Ever since APP emerged from its debt restructuring restructuring in 20051, Indah Kiat’s shares have
consistently underperformed the broader Indonesian market. Over the past six years, Indah Kiat’s share
price has managed a paltry 2% annualized return, compared with 22% for the Jakarta stock exchange.2
To put that in perspective, it means that if an investor invested US$100,000 in Indah Kiat, she would
have made a miserableUS$12,840 capital gain after six years; if she had invested in the broader Jakarta
stock exchange, he would have made a US$ 126,790 capital gain - a near ten times difference.
2006 to Present: Indah Kiat share price versus Jakarta Stock Exchange
Note: Red line: Jakarta Stock Exchange, Blue line: Indah Kiat (Source: Yahoo Finance)
Investors in 2011 hoping for a turnaround in the company would have been sorely disappointed.
Midway through year, the only major bank providing research coverage of Indah Kiat, Mandiri
Securities, reported in its August reportthat the company “posted (a) first half net loss of US$15million
compared to our full year 2011 forecast of US$105million".3 Over the year, Indah Kiat’s share price fell a
massive 25% from Rupiah 1640 on Jan 1st 2011 to Rupiah 1230 by end year, compared to a 2.5% gain for
broader market.
2011: Indah Kiat share price versus Jakarta Stock Exchange
Note: Red line: Indah Kiat, Blue line: Jakarta Stock Exchange(Source: Yahoo Finance)
1http://www.shearman.com/NewsEvents/News/Detail.aspx?news=1f490c97-0e07-4e41-940c-249b40238d10
2Author’s
3Investor
calculations based on data sourced from Yahoo Finance
Digest, 8 August 2011, Mandiri Sekuritas, page 3