H1/2023 performance: Solid performance of Construction SOEs
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 - Kinerja semester I/2023: Adu kokoh BUMN karya
4 August 2023
By: Dionisio Damara, Artha Adventy, & Lukas Hendra T.M
State-owned issuers in the construction sector closed off their performance in the first half of this year with a solid achievement. However, there are several state-owned business entities in the sector that logged negative performance.
Out of these four state-owned enterprises (SOEs) in the construction sector, only PT Adhi Karya (Persero) Tbk (ADHI) and PT PP (Persero) Tbk (PTPP) logged an excellent performance throughout the first half of 2023.
The other two construction SOEs, namely PT Waskita Karya (Persero) Tbk (WSKT) and PT Wijaya Karya (Persero) Tbk (WIKA), are still struggling to make profit.
In the first half of this year, ADHI logged a business revenue of Rp6.35 trillion, which slightly increased by 0.45% compared to last year.
Based on the company’s financial report, their business revenue realisation is sustained by the investment and concession segment that surged by 45.82% year-on-year (YoY) to Rp398.62 billion in the first half of 2023.
Besides that, their business revenue from manufacturing grew 21.05% YoY to reach Rp454.96 billion. The realisation is followed by the property and services segment that increased by 25.88% to Rp303.53.
During the period, only the revenue from the engineering and construction segment decreased by 1.33% YoY to Rp5.19 trillion in the first half of 2023.
ADHI is said to have secured new contracts worth Rp14 trillion. The contracts secured by the construction SOE surged by 20% YoY.
Adhi Karya Corporate Secretary Farid Budiyanto said that the largest contributors to ADHI’s revenue were infrastructure projects, namely Yogyakarta-Bawen toll road, Sigli-Banda Aceh toll road, and Cisumdawu toll road.
Besides that, he added that ADHI’s financial burden decreased by 18% compared to last year after they successfully lowered their average loan interest rate.
“Regarding the bottom line, ADHI’s net profit increased by 21% to Rp12.4 billion compared to the previous year,” he said in his official statement on Wednesday (2/8).
In the company’s financial report, ADHI logs that the profit that can be attributed to the owner of the parent entity reached Rp12.41 billion in the first half of 2023, which increased by 21.31% YoY.
The same goes for PTPP’s net profit that increased even though their revenue declined to Rp8.04 trillion throughout the first half of 2023.
PTPP’s revenue declined by 11% YoY to Rp8.04 trillion in the first half of this year.
The revenue realisation that is contributed by construction services reached Rp6.42 trillion, which decreased by 9.95% YoY. Meanwhile, revenue from the property and real estate segment reached Rp391.14 billion.
The engineering, procurement, and construction (EPC) segment contributed a revenue of Rp930.14 billion.
Revenue from the energy segment reached Rp76.64 billion, from equipment rental reached Rp65.90 billion, from financial asset concession reached Rp142.25 billion, and from the precast segment reached Rp19.35 billion.
Until June 2023, PTPP has logged a new contract realisation of Rp11.62 trillion. The realisation surged by 6.31% YoY.
PTPP Corporate Secretary Bakhtiyar Efendi said that the new contract realisation was 45.67% government projects, 27.7% SOE projects, and 27.06% private projects.
“In detail, PTPP’s project realisation until the end of June 2023 consists of [projects secured by] the parent entity that reach 85.1% and [projects secured by] subsidiaries that reach 14.9%,” he said recently.
In line with the decline in business revenue, cost of revenue also declined by 11% YoY to Rp6.90 trillion.
Hence, PTPP could log a net profit of Rp96.41 billion that can be attributed to the owner of the parent entity, which increased by 10.87% YoY.
Loss increasing
However, a different condition is experienced by PT Waskita Karya (Persero) Tbk (WSKT) that increased their net loss by 776% from Rp236.51 billion to Rp2.07 trillion throughout the first six months of this year.
In the first half of this year, the company’s revenue declined by 13.43% YoY to Rp5.27 trillion. The company’s revenue from the construction segment decreased by 19.25% YoY to Rp4.34 trillion in the first half of 2023.
Meanwhile, revenue from construction service interest reached Rp23.85 billion, which declined by 25.5% YoY.
Besides that, property revenue weakened by 19.25% YoY to Rp83.91 billion in the first half of 2023. Moreover, infrastructure revenue plummeted by 33.82% YoY to Rp28.75 billion in the first half of this year.
However, WSKT Corporate Secretary SVP Ermy Puspa Yunita previously revealed that the company successfully logged a new contract value of Rp7.82 trillion in June 2023.
“The new contract value realisation is dominated by government projects that reach 66.24%,” she said in the middle of June.
In the first half of this year, the company also successfully supressed their cost of revenue by 11.47% YoY to Rp4.81 trillion.
However, efficiency from the cost of revenue decline could not boost WSKT’s performance. Waskita still logged a loss of Rp2.07 trillion that can be attributed to the owner of the company, which increased by 776.26% YoY.
WIKA also logged an increase in their comprehensive loss that can be attributed to the parent entity from Rp13.32 billion last year to Rp1.8 trillion in the first half of 2023. However, Wika could still log a net revenue of Rp9.25 trillion in the first half of this year, which increased by 28.81% YoY.
WIKA President Director Agung Budi Waskito revealed that the company was recovering their finances to improve their performance by increasing their productivity, which is reflected in sales that increased by 28% YoY.
He revealed that the company could operate excellently amid challenges.
He added that it was proven by the production process that continued even though the company was in a standstill from April 2023.
“In that condition, WIKA could still increase their sales. It is in line with WIKA’s transformation steps that consist of three pillars, namely cash-focused, project execution excellence, and portfolio balancing,” he said in his official statement recently.
Ciptadana Sekuritas Asia Analyst Arief Budiman revealed that WIKA’s business profit could not provide for the higher interest rates and the significant surges of other costs that caused the company to experience loss in the first half of this year.
Even though new contracts declined in the first half of 2023, he reckoned that carry-over contracts were still sustaining WIKA’s revenue in the first half of 2023.
“The orderbook total is still strong at Rp54 trillion, which supported revenue growth in the first half of 2023,” he said in the research conducted by Bloomberg on Wednesday (2/8).
However, he believes that it is difficult to secure new loans, which forces WIKA to use their internal cash to produce raw materials for projects and cover their day-to-day expenses.
“We predict that WIKA will log a net loss of Rp965 billion and Rp441 billion in 2023 and 2024. We have cut our forecast of WIKA’s target price from Rp650 to Rp350. We are also changing our recommendation from buy to sell,” he stated.
