Indonesia's Watsons Operator Duta Intidaya Made Trading Debut
On Tuesday (28/06) Duta Intidaya became the 7th company to list on the Indonesia Stock Exchange (IDX) in 2016. The company, an Indonesia-based health & beauty products retailer and specifically known for being the operator of the Watsons stores in Indonesia, made a solid trading debut. Its shares rose five percent to finish at IDR 189 per piece. Through the initial public offering (IPO), Duta Intidaya seeks new funds for business expansion and debt settlement. The company is set to open new branches and expand its e-commerce activities.
Currently, Duta Intidaya, founded in 2005, already operates 47 Watsons stores in Indonesia (mainly in Jakarta and the bigger cities in West Java and Central Java) through an exclusive license with Watsons. However, after the IPO, the company wants to add between 15 and 20 new stores in 2016 (on Java, Bali and in Jakarta). Hong Kong-based Watsons Personal Care Stores (Watsons) is the largest health care and beauty care chain store in Asia, operating more than 5,200 stores in 12 Asian and European markets.
In the IPO Duta Intidaya offered 478 million new shares (23 percent of the company's enlarged equity) at IDR 180 per piece, hence raising IDR 86 billion (approx. USD $6.5 million). Some 65 percent of proceeds generated through the IPO are to be used to add new outlets (the company budgeted IDR 1 billion per new store) while the remaining 35 percent is allocated to pay off IDR 29.14 billion worth of debt to London-based lender HSBC. Despite uncertainties caused by the Brexit issue there was plenty of interest from investors as the IPO of Duta Intidaya was oversubscribed 4.5 times.
Duta Intidaya is currently not recording any net profit as the company is engaged in large investments to expand its business across Java and Bali. Sukarnen, Independent Director at Duta Intidaya, said it will require about three years before the company will see solid net profit growth. This year the company's net loss is expected to be around IDR 6 billion, improving from the IDR 21 billion net loss posted one year earlier. Meanwhile, the company targets a 20 percent (y/y) rise in sales from IDR 192 billion in 2015.
Read more: IPO of Duta Intidaya on the Indonesia Stock Exchange
Sukarnen sees great potential for further growth of Watsons stores in Indonesia. Whereas the Philippines already has over 400 Watsons stores and Singapore more than 150 stores, Indonesia - Southeast Asia's largest economy with a population of more than 255 million people - is still at 47 stores only.
Read more: Initial Public Offerings (IPOs) on the Indonesia Stock Exchange in 2016
Lilis Mulyawati, President Director at Duta Intidaya, added that the company will tap the e-commerce business more aggressively in the years to come. By 2020 she wants 50 percent of the company's sales to be generated online through electronic transactions. For this purpose Duta Intidaya plans to partner with e-commerce platform Lazada and transportation services application Go-Jek.
Stock Quote Duta Intidaya - DAYA: