

The shares moved in a range of Rp 270 to Rp 320, according to figures from the IDX. ISSP closed at Rp 300 apiece at the end of the first trading session at 11:30 a.m. on Friday. ISSP failed to maintained its increase, ending at Rp 290 on Friday, a 1.69 percent drop compared to its IPO price.

The benchmark Jakarta Composite Index (JCI) closed at 4,651.12 on Friday, a slight 0.4 percent increase compared to a day earlier, marking a 7.74 percent growth year to date.

Spindo, the sixth company entering the bourse this year, raised Rp 855.5 billion (US$88.16 million) from releasing 2.9 billion new shares, which is equal to 40.36 percent of total enlarged capital, in its IPO held
last week.

“Most of Spindo’s shares were allotted to local investors. There are only a number of foreign investors,” said Andry Rukminto, the president director of PT Andalan Artha Advisindo, which served as the underwriter for Spindo’s IPO.

The company will use 42 percent of the total funds raised to support capital expenditures, 45 percent as working capital and the remaining 12 percent to repay loans.

Vice president Tedjasukmana Hudianto said the company would need around Rp 300 billion this year and around Rp 500 billion next year to support its expansion.

The company is working on the development of new factories, particularly on the new Spindo Gresik Factory, and improvements of its existing plants. Spindo, which was established in 1971 as a joint venture between Itochu Corp. and Kawasaki Steel, now has five factories in Surabaya and Pasuruan in East Java as well as in Karawang in West Java.

Tedjasukmana said that the company’s unaudited total sales reached Rp 3.1 trillion in 2012 with profit before tax standing at Rp 160 billion. He added that the company expected to book around 3.9 trillion in sales this year with profits estimated at Rp 300 billion.

“The driver is increasing demand for pipe following growing demand in automotive, construction, infrastructure and gas pipe sectors. Local cement companies, such as Semen Gresik [now Semen Indonesia] and Holcim Indonesia, as well as petrochemical companies are expanding through new plant development,” he said, adding that the company’s production was expected to touch 400,000 tons this year.

Spindo’s products such as electric resistance welded pipe are also used in consumer products like furniture, bicycles and plumbing.

—JP/ Raras Cahyafitri

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