Indonesia's Phapros Conducts Right Issue $71.42M in 2nd Half of 2019

JAKARTA (TheInsiderStories)PT Phapros Tbk (IDX: PEHA) planned to conduct a rights issue with a target of Rp1 trillion (US$71.42 million) in the second half (2H) of 2019 by releasing 20 percent of the total listed shares, according to the management today.

President Director of Phapros Barokah Sri Utami said, this year the company focused on spurring revenue growth and double-digit net income. A number of plans have been prepared to spur performance such as increasing the export business, innovating product development, releasing 12 new products, and spurring inorganic business.

“The results of the rights issue are planned to finance investments, refinancing, and working capital needs,” she said in an official statement.

This year, Phapros targets a revenue growth up to 30 percent and net profit around 20 percent to Rp1.33 trillion and Rp159.95 billion.

In addition, the company also plans to expand inorganic, namely by acquiring a hospital and increasing ownership of the Cirebon Permata Hospital which is currently still at 20 percent.

Then, the company also plans to build a factory in Myanmar which is currently still in the feasibility study phase. The company will also refinance loans owned by around Rp400 billion to Rp500 billion of this year.

In 2018, the company net sales up 2.08 percent to Rp1.02 trillion. Then, profits rose 5.62 percent to Rp132.31 billion.

The company also gave a total dividend of Rp92.6 billion for 840 million shares, or 70 percent of net income. Meanwhile, dividends per share to be received amounted to Rp110.26 per share.

Previously, PT Kimia Farma Tbk (IDX: KAEF) signed a sale and purchase agreement to buy 56.77 percent or 476.90 million shares of Phapros from PT Rajawali Nusantara Indonesia on Feb. 13.

The state-owned pharmaceutical not give more detail on the acquisition values. The acquisition process is expected to be completed in the first quarter of 2019.

The medicine producer said, the purpose of purchasing all of these shares is to increase Kimia Farma‘ pharmaceutical market shares to six percent and enrich the drug production portfolio in Phapros. This transaction also aims to increase the growth of assets, profitability, the efficiency of marketing costs, research and marketing development by utilizing Phapros’ distribution channel.

Since last year, KAEF has planned to acquire a pharmaceutical company and three hospitals. The company has allocated Rp2.2 trillion (US$157.14 million) for the acquisition.

Previously, in February 2018, the company was bought 60 percent shares of Dawaa Medical Ltd. Co. which has a pharmaceutical network in Saudi Arabia with worth Rp139 billion. This action was part of Kimia Farma’ planned to expand the market to the Middle East and Africa.

The CEO Honesty Basyir said, the company will build 90 retail outlets and open a drug factory in Saudi Arabia in two years period. In Indonesia, Kimia Farma aimed to adds production facilities in Banjaran, West Java. The company developed ethical drug factories and herbal medicine factories at Banjaran, which will be completed before the second quarter of 2019.

The total investment for the construction of the plant reaches Rp 1.1 trillion. In Cikarang, Bekasi, KAEF also build the new factory to produce raw materials for medicine, cosmetics and food supplements with total investment Rp132.5 billion.

The factory is operated by PT Kimia Farma Sungwun Pharmacopia, a joint venture between Kimia Farma and Sungwun Pharmacopia Co. Ltd., from South Korea. About 20 percent of the production from the factory will be allocated to domestic needs while 80 percent will be exported.

The construction of a drug raw material factory is also carried out to reduce the company’ dependence on imported raw materials. As is known, about 90 percent of domestic drug raw material needs are still imported. Over the past year, there have been several medicinal raw materials whose prices have risen by more than 40 percent, especially those imported from India.

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