Following its initial public offering (IPO) on Monday, crumb rubber producer Kirana Megatara hopes to see a significant upsurge in its net profits this year on the back of stronger global rubber prices and increased production capacity.

Kirana, part of diversified conglomerate Triputra Group, is looking to increase net profits by 50 percent to Rp 315 billion (US$23.7 million) this year from Rp 210 billion last year.

To reach this target, the firm aims to boost the sale of crumb rubber from 440,000 tons to 500,000 tons, Kirana finance director Jenny Widjaja said after the company’s stock listing ceremony at the Indonesia Stock Exchange (IDX) building.

“With the [projected] increase in sales, combined with improved rubber prices, we are confident we can book a 50 percent increase in net profits,” she said.

Despite price fluctuations, the average price of rubber stood at around $1.50 per kilogram in the first quarter of this year, higher than the average price of $1.30 per kg in 2016. “As a result of the rise in global rubber prices, our profit margins will also increase,” Jenny added.

With Rp 100 billion prepared for capital expenditure throughout 2017, the firm plans to relocate two of its existing factories. The factory in Medan will be relocated to Langkat regency, while the one in Tulangbawang regency, Lampung, will be relocated to Central Lampung.

The company currently has 15 crumb rubber processing factories spread across Sumatra and West Kalimantan, with production capacity of 720,000 tons per annum. After the relocation is completed, the company’s production capacity is expected to increase to 780,000 tons.

Kirana Megatara Group is one of the largest producers of crumb rubber in Indonesia, capturing 17 percent of the export market in 2016. The group produces technically specified rubber, or equivalent to Standard Indonesian Rubber (SIR).

Most of the crumb rubber was exported to the United States, Europe and other countries. The main buyers of the company’s product consist of several top global tire producers such as Goodyear, Hankook, Michelin, Yokohama, Bridgestone and Pirelli, operational director Daniel Tirta Kristiadi said.

The company exported most of its crumb rubber because domestic demand only amounted to 500,000 tons. Rubber producers in Indonesia can produce a total of 3 million tons every year, leading to an oversupply in the domestic market.

Kirana started its first trading day as a publicly listed company on Monday, cashing out a total of Rp 527.8 billion from the sale of 15 percent of its new shares, or equivalent to 1.15 billion shares. The shares were offered to investors for Rp 458 apiece.

The company will use 58 percent of the proceeds to inject capital into its subsidiaries and 22 percent to pay back loans. The remaining 20 percent will be used for working capital.

Kirana became the 12th company to go public this year and the 547th company to be listed on the IDX. During the closing session on Monday, shares of Kirana closed 49.6 percent higher at Rp 685 per share from the initial listing of Rp 458 per share.

“Today marks a huge milestone for the company. We hope that the listing of KMTR shares will help the company grow faster,” Kirana president commissioner Toddy Mizaabianto said.

Kirana is partly owned by business tycoon Theodore Permadi Rachmat through his firm PT Triputra Investindo Arya.

PT Persada Capital Investama, Martinus Subandi Sinarya and members of the public also have an ownership stake in the company.

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