JAKARTA: When PT Krakatau Steel Tbk entered the primary market, the steel market stocks immediately 'disappeared, but now the market is flooded with stocks of PT Garuda Indonesia Tbk.M. Reza, Head of Research at PT Erdhika Sekuritas, said that the IPO stocks of Garuda floods the market, since the Ministry of State-Owned Enterprise (SOE) decided to allocate 57% subscription shares in fixed allotment.Of the total subscription of Garuda, Erdhika gets 57% allotment. The market will be flooded with Garuda stocks. After listing, will Garuda fly high? Will it last? Since the investors sell in the first day, he told Bisnis today.In the grey market, the premium 10% offered in the initial public offering (IPO) of Garuda at IDR750 has decreased to 3%.Reza thought that bigger allocation for local investors is a strategy of investment managers and the government, considering that foreign investors are not too attracted to the shares of Garuda in IPO.It may be a strategy, so the portion for local investors is bigger, he said.Too expensiveAccording to him, the initial price of Garuda at IDR750 is considered too expensive. The price reflects the estimated price to earning ratio (P/E) 2010 at 60 times.Airlines, like British Airways has P/E 2010 around 27 times and the average P/E of airline industry is not more than 17 folds, he said.Sanusi, Secretary General of Indonesian Securities Investors Community (MISSI), responds the big allocation in Garudas IPO positively.In IPO of SOE, local retail investors are supposed to get the same allocation with foreign investors. Dont let local retail investors only viewers, he said.When Krakatau Steel held IPO, Sanusi said he subscribed for 1 million shares but he got allocation of 1 lot or 10 lot.According to him, Garuda Indonesia business is quite prospective, provided it is well managed.Whether it may gain or lose after listing, it doesnt matter. If it loses, investor can cut loss. The most important is that local investors become priority, he said.The government reduced the number of Garuda shares to be launched in the IPO from 36.5% or 9.36 billion shares to 6.27 billion shares,covering 4.4 billion new shares and 1.9 billion shares belonging to PT Bank Mandiri Tbk.Garuda will generate IDR3.3 trillion and Bank Mandiri will gain IDR1.4 trillion. The subscription of Garuda shares reached 1.3 times for the price of IDR750. (t04/wiw)

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