JSMR DETAILS RIGHTS ISSUE PLANS
Jasa Marga ($JSMR) launched a rights issue of 457.87 mn new shares where shareholders is entitled to 33,667 subscription rights for 500,000 shares held. The subscription price is Rp3,900 per share. Assuming full subscription, the total issue proceeds amounts to Rp1.78 tn. Along with the plan, around 50% of proceeds will be used for Batang-Semarang toll road project (75 km), 30% for Pandaan-Malang toll road (38 km) and the remaining 20% of the proceeds raised from right issue will be allocated for Jakarta-Cikampek toll road project (64 km). Cum-right and ex-right date will be on 25 and 28 November, respectively. The shares are traded including the right to participate in the rights issue between 2 and 8 December 2016.
Comment : We are positive with JSMR’s right issue plan which should help strengthen the balance sheet and working capital. We believe this rights issues will give JSMR more room to expand. Based on last price (21/11), TERP will be at Rp4,200. We still maintain BUY for JSMR with TP Rp6,500.