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Hype over Bukalapak IPO raises eyebrows
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The Bukalapak app is seen running on a smartphone. Bukalapak is an app for buying and selling goods in Indonesia. (Shutterstock/Deddy Pramu)
H
omegrown unicorn Bukalapak is expecting a massive success with its initial public offering (IPO) as investors are reportedly eager to grab a piece of the pie, but critics say the maiden listing of an e-commerce company in Indonesia is overhyped.
The company, which is backed by Singaporean sovereign wealth fund GIC and Microsoft among others, is expected to raise Rp 21 trillion (US$1.5 billion) in an IPO that is oversubscribed four times, as reported by Kontan based on unnamed sources. The offering is set to be priced at the upper end of the Rp 750 to Rp 850 range announced earlier.
On June 24, the company estimated its valuation would reach $4 billion to $5 billion at the IPO, far above the current $2.5 billion. More than 25 billion shares will be offered to the public from July 27 to 30, Bukalapak announced on Tuesday.
MNC Asset Management analyst Edwin Sebayang said the company might be overplaying its hand. He opined that investors who understood the company well would exclude it from their long-term investment portfolio as no dividends could be expected. He predicted that investors would still seek to buy it for short-term gain, capitalizing on market hype.
In 2020, he said, the company booked a net loss of Rp 1.34 trillion, which took the price-to-earnings ratio far into negative territory.
Meanwhile, he said the company’s equity of Rp 1.6 trillion at the end of 2020 meant the price-to-book value (PBV) was more than 54, making the stock overvalued.
“I would not recommend it. The company is not as [strong] as we imagine. Should anyone want to buy it, they have to prepare for the risk,” Edwin told The Jakarta Post on Monday.
