HM Sampoerna to Increase Free Float on Indonesia Stock Exchange
HM Sampoerna, Indonesia's largest tobacco producer by market capitalization (controlling about 23 percent of the Indonesian tobacco market), plans to increase its free-float shares by 5.68 percent (valued at USD $1.27 billion) in order to meet the minimum free float requirement of 7.5 percent set by the Indonesia Stock Exchange (IDX) in a regulation introduced in January 2014 and which will come into effect on 30 January 2016. By this date all listed companies on the IDX must have a minimum free float of 7.5 percent.
Ito Warsito, General Director at the IDX, said that there are still 40 listed Indonesian companies that are yet to comply with the new requirement. Currently, HM Sampoerna is for 98.18 percent owned by Philip Morris Indonesia, the Indonesian unit of US cigarette giant Philip Morris International. The remaining 1.82 percent of HM Sampoerna's outstanding shares are publicly traded. HM Sampoerna has a total market capitalization of about IDR 285 trillion (USD $22 billion) making it the country’s fifth-largest company in terms of market capitalization among companies listed on the Indonesia Stock Exchange. However, its market capitalization has declined from end-2014 when it was still the third-largest company. Shares of HM Sampoerna have fallen 5.1 percent in 2015 (up to 16 February) due to several recent developments in the country’s tobacco sector. Per 1 January 2015 Indonesia raised the tobacco excise (applied to all tobacco-related manufactured products) by an average of 8.7 percent. Earlier, in June 2014, the government required that graphic warnings are mandatory on cigarette packages in a move to discourage smoking in Indonesia. Therefore, it is clear that the government tries to limit companies’ profitability in the country’s tobacco industry. In May 2014 it was reported that HM Sampoerna decided to close two of its seven hand-rolled cigarette factories as the company felt the need to restructure as it saw its market share declining in the country's hand-rolled cigarettes industry. Its market share fell from 30.4 percent in 2009 to 23.1 percent in 2013 because consumers are shifting toward machine-rolled cigarettes.
Stock Quote HM Sampoerna - HMSP:
Top Market Capitalization at end-2014:
| Company | Market Capitalization |
| Bank Central Asia | IDR 320 trillion |
| Astra International | IDR 301 trillion |
| HM Sampoerna | IDR 295 trillion |
| Telekomunikasi Indonesia | IDR 289 trillion |
| Bank Rakyat Indonesia | IDR 285 trillion |
| Bank Mandiri | IDR 249 trillion |
| Unilever Indonesia | IDR 246 trillion |
| Perusahaan Gas Negara | IDR 145 trillion |
| Gudang Garam | IDR 117 trillion |
| Bank Negara Indonesia | IDR 113 trillion |
Source: Neraca
Further Reading:
• HM Sampoerna Studying Higher Free Float on Indonesia Stock Exchange
• Indonesian Tobacco Products Subject to Excise Tax Hike in January 2015
• Higher Cigarette Excise; Indonesia’s Tobacco Industry in Trouble?
• Indonesian Tobacco Giant Sampoerna Shuts down Two Cigarette Plants
• Revenue or Health: Dilemma of Curbing Indonesia's Tobacco Consumption