Thursday, July 16, 2009

Garda Tujuh Buana: No gain so far

The newly listed coal player PT Garda Tujuh Buana (GTBO) Tbk succeeded in raising Rp210 billion from the IPO of 73.4% issued shares last week. Unfortunately, the first six days of trading have gone without a single day of gain.
GTBO's IPO price is Rp115. The first day of trading, July 9, the stock lost 8% straight, even though the stock once jumped as high as Rp126. The second day, July 10, the stock gained 5%, but since then continued the downfall to close at Rp101 on Thursday or 12% below its IPO price.
The stock is not a sexy stock with less than US$27,000 trading value in the past two days even though the management has tried to attract investors with "promising" outlook. GTBO claimed its coal production would jump to 900,000 tons this year (from 30,000 tons last year) and double to 1.8 million tons next year.
Well, the bubble on coal stocks have busted. We have experienced a "mini bubble" on coal stocks this year where most of them gained over 100%, faster than recovery in coal prices. Thermal coal prices are hovering around US$70 per ton (normally for 6000 Kcal/Kg coal), only 36% of last year's peak of over US$190 per ton. Interestingly, some coal stocks are currently traded only 20%-30% below their peak last year.

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