Analysts warn investors of PT DCI’s 10,000% share surge

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Indonesian data firm PT DCI’s shares rose 10,852% after their $10.5 million IPO in January, making it the best-performing stock market debut globally this year and the second-biggest contributor to the Jakarta Composite Index’s 12% rise this year.

According to Bloomberg, the unexpected performance of PT DCI is yet another example of the country’s exuberant growth, having risen nearly four times since late January.

However, given the stock’s limited trading and lack of research coverage by brokerages, Bloomberg warns investors to be cautious about how much they read into PT DCI’s performance.

Henry Wibowo, head of research at JP Morgan Sekuritas Indonesia, mentioned to Bloomberg that the company’s stock is “not liquid.” Meanwhile, MNC Securities analyst Victoria Venny said that the sharp gains in tech stocks were driven by “speculation about their high EPS growth.”

PT DCI, partly owned by an Indonesian business tycoon, is a cloud data service provider that claims to be the first Tier 4 data centre in Southeast Asia. Tier 4 data centres are known to “fit enterprises without budget constraints that require uninterrupted availability. Large enterprises with mission-critical servers and intense customer or business demands are typical users of a tier 4 facility.”

After PT DCI’s rally, Indonesian stock exchange officials opened formal inquiries and implemented period trading suspensions for possible market manipulation earlier this year.  

After the investigations and in response to questions by Bloomberg, DCI’s corporate secretary Nicholas Suharsono said that there is no indication of any violations by the company.

CSA Research Institute Senior Analyst Reza Priyambada is concerned that there will be a ‘bubble’ or bubble from this unnatural increase in DCI prices. The bubble in question is the stock price, which is much higher than the company’s performance in question.

“If the growth is mediocre, (for example) income increases by 15-20%, (while) the share price increases significantly, it could also be a bubble, ” said Reza to Katadata.

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