Reviewing IPO Report of PT Eka Sari Lorena Transport Tbk

Bareksa.com - PT Eka Sari Lorena Transport Tbk is offering a maximum of 150.000.000 of new shares. The amount being offered equals to 42.86% of the enlarged capital.

In conjunction with the Public Offering, the Company will also issue a maximum of 30.000.000 Warrant Series I. The Series I Warrant is given to the shareholders with a ration of 5:1, meaning for every 5 shares, the holder will receive 1 Series I Warrant.

The Company has decided to carry out an Employee Stock Allocation (ESA) program. As much as 1% of the number of shares offered or a maximum of 1.500.000 shares is allocated for the ESA program. Shown above are the shareholders after the Initial Public Offering, ESA and Series I Warrant conversion.

Company Overview

PT Eka Sari Lorena Transport Tbk has been in the land transport line of business for approximately 44 years, where it was established by its founder GT Soerbakti in 1970.

The Company’s main service are Trans Province (AKAP) bus, Transjakarta Busway and Transjakarta Feeder. The Company’s AKAP bus service has a fleet of 161 Mercedes-Benz busses. The Company also participates in the Transjakarta Busway with 47 busses; 13 are articulated busses (Komodo brand) and 34 single busses (HINO brand) operating in Corridors 5 and 7. The management plans for aggressive expansions as it is planning to add approximately 115 of new busses.

Currently the Company’s main Depot/workshop is situated in Bogor, two other are in South and East Jakarta, and supporting workshops located in almost all of the representative offices. Current route of the Company’s busses covers 21 major cities in Sumatera, Java and Bali.

Financial Overview

FY12’s total Asset decreases by –4.6% to Rp 228 bn, vs. Rp 239 bn in FY11. Bank loans in FY12 decreases by –60% YoY, trimming liabilities that lead to the lessening of total asset. On the other hand, Equity was up by +6% YoY in FY12 and was on the back of increases in unappropriated retained earnings (Rp 42.5 bn in FY12 vs. Rp 35.5 bn in FY11 ). Net debts to equity ratio was 0.65x at end of 2012. This is expected to remain the same as; 1) IPO proceeds will not be utilized to pay off debts of the Company 2) expansion will not be funded externally. 9M13 figures shows a slight up trend in DER as it is at 0.67x.

The Company generates Rp 120.7 bn of revenue in 9M13, down by -10% YoY (9M12 Rp 134 bn). Revenue declines due to a –7.7%/-16% YoY decrease of their long range bus and TransJakarta Busway revenue respectively. Gross profit up by +12% YoY in 9M13 as cost of revenue goes down by – 17.6% YoY. This was mostly due to a –19% YoY decrease of fuel expense that contributes 30% towards total cost. Bottom-line profit reached Rp 10.2 bn in 9M13, +118% YoY increase, on the back of widening gross profit margin which increased to 31.9% 9M13 from 25.3% in 9M12.

The Company’s ROA/ROE shows an increasing trend that starts in Fy11. ROA/ROE in 9M13 reaches 4%/7% compared to its position in FY11 of 2.8%/5.2%.

Initial Public Offering

The Company is aiming to raise Rp 123.8 bn to Rp 153.8 bn from IPO by floating 42.86% of its shares. The indicative IPO offer price ranges at Rp 825 to Rp 1.025. The proceeds are to be used for:

1.  81% of the proceeds will be utilized for fleet expansion of the Company’s buses:
     a. 82% for adding 85 new buses on their long range transport services (AKAP) and 15 for the Integrated City Bus Busway (BKTB).

     b. Approximately 11% is for 15 additional buses designated for their Integrated Border Transit Busway (APBT).

     c. 7% will b utilized to rejuvenate the Company’s current bus armada of 208 buses.

2.  Approximately 16% will be used for TransJakarta Busway facilities/infrastructure depots and workshops in Ceger, West Java. This includes purchase of land that the Company is currently renting.

3.  3% for working capital.

At the indicative price range of Rp 825 - Rp 1.025, the offering price implies to 14F PER of 9.9x - 12.4x, based on Company’s earnings estimates. The Company’s market capitalization will approximately be between Rp 288.8 bn to Rp 358.8 bn.