We are familiar with scenes on television and movies where lumberjacks bellow “Timber!” to warn people of a falling tree. I wonder what do Indonesian natives shout. “Kayu balak!” perhaps?

The current construction boom which Singapore and the region are enjoying, requires tons upon tons of wood. And wood is what Samko Timber (Samko) supplies.

Samko is a leading Indonesian timber processing company and one of the top five tropical hardwood plywood producers globally. In 2006, Samko had an estimated domestic plywood market share of about 32%. Samko’s production facilities include 7 timber processing plants in Sumatra, Java, Kalimantan and Sulawesi, 1 medium density fiberboard production plant in Kalimantan, 10 satellite veneer plants in Java and Sumatra, 1 power plant in Kalimantan and 2 chemical glue facilities in Kalimantan and Sumatra.

Samko has about 450,000 hectares of natural forest concessions and approximately 125,000 hectares of industrial forest plantations.

HIGHER ON DEBUT

Samko debuted on the mainboard 0.9% higher at $0.555 on Monday (25 Feb) versus its initial public offering (IPO) price of $0.55 per share and closed its first trading day at $0.56 each. The net proceeds of about US$63.3m included a previously agreed subscription of 27.9m new ordinary shares in Samko by Sampoerna Forestry at a 15% discount to the offer price. Samko plans to use around US$43m to expand its production facilities and logistics and distribution network. About US$9.3m would be used to repay bank loans. The company reportedly delayed its Singapore listing in January 2008 due to volatile market conditions.

Originally, Samko had wanted to raise as much as $162m by selling 200m shares at an indicative price range of $0.63 to $0.81 apiece.

Issue manager cum underwriter, Credit Suisse, was granted an over-allotment option to purchase up to an additional 17m shares, representing not more than 9.3% of the total offering.

For its 2006 financial year, Samko reported revenue of about 1.6t rupiah ($245.5m) and a posttax profit of 54b rupiah. For the eight months to 31 Aug 2007, revenue was 1.3t rupiah and net profit was 42b rupiah.

MORE WOOD TO FOLLOW

Samko will continue to focus on expanding production capacity and enhancing production capabilities to grow its market share in the Indonesian processed timber products market. It will establish additional satellite veneer plants in various locations in Java and Sumatra to tap into the supply of plantation logs in these areas. Samko will expand its processing plants for the production of processed timber products, to support the increased availability of veneer from these new satellite veneer plants. It will acquire new natural forest concessions or industrial forest plantations or make acquisitions and investments in companies or businesses.

To capitalise on the booming construction industry in Asia and the Middle East, Samko will also increase its sales and marketing efforts in these markets.