PT ChemStar Indonesia Tbk (CHEM), a chemical manufacturer for the textile industry is aiming for sales growth of up to 15% year on year (yoy) throughout 2022. The plan is that Chemstar will be more expansive after getting fresh funds from the Initial Public Offering (IPO) on July 8 next 2022. Launching the prospectus, ChemStar will issue a maximum of 500 million new shares or 29.41% of the issued and fully paid capital. Meanwhile, CHEM set the initial public offering price of Rp 150 per share. According to Kontan.co.id's calculations, in this corporate action Chemstar will receive fresh funds of Rp 75 billion.
The President Director of Chemstar Indonesia, Kwee Sutrimo explained that according to the prospectus, 27.87% of the proceeds from the IPO will be used to purchase land and buildings which are currently being used by the Company as factories and offices. Then, the rest will be used for working capital, especially the purchase of inventory to increase sales.
“If you want to sell more, the inventory must be higher. So far, our difficulty in developing is the availability of working capital. With this IPO, there will be more working capital so sales will be higher,” he explained when met in Jakarta, Tuesday (5/7).
CHEM management sees that the textile industry is currently starting to get excited again following the improvement in economic conditions and the easing of the Covid-19 pandemic. With this, many companies are revitalizing machines so that they are much more efficient. As a result, there is an increase in demand in the textile industry. Seeing this opportunity, CHEM is optimistic that it can achieve sales growth of 15% yoy this year.
With the increase in working capital, these chemical producers can increase their inventory so that CHEM intends to expand into other industries outside of textiles such as into food or cosmetics. His party sees that currently the food and cosmetic industry is developing quite rapidly, so there is a promising market potential.
“The chemicals that we produce are already food grade, so we are exploring the food or cosmetic sector. For the food industry, what we want to explore are food coloring, chemical food preservatives," he explained.
Kwee explained that currently his party does not need a new machine because the existing machine can be optimized by developing chemical variations only.
In line with soaring world oil prices, making chemical raw materials also increase. On the other hand, all industrial sectors are also experiencing challenges from disrupted supply chain barriers and the Russo-Ukrainian war. Kwee explained that this matter was foreseen.
"So what we do to anticipate this is intensive communication with the principal, especially regarding projections for selling in the local market. So how much raw material do we need, what is prepared and our time schedule is always communicated so that supply can be obtained and existing problems can be overcome, "he said.
Then, with the increase in the price of raw materials, the selling price of chemical products produced by CHEM automatically also increased. Kwee explained that the increase was varied and the highest was around 20% -30%.
However, Kwee explained that the price increase could still be absorbed by the market. As is well known, currently price increases occur in almost all commodities or in all industrial sectors, so this increase is still being absorbed by industrial users.
In addition to carrying out an IPO corporate action, CHEM also has the potential to obtain additional fresh funds in the future from the conversion of the Company's warrants of a maximum of 250 million Series I Warrants or equivalent to a maximum of 20.83% of the paid-up capital.
