January 8, 2021
Indonesian chicken producer targets US$85 million IPO
Chicken producer PT Widodo Makmur Unggas (WMU) aims to raise Rp 1.18 trillion (US$84.69 million) to finance its expansion plans through a giant initial public offering (IPO) in a relatively weak but stable market, TheJakartaPost reported.
The company plans to use 74.3% of the IPO funds to expand its facilities, including slaughterhouses, farms and storage warehouses. The remainder would be used as working capital to purchase live chickens and chicken feed.
"We will focus on [expanding] the slaughterhouse business to increase chicken production. Our target is to hold 15% [of the market share]," WMU president director Ali Masadi said in a public statement on January 6.
WMU is positioning itself as a strong newcomer in the poultry industry, currently dominated by public-listed PT Charoen Pokphand Indonesia (CPIN) and PT Japfa Comfeed Indonesia (JPFA).
Latest data shows that WMU's assets, valued at Rp 1.33 trillion in October 2020, still trails far behind Charoen valued at Rp 31.24 trillion and Japfa at Rp 26.8 trillion in September.
Mirae Asset Sekuritas Indonesia places the poultry industry among the three industries with promising growth this year. The other two are banking and mining.
Mirae securities analyst Emma Fauni wrote in a research note on December 11 that local demand for chicken fell significantly last year, following the closure of hotels and restaurants in large cities due to COVID-19 restriction.
However, she noted that demand would remain steady this year because "the current demand represents individual daily consumption of chicken meat per day", and it was unlikely that people would reduce spending on daily staples.
In addition, the securities company expected the government to limit chicken supply this year to maintain prices in the range of Rp 17,000 to 20,000 per kilogram of chicken. The government's objective is to protect small-scale chicken farmers amid a volatile market, Fauni added.
Fauni also noted that the weakening US dollar would benefit Indonesia's chicken industry, as most producers depend on imported soybean for chicken feed.
WMU is 90% owned by integrated livestock agriculture holding company PT Widodo Makmur Perkasa (WMP). WMU is offering 5.92 billion shares, which represent 35% of the company's paid-up capital, priced between Rp 142 200 per share. Its shares are to be listed on the Indonesia Stock Exchange (IDX) on January 29.