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Jakarta Post

Sritex seeks 41% rise in net profits on '€˜good looking'€™ China

  • Raras Cahyafitri

    The Jakarta Post

Jakarta   /   Tue, May 21, 2013   /  12:05 pm

Southeast Asia'€™s largest textile company, PT Sri Rejeki Isman (Sritex), is aiming to increase its net profits by 41 percent with more orders from China.

The publicly listed company, which is working on its plan for an initial public offering (IPO), is estimating that its net profits will stand handsomely at Rp 325 billion (US$33 million) by year'€™s end.

The growth is in line with its sales of Rp 5.1 trillion this year, which will make up a 24 percent increase from Rp 4.1 trillion year-on-year.

Sritex president director Iwan Setiawan Lukminto said on Monday that the company would likely see increasing exports to China on the back of an improved world economic outlook this year.

'€œOur export target is China because it has a big population, tremendous retail sector potential and a high level of income per capita. Sritex is fit for China'€™s market,'€ Iwan said during a press conference regarding the company'€™s IPO plan.

'€œMoreover, we have orders from Japan'€™s UNIQLO this year as well as for the next three years.'€

According to the company'€™s presentation, it has obtained garment orders totaling $30 million from UNIQLO this year. Sritex has also agreed to fulfill UNIQLO'€™s garment orders amounting to 4 million pieces worth $50 million in 2014 and 8 to 12 million pieces worth $100 million to $150 million in 2015.

Sritex is also expecting higher uniform orders from Indonesia'€™s Army to a total of Rp 300 billion this year, up around 63 percent from Rp 184 billion in 2012.

Sritex was founded in 1966 by local entrepreneur Muhammad Lukminto in Surakarta, Central Java. The company now has nine spinning plants, three weaving plants, three printing plants and seven garment plants in Sukoharjo, Central Java. The company claims that it has penetrated 55 countries.

Beside UNIQLO, Sritex'€™s clients include big fashion brands such as Guess and H&M.

It is also a military apparel supplier to more than 30 countries and has been appointed as the official partner outside Europe to produce military uniforms for NATO.

The company is planning to raise between Rp 1.29 trillion and Rp 2.16 trillion from offloading 5.6 billion shares representing 30.12 percent of enlarged capital through an IPO. Each share has been priced Rp 230 to Rp 385.

Funds raised from the offering will be used to expand the capacity of its spinning factory to 700,000 bales per year from the current 287,000 bales per year. It will also use fund from the IPO to increase the production capacity of its garment factory to 16 million pieces of apparel per year from the current 8 million.

Finance director Allan Severino said that the expansions of the spinning and garment factories would require Rp 2.4 trillion in total investment.

'€œAs much as Rp 1.5 trillion will be from the IPO and the remaining from debts,'€ Allan said.

Sritex is currently 80.24 percent owned by PT Huddleston Indonesia, which is controlled by the Lukminto family. Lukminto himself has a 0.07 percent stake in the company.

Another shareholder is Estrada Trading Limited with 19.69 percent. However, while Sritex launches an IPO, Estrada will divest its stake in the company in a private placement.

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