E-commerce start-up Bukalapak, which debuted on Indonesia bourse on Friday, saw its shares surging to upper band movement cap for two consecutive days, signalling healthy demand from investors seeking to tap country’s high-growth companies.
Bukalapak, the first unicorn to be listed, raised IDR21.9trn (around $1.5bn) from floating 25% stake last week, the highest ever proceeds. Around 150 institutional investors and over 100,000 retail investors – many of whom buying stock for the first time – subscribed the share offering, according to underwriters.
On 6 August, immediately after the bell-opening, shares of Bukalapak already climbed 25% from its initial public offering (IPO) price of IDR850. Under local listing norm following the pandemic, the upside movement for shares priced between IDR200 and IDR5,000 is capped at 25%, while downside is limited to 7%.
High stock price
Robust demand for Bukalapak meant that Monday’s trade saw another 25% intraday jump, bringing the stock price to as high as IDR1,325 – or 56% higher than its IPO price. Some profit booking occurred in late afternoon, with the stock ending at IDR1,110.
More profit booking occurred on Tuesday, when the stock ended down 7% - maximum downside allowed for any stock – but still representing a 22% increase compared with its IPO price.
Amid the price fluctuations, professional investors are still seeing value to accumulate Bukalapak shares. Fund manager Panin Asset Management, for instance is buying the stock to get exposure to the tech company as part of its investment strategy.
“BUKA [Bukalapak] stock can be a part of funds that have more flexible investment policy. [The allocation] can be tactical, meaning when the target price is met, it can be sold,” said Rudiyanto, director at Jakarta-based Panin Asset.
The loss-making e-commerce firm, which focuses on growth story outside Indonesia’s main cities, may turn to profit in 2025, Nomura said in a note to clients. The brokerage initiated a buy call for Bukalapak, with target price of IDR1,620.
“We note the shift away from traditional brick and mortar stores towards e-commerce has been mainly driven by the increasing need for convenience and Indonesia’s relatively young, digitally-literate population. Hence, we think Bukalapak could become one of the dominant e-commerce players in Indonesia,” said Nomura.