Promising business prospect in 2023: Construction SOEs flooded by new projects worth Rp87 trillion
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.
Investor Daily - Prospek bisnis 2023 menjanjikan: BUMN Karya banjir proyek baru Rp87 triliun
5 January 2023
By: Muawwan Daelami
Jakarta, ID – Four state-owned enterprises (SOEs), namely PT Adhi Karya Tbk (ADHI), PT Wijaya Karya Tbk (Wika/WIKA), PT PP Tbk (PTPP), and PT Waskita Karya Tbk (WSKT), are flooded by new projects that will sustain their financial performance in 2022 and 2023. As of November 2022, they have secured new contracts worth Rp87.7 trillion.
In detail, Adhi Karya’s new contracts surged by 63% to Rp22.4 trillion, Wika’s by 67% to Rp27.7 trillion, PP’s by 44.6% to Rp23.9 trillion, and Waskita’s by 3.4% to Rp13.7 trillion. Adhi Karya’s contracts as of November 2022 have reached 97% of the company’s target, Wika’s reached 65%, PP’s 77%, and Waskita’s 54.8%.
Based on the research report of BRI Danareksa Sekuritas on Wednesday (4/1/2023), several jumbo projects worked on by Adhi Karya include Yogyakarta-Bawen toll road worth Rp4.5 trillion, MRT Phase II-CP 202 worth Rp2.3 trillion, New Capital City (IKN) Nusantara toll road 3A worth Rp1.1 trillion, Jenelata Dam in Gowa worth Rp849 billion, and Semarang-Demak toll road worth Rp761 billion.
Then, several projects held by Wika include Hang Nadim International Airport worth Rp1.9 trillion, Semarang-Demak toll road worth Rp1.2 trillion, vertical hospital in Surabaya worth Rp941 billion, Manyar Smelter in Gresik worth Rp891 billion, and KKT Kariangau-Tempadung segment of IKN toll road worth Rp731 billion.
Meanwhile, PP is working on Kalibaru Port worth Rp3.8 trillion, Bahodopi Smelter owned by PT Vale Indonesia Tbk worth Rp2.5 trillion, Semarang-Batang pipeline worth Rp1.06 trillion, Patimban Phase II worth Rp823 billion, and vertical hospital in Makassar worth Rp771 billion.
Waskita also owns projects with fantastic value, such as 1,000 km-South road improvement in Sudan worth Rp4.1 trillion, Bogor-Ciawi-Sukabumi toll road section 3, South Japek toll road package 3, Kayu Agung-Palembang toll road package 4 section 3 worth Rp1.23 trillion, and State Secretariat Building worth Rp1.2 trillion.
Adhi Karya Corporate Secretary Farid Budiyanto said that the company had logged new contracts worth Rp1.8 trillion from the IKN project, and they would continue to pursue additional contracts from the megaproject. Moreover, the government will still hold tenders for high-value projects.
“So, we will still target projects in IKN to pursue the new contract in 2023,” Farid said to Investor Daily.
In the future, he affirmed that the company would focus on strengthening their market share in government projects as they provide payment certainty and completion program clarity. Adhi will also focus on pursuing the operating infrastructure maintenance preservation program. Preservation is an interesting market, especially for the road segment.
“Other focuses include completing national strategic projects (PSNs), especially toll road projects,” he affirmed.
Business prospect
On the other hand, BRI Danareksa Sekuritas analyst Muhammad Naufal Yunas said that the new contract realisation of the four construction SOEs was in line with the Rp41 trillion that the government had spent for projects in IKN Nusantara. As of 18 December 2022, the construction of flats for construction workers has reached 71%, and it is set to be completed at the end of January 2023.
Naufal is also recommending buying the stock of the four construction SOEs. The target price of ADHI’s stock is Rp800, WIKA’s is Rp900, PTPP’s is Rp1,500, and WSKT’s is Rp550 per stock.
Meanwhile, Infovesta Kapital Advisori research analyst Arjun Ajwani predicts that the construction issuers have a bright prospect as they are working on the IKN megaproject this year.
“So, the prospect of construction SOEs is great, especially Adhi Karya and Waskita. Based on their financial reports, their net profit in 2022 surged compared to the previous year,” Arjun said to Investor Daily.
Arjun does not deny that several challenges will still be faced by construction SOEs this year, such as the potential of the interest rate increasing and rupiah weakening against the US dollar. Both factors can increase the operating cost of construction SOEs.
However, Arjun is recommending investors to collect WSKT’s shares at Rp410 with support at Rp352 and ADHI’s at Rp520 with support at Rp484.
On a separate occasion, MNC Sekuritas technical analyst Herditya Wicaksana is suggesting holding ADHI’s stock at Rp520-556. He sees that ADHI’s stock movement tends to go sideways. This is confirmed by the MACD and stochastic indicators that are still declining.
Meanwhile, for WIKA’s shares, the man familiarly called Didit is recommending to sell on strength (SoS). WIKA’s stock decline is accompanied by a large pressure to sell. Besides that, the MAC and stochastic indicators are still showing signs of continued decline.
A different suggestion is provided for PTPP’s shares. Didit is recommending investors to buy at Rp760-800 as the movements still tends to go sideways and stagnant at MA20. However, the MACD and stochastic still show signs of improvement.
“For WSKT, the speculation is to buy at around Rp404-420. The increase in WSKT’s shares yesterday was accompanied an increase in the purchase volume, while the MACD and stochastic are still showing signs of continued improvement,” Didit concluded.
Based on RTI’s data on the trading day on Wednesday (4/1/2023), ADHI’s stock declined by 0.8% to Rp484, WIKA’s by 0.6% to Rp800, and PTPP’s by 0.6% to Rp752, while WSKT’s increased by 0.5% to Rp374.
