Does NH's Indonesian underwriter unit underprice IPOs?
Seoul-based NH Investment & Securities’ Indonesian underwriter unit appears to have underpriced its fourth initial public offering yet again considering the newly listed company‘s robust debut.
Meta Epsi, a Jakarta-based engineering, procurement and construction (EPC) services provider, hit the price ceiling for the first three trading days until April 11 after its 200 billion rupiah ($14.16 million) IPO.
The share price of Meta Epsi came to 750 rupiah per share as of 2 p.m. on April 12, Indonesian time, rising 25 percent for the second consecutive day. The winning streak sent its price 2.3 times higher than the offering price at 320 rupiah per share. On the first trading day, Meta Epsi rose to the price ceiling to close at 480 rupiah, up 50 percent.
Indonesian rule stipulates that a listed company on Indonesian Stock Exchange with a share price of over 200 rupiah cannot rise or fall by more than 25 percent in each daily session, except on the first trading day, when it is 50 percent.
The IPO is the fourth to be underwritten by NH Korindo Securities Indonesia, which aims to take on at least three more IPOs this year. NH Investment & Securities owns 80 percent stake of the offshore unit.
All three previous IPOs by NH Korindo led to the companies‘ strong upshot in the first several trading days.
Solely last year, NH Korindo Securities worked on IPOs for Sriwahana Adityakarta, Sinergi Megah Internusa and MD Pictures.
MD Pictures’ IPO saw the share price rise more than sevenfold from initial offering price in the first 10 trading days. Also, Sriwahana‘s share price more than tripled in its first six trading days, while that of Sinergi doubled through the first six trading sessions.
But considering the longer-term performance, NH Korindo may not necessarily have undervalued the stocks. As of April 11, Sriwahana‘s closing price was 24.4 percent lower than the initially offered price, while Sinergi’s had nearly halved.
NH’s Indonesian entity had its first IPO in 2018, 10 years after the firm secured a foothold in Indonesia. Once called Woori Korindo Securities, the firm changed its name to NH Korindo Securities in 2015 after a community credit cooperative-led NH Financial Group took over Woori Securities in Korea.
Meta Epsi was listed on a development board of IDX on April 10 and made some 625 million shares -- 30 percent stake of Meta Epsi -- open for public trading.
The EPC company was founded in 1975 and became a subsidiary of Truba Alam Manunggal Engineering in 2007. Meta Epsi has facilities in Belebu, Bogor, Tanjung Batu, Kabupaten Kutai Kertanegara, Puhawang Island, Lampung, Sumatra, and East Kalimantan.
By Son Ji-hyoung (email@example.com)