Indofood CBP Sukses Makmur Offering Premium Pricing

PT Indofood CBP Sukses Makmur set the price range for book building at 4,300 rupiah to 5,500 rupiah per share, said Harry Zen, a director at Credit Suisse Indonesia, one of the underwriters, giving a prospective 2011 price-earnings multiple of 15-19 times and a market cap of between $2.8 billion to $3.5 billion.

Parent Indofood trades on a forward 2011 P/E of 14.24, while local food firm PT Mayora Indah (MYOR) is on 12 times, Taiwanese rival Tingyi Group (0322.HK) on 26.6 times, and Japan's Nissin Food Holdings (2897.T) at 14.33 times.

"The offering is at a bit of a premium," said Winston Sual, a fund manager at Panin Dana Maxima, who manages about $100 million, although he welcomed the deal and said he would subscribe because it offered a play on the fast-growing consumer sector.

"It's good for our capital markets to increase its size and investors want to see more players from many sectors. We need more companies from many sectors to list so we have more choice."

Sual also said there would probably be a shift out of Indofood shares into the listed subsidiary because Indofood CBP now controls the group's more lucrative assets, including instant noodles and dairy products. 

"The fair valuation should be at around at P/E of 16 or 17 PE," Bahana's Su said.

Indofood CBP will sell up to 1.166 billion new shares in the IPO, representing 20 percent of the enlarged share capital. It said 70-80 percent of the funds raised from the IPO would be used to repay debt and the rest for capital expenditure.

The share offering is set for Sept. 1-16, and the shares are due to start trading on Oct. 7. Indofood CBP has appointed Kim Eng Securities, Credit Suisse, Deutsche Bank, and Mandiri Securities as underwriters for the offering.

DEAL FLURRY

Indofood CBP will be competing with several other firms for investor funds, including IPOs by state-owned national carrier Garuda Indonesia and steel giant Krakatau Steel, which between them hope to raise a combined $800 million, while Bank Mandiri's (BMRI) rights issue could raise as much as $1.55 billion.

Coal miner Bumi Resources (BUMI) plans to spin off its non-coal mining assets, while U.S. miner Newmont Corp (NEM.N) is considering listing its local unit.Source: Reuters