This article has been translated by PwC Indonesia as part of our Indonesia Infrastructure News Service. PwC Indonesia has not checked the accuracy of, and accepts no responsibility for the content.
Bisnis Indonesia - Aksi korporasi: Menjaring tambahan modal jumbo
3 April 2024
By Dionisio Damara, Akbar Evandio, and Ibad Durohman
The construction issuer PT Wijaya Karya (Persero) Tbk or WIKA is hunting for additional capital of Rp9.2 trillion from the rights issue conducted by the company, offering 46.81 billion new series B shares worth Rp197 per share.
The capital increase activity through a second rights issue is aimed at enabling the company to receive fresh funds worth Rp6 trillion from state equity participation (PMN).
Based on its most recent prospectus, WIKA will offer 46.81 billion new series B shares at Rp100 per share. Meanwhile, the implementation price is set at Rp197 per share, representing 83.92% of the capital invested.
“So, the value of the second rights issue will reach Rp9.22 trillion at most,” wrote WIKA’s latest prospectus released on Tuesday (2/4).
In the prospectus, the management stated that each holder of 100 million regular shares listed on the list of the company’s shareholders on Thursday (18/4) is entitled to 521.98 million pre-emptive rights.
According to the schedule provided by the company, the last day for trading shares with rights in the regular market or for negotiations is Tuesday (16/4). However, these activities can still be conducted in the cash market until Thursday (18/4).
Additionally, the rights issue will be traded on the Indonesian Stock Exchange (IDX) and outside the stock exchange for five working days, from 22 April to 26 April 2024. The listing of the new series B shares will take place on 22 April.
“Shareholders who choose not to exercise their pre-emptive rights could face a maximum dilution of 83.92% following the implementation of the second rights issue,” WIKA’s prospectus wrote.
In the activity, the Indonesian government as the majority shareholder of WIKA will exercise its rights by providing PMN worth Rp6 trillion from the 2024 state budget (APBN).
The PMN provision will be carried out after President Joko Widodo signs the regulation on the activity, which is Government Regulation Number 15/2024 on Increase of State Capital Participation of the Republic of Indonesia in the Stock Capital of Perusahaan Perseroan (Persero) PT Wijaya Karya Tbk.
The regulation mandates the provision of PMN from the government to enhance WIKA’s business capacity to complete several national strategic projects (PSNs).
This is in line with the statement of WIKA President Director Agung Budi Waskito who explained that the funding injection from the government would be used by the company to complete several PSNs, including projects in Nusantara Capital City (IKN).
However, Agung is concerned about the low public participation in WIKA's rights issue, which is attributed to various sentiments and recent issues surfacing.
“We are carrying out a non-deal roadshow to several parties so that the public’s portion can be absorbed. Then, the schedule of the rights issue and the PMN provision is extremely tight in the first quarter of 2024, so we are continuously coordinating with stakeholders,” he said some time ago.
Last year posed significant challenges for WIKA as the company underwent financial restructuring and various transformations. These initiatives are part of its eight recovery streams aimed at accelerating recovery and bolstering the company's fundamentals.
“During its recovery phase, WIKA achieved sales of Rp22.53 trillion, marking a 4.9% year-on-year increase along with a net profit of Rp1.86 trillion. Similarly, new contract realisations amounted to Rp29.25 trillion, with 93% comprising contracts with monthly payments,” the management wrote through their official statement.
Subsidiaries
In another development, WIKA's subsidiary, PT Wijaya Karya Beton Tbk (WTON), experienced a negative performance throughout 2023, marked by declines in both revenue and net profit.
According to its 2023 financial report, WTON reported a net revenue of Rp4.20 trillion, marking a year-on-year decline of 29.99%. In 2022, WTON's revenue amounted to Rp6.03 trillion.
WTON's revenue comprises spun and non-spun concrete, quarry operations, and construction services. Specifically, revenue from concrete sales decreased to Rp3.72 trillion by late December 2023 from Rp5.56 trillion in late 2022.
Revenue from the quarry operations segment also decreased to Rp17.31 billion from Rp19.93 billion. Meanwhile, revenue from the construction services segment increased in 2023 to Rp461.06 billion from Rp295.38 billion in 2022.
After the decline in revenue, WTON’s cost of income also decreased by 29.28% to Rp2.88 trillion from Rp5.46 trillion in 2022.
Moreover, WTON’s gross profit also decreased by 37.56% to Rp322.91 billion in 2023 from Rp517.15 billion in 2022.
After implementing efficiency measures across various costs, WTON reported that its profit attributable to the parent entity owner for the current year amounted to Rp34.12 billion in 2023, marking a decline of 79.05% from Rp162.91 billion in 2022.
Another WIKA subsidiary, PT Wijaya Karya Bangunan Gedung Tbk (WEGE), reported positive performance in its audited financial report as of 31 December 2023. The company achieved a revenue of Rp3.98 trillion, marking a remarkable growth of 68.19% year-on-year.
Besides that, WEGE logged a gross profit of Rp303.22 billion in 2023, which grew 32.96% year-on-year with a consolidated net profit of Rp46.50 billion.
In its 2023 financial position, WEGE demonstrated a positive performance across several key metrics with cash from operations reaching Rp567.74 billion, cash and cash equivalents amounting to Rp1.04 trillion, total equities reaching Rp2.56 trillion, and total assets amounting Rp5.56 trillion.
On the other hand, Universitas Indonesia Faculty of Economics and Business Management Institute BUMN Research Group Associate Director Toto Pranoto said that the lack of additional capital from the government to SOEs was one of the issues they faced in their assignments.
“Hence, SOEs are forced to go into debt to finance their capital expenditure. Meanwhile, investment for these assignments is long term,” he said when he was contacted.
Under these circumstances, he further elaborated that discrepancies in funding tended to arise, resulting in a lack of liquidity and solvency for state-owned companies. Therefore, state equity participation emerges as an alternative solution to restore the financial condition of SOEs.
Regarding state equity participation, Toto said that PMN management must improve. In the last two years, there has been an agreement between the State-owned Enterprises Ministry, the Finance Ministry, and other technical ministries to manage SOEs for their enhancement.
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