Bhakti Investama as a Holding Company

Although I have been regularly discuss about Bhakti Investama (BHIT) in this blog, but the question about the stock still continues to come. One of the biggest questions is about whether BHIT still capable to rise on this June? Because after a long-awaited moment, BHIT remained sedentary although its transaction volume was above 100 million shares per day. Currently, BHIT still stuck in the position of 146.

On last May, I estimated that BHIT would return at least into position of 200 (in average) on last June 4th, because my estimation expect that after the correction on May, JCI will reach its peak on June 4th. I tell this to a friend of mine who bought BHIT at the price of 200 via email. I said not to despair yet, and wait until June 4th. The hope of course, that BHIT will go up along with the increase of the index.

The reality? JCI indeed continued to rise from its lowest position of 2,514 on May 25, to 2,823 as its highest position on 4 June, before then moving to sideways until today. But what about BHIT? Well, a hope is just a hope. BHIT indeed rose after 25 May, but the increase can only last until 31 May. BHIT only capable to reach position of 175 as its highest position, before then continues to decline until now.

Then what about the future and prospect of BHIT, particularly in this June?

I have mentioned that BHIT is similar to BUMI; preferred because it promises high profits in an instant for those who dare to speculate, but at the same time hated because it can trap those who took the wrong position. After I learned a little, BHIT is not like BUMI. BHIT was more similar with the two holding companies, that similar to two other conglomerate groups, Bakrie and Lippo, which are Bakrie & Brothers (Bakrie) and Multipolar (MLPL).

What are the similarities between the three companies? They are equally owned by conglomerate group, equally functioned as a holding company for many subsidiaries, the stock price are equally low of only Rp50 - 150 per share, and the trading liquidity are equally large. BHIT is the holding of Bhakti Group’s subsidiaries namely Global Mediacom (BMTR), Media Citra Nusantara (MNCN), and so on. BNBR is the holding of the Bumi Resources (BUMI), Bakrie Telecom (BTEL), and so on. MLPL is the holding of Lippo Karawaci (LPKR), Matahari Putra Prima (MPPA), and so on.

Currently, BHIT’s price is only Rp146 per share, BNBR is Rp56 per share, and MLPL is only Rp98 per share. BHIT’s trading volume for today reaches 117 million shares, BNBR 97 million, and MLPL only 4 million but at certain time, it reaches up to Rp300 million. See? Quite identical, isn’t it?

The bad news is, these three companies have the same unusual stock movement. You might remember that BHIT ever reached 1,020 on last March. Long before that, on May 2007, BHIT even reached 1,550. However, its sideways position if did not experience a sudden increase like in last March, is in 100 – 300 range. That means that in a reasonable condition as it is now, BHIT indeed still have the chance to at least return to the position of 200 (in average). Although who knows when.

BNBR and MLPL also had high positions in the past. BNBR been valued of 950 per share, while MLPL is 505. However, because the company is blank (because their status as a holding company, the existing content is its subsidiaries), their value continues to fall until it moves sideways in the lowest position. BNBR and MLPL's movement since last year never came out of the range of 50 - 100.

What about BHIT? Unfortunately, BHIT is also a blank holding company. The most profitable BHIT’s subsidiary is MNCN (as for BNBR, the most favorite subsidiary is BUMI, while for MLPL is LKPR). Meaning? MNCN’s value can continues to rise from time to time as long as the performance stays that way. What about BHIT? Unless it is being finalized like last March, then if BHIT can reach 200 alone, it was good enough. Currently, BHIT's position is reasonable, considering its status as a blank holding company.

But it was said that BHIT acquired concessions of coal and oil fields? So does it means that BHIT already has content? So here goes: Those concessions does not belong to BHIT directly. A few moment ago, Mr. Hary established PT. Bhakti Coal Resources, a subsidiary of BHIT. The eigth coal concessions that have been acquired belong to this new company, not belong to BHIT directly, so that BHIT is still blank. If later the oilfield actually produce, then Mr. Hary will also established new company, maybe PT Bhakti Oil Resources or something. So once again, BHIT remains blank.

Why BHIT remain in its status as a holding company? It is because the existence of BHIT is still required in such circumstances as a supervisor for many subsidiaries in the Bhakti Group. It’s like a boss of public transportation service company; it will be troublesome to go out for passengers. It’s better to wait for the driver’s deposits (the subsidiaries) in home. Some of those deposits will be returned to the subordinates, yet he still get a bit of part as the boss, and the fund is usually used to expand the business. I have discussed it in Kaskus.

The conclusion? In the future, BHIT’s price will remain at its current condition and will not move anywhere, except if it really back to it’s track of 200 – 300 range. And I’m sure you have considered before deciding to enter into BHIT. If you still want to invest in Bhakti Group, then choose BHIT’s subsidiary that has good performance and has reasonable stock movement.

Original article was written on June 14^th, 2010.