Use IPO Results Funds, CGAS Builds LNG Factory

IDX (Photo: Antara)

JAKARTA PT Citra Nusantara Gemilang Tbk (CGAS) officially listed shares on the Indonesia Stock Exchange (IDX) as the second issuer in 2024.

In the implementation of the IPO during the period January 2-4, 2024, CGAS released 531.42 million shares to the public with a nominal value of IDR 50 per share, equivalent to 30 percent of the company's issued and fully paid capital.

The public offering price is priced at IDR 338 per share or is at the upper limit of the initial bid price (book building) of around IDR 284-IDR 338 per share.

Along with the implementation of the IPO, the Company also issued 265.71 million Series I Warrants accompanying CGAS' new shares, with a ratio of 2:1. Thus, each holder of two new shares is entitled to receive one warrant, while each waran gives the right to his holder to buy CGAS shares. With an exercise price of IDR 306 per war, the Company can obtain funds from the results of the implementation of Series I Warrants of a maximum of IDR 81.3 billion.

President Director of CGAS Andika Purwonugroho said the decision to conduct this IPO was a step for the Company to increase its funding capacity in order to accelerate growth and strengthen financial stability.

"As for 90 percent of the funds obtained from this corporate action after deducting the costs of emissions will be used as capital expenditure funds (capex) to build an LNG station at the Field Tambun Zone 7 Regional 2 Galian, while the rest will be used for working capital. Meanwhile, the funds obtained from the implementation of the Series I Warrant will also be used as the Company's working capital," he explained in his statement, Monday, January 8, 2024.

Andika also conveyed that the listing of CGAS shares on the IDX is part of a strategy to increase funding capacity, business expansion, management and the Company's principle of better openness as a public company, so that this effort is expected to be an added value for the Company's stakeholders.

According to Andika, CGAS' business development is also in line with the government's program regarding energy transitions that prioritize natural gas as an energy source with a lower emission rate than fuel oil (BBM).

"We hope that the presence of PT Citra Nusantara Gemilang Tbk on the IDX will provide broad opportunities for the entire community to be able to own the Company through the Exchange. The presence of CGAS on the IDX is also expected to enliven stock trading on the IDX and become an attractive option for investors," said Andika.

Andika said that in the future, in addition to developing LNG by using IPO proceeds, CGAS also plans to expand its business to several regions by building a new mother station, namely Grobogan Purwodadi, Central Java with a plant capacity of 1.5 MMSCFD.

Furthermore, the mother station in Majalengka has a plant capacity of 1 MMSCFD, as well as a mother station in Manyar, Gresik, East Java with a plant capacity of 2 MMSCFD.

"Hopefully, with the distribution of business locations, the Company can reach and serve more consumers from various segments," he said.

Andika also said that so far CGAS offers competitive prices that can create cost savings for calibrated metering customers, so that they can obtain the results of using CNG in a measured and precise manner.

The distribution network of the Company and its subsidiaries has also spread across the islands of Sumatra and Java, so currently CNG can more easily be obtained by customers. CGAS implements an integrated SCADA application, so that customers can ensure that CNG delivery is on schedule.

"CNG is a very safe gas, because we always use the highest standards of security for gas distribution to customers. The Company always prevents maintenance of equity, such as PRS (Pressure Reduction System), CNG Tubeskid, GTM, meters and equipment rejuvenation that is maintained and scheduled," said Andika.

Andika further revealed, through a product diversification strategy, CGAS believes it can be an option for customers who are looking for alternative gas as an energy source for industrial purposes, so that they can continue to grow continuously and make more useful contributions to the wider community.

Andika said that his party projects that it can reap a sales figure of IDR 1 trillion over the next 5 years or an increase of almost 4 times compared to 2023.

"Meanwhile, net profit in the same period increased up to 10 times compared to 2022," said Andika.

In this corporate action, the management of CGAS appointed PT Pilarmas Investindo Sekuritas as the underwriter for the issuance of securities. Based on the calculation of Pilarmas Investindo, using the methodology of the Discounted Cash Flow Method, Andika said, it was recorded that the equity assessment range was Rp. 687.02 billion.

"The Discounted Cash Flow (DCF) method uses the assumption that the risk-free interest rate is 6.4 percent, beta is 1.53, the country's risk premium is 2.9 percent, equity costs are 13.1 percent, debt costs 8.3 percent, terminal growth is 3 percent and WACC is 10.85 percent," said Andika.

Director of Pilarmas Investindo William Siddharta revealed that the high enthusiasm of the public to own CGAS shares was reflected in the primary market which experienced an oversubscription of up to 93.23 times from the portion of centralized allotment.

"The summary of public offering results through the e-IPO website shows an oversubscribed portion of the central allotment of 93.23 times, where incoming investor funds to compete for the pooling portion of CGAS shares reached Rp. 2.51 trillion," said William.

William further emphasized that the public's high interest and demand for CGAS shares during the offering period in the primary market reflects investor confidence in the Company's business in the trade and distribution of environmentally friendly gas.