United Tractors consortium targets Rp15.4 trillion toll road project
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 - Konsorsium United Tractors bidik proyek tol Rp15,4 triliun
24 January 2023
By: Muawwan Daelami
Jakarta - PT United Tractors Tbk (UT/UNTR) established a consortium with PT Jasa Marga Tbk (JSMR), PT Adhi Karya Tbk (ADHI), and PT Hutama Karya to participate in the tender of South Sentul-Karawang toll road project worth Rp15.4 trillion this year.
UT entered the project through PT Persada Utama Infra, which is the subsidiary of PT Pamapersada Nusantara (PAMA) that is controlled by the company.
UT Corporate Secretary Sara K. Loebis explained that, in the project, Persada Utama Infra acted as the initiator. “The project is currently in the tender process. So, we are waiting for the tender to be completed,” Sara said to Investor Daily last weekend.
Previously, Public Works and Housing (PUPR) Ministry Spokesperson Endra S. Atmawidjaja said that the length of South Sentul-West Karawang toll road reached 61.5 kilometres. This is one of the four toll road projects that will be constructed this year.
Besides South Sentul-Karawang, he said that other projects that started this year include Patimban access road spanning 37 km worth Rp84.8 trillion, Kamal-Teluknaga-Rajeg toll road spanning 39 km worth Rp18.8 trillion, Bogor-Serpong toll road via Parung spanning 31 km worth Rp8.9 trillion, and Kediri-Tulangagung toll road spanning 44.5 km worth Rp10.2 trillion.
“Several projects are still at the Infrastructure Financing Directorate General (DJPI), some of them are in the feasibility study process conducted by the investors,” Endra said.
Stock prospect
Meanwhile, regarding the activities of the business entity UT in the toll road sector, Reswara Gian Investa Head of Investment Kiswoyo Adi Joe said that the company’s business expansion to the sector had been expected. Moreover, besides that, the company will add more business lines by expanding to the gold and nickel mining sectors.
“This business diversification acceleration is related to the energy transition from fossil to an eco-friendlier energy. So, UT is getting ready,” Kiswoyo said to Investor Daily on Monday (23/1).
Moreover, Kiswoyo sees that the company has sufficient cash to enter the toll road infrastructure sector, so this business development is inevitable. Cash sufficiency is important as toll roads needs a large capital expenditure (capex) in the initial phase.
However, at the end, he explained that toll road investments were beneficial as they produce sustainable revenue. Moreover, expenditure will only be needed for maintenance.
“This means that UT wants to stabilise their revenue, so they enter a sector that produces recurring income. Moreover, the company has a contractor. Usually, if they are part of Astra Group, the work will be handed over to Acset,” he said.
Last week, UNTR’s stock was traded at Rp26,775. Kiswoyo reckoned that investors could buy the stock of the subsidiary of PT Astra International Tbk (ASII) under Rp26 thousand as the coal industry is still vibrant.
Besides that, he said that coal price in the fourth quarter of 2022 was still good. If this coal price sentiment remains stable, it is not impossible for UNTR’s stock price to surge to Rp35 thousand.
According to Kiswoyo, UT is one of the mainstay subsidiaries of Astra Group with a consolidated contribution of around 30%, while the automotive sector contributes 50%. If coal price remains consistent, he predicts that UT’s contribution to Astra Group will increase to 35%.
“However, UNTR’s stock is threatened by the decrease in commodity prices. If this happens, UNTR’s stock can go down again. Companies in the mining sector are getting ready to face it, the same goes for UT,” Kiswoyo stated.
