PT Duta Graha Indah Tbk needs Rp 88 billion of fund to do Buyback, giving the share an upside potential

Infrastructure and building construction company in Indonesia, PT Duta Graha Indah Tbk (DGIK) is preparing Rp 88.495 billion to buy back its shares.

Since the 13 of October to the 14 of November, DGIK has bought 17.68 million shares or 3.19% from outstanding shares with the fund of Rp 909 million. DGIK is allowed to buy a maximum of 554 million shares or 10% from its total outstanding shares. The buyback would bring back the investor confidence and would give optimal performance to the shareholders.

 

Currently, the company has Rp 268 billion of cash and Rp 100 billion of retained earning based on 3rd quarter 2008 financial report.  Operating profit increased by 54.08% from Rp 607.7 billion to Rp 936.4 billion. The building construction is still the biggest contributor to the DGIK’s revenue. Its contribution is 74.18% while the infrastructure construction is 25.82%.  Meanwhile, sales by geography is contributed mostly from Sumatera (46.4%), followed by Jakarta (30.88%), Kalimantan (9.93%), Sulawesi (8.5%) and other Java area excluded Jakarta (4.3%)

 

At present, DGIK has 30 projects that is designed to be finished by 2010. DGIK has a good liquidity position. The current ratio up from 1.58x to 2.29x due to the increase of its current assets by 120.83% while the current liabilities increased only by 51.88%.

 

DGIK has a market capitalization of Rp 277 billion with 5x of PE (25 November 2008). The unprecedented highest price of DGIK was Rp 240. The share should be stronger in short term to Rp130 as MACD has been in the trade section

 

The shareholder structure is still dominated by local investor. This is based on shareholder composition per 31 October 2008 where local investors’ contribution is 90% while foreign organization has 10%. (Business Today - Nov 26,2008)

 

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