State-owned enterprises: Competing for excellence in the 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 - Perusahaan pelat merah: Adu prima performa BUMN karya
4 July 2024
By Dionisio Damara
Over the past five years, state-owned issuers in the construction sector have experienced varied performances during the second quarter. Only a handful of these construction state-owned enterprises (SOEs) have managed to consistently maintain a positive performance.
According to the data processed by Bisnis from Bloomberg, only two companies, PT Adhi Karya (Persero) Tbk (ADHI) and PT Wijaya Karya (Persero) Tbk (WIKA), managed to successfully boost their revenue during the second quarters of 2022-2023
In the second quarter of 2022, ADHI logged a revenue of Rp2.53 trillion. This amount increased by 9% from the Rp2.32 trillion recorded in the previous year.
Their revenue performance increased again in the second quarter of 2023 to Rp3.68 trillion, which reflects a year-on-year (YoY) increase of 45%.
In the second quarter of 2022, WIKA logged a revenue of Rp4.02 trillion, which increased by 41% from the Rp2.84 trillion recorded in the previous year. In the second quarter of last year, the company logged a revenue of Rp4.9 trillion, marking a YoY growth of 22%.
On the other hand, PT Waskita Karya (Persero) Tbk (WSKT) and PT PP (Persero) Tbk (PTPP) logged a decline in their revenue during the second quarters of the past two years.
For instance, Waskita logged a revenue of Rp3.34 trillion in the second quarter of 2022, marking a 64% YoY growth from Rp2.03 trillion in the previous year. However, in the second quarter of 2023, its revenue decreased by 24% to Rp2.54 trillion.
The same goes for PTPP. During the second quarter of 2022, the company reported a revenue of Rp4.74 trillion, marking a 31% YoY growth. However, its revenue fell in the second quarter of 2023 to Rp3.68 trillion.
Meanwhile, in the first quarter of this year, ADHI logged a revenue of Rp2.63 trillion, which fell 1.21% from Rp2.66 trillion in the first quarter in 2023.
The business revenue of ADHI is composed of contributions from various sectors, with Rp2.03 trillion from the engineering and construction business, Rp106.33 billion from the property and services business, Rp379.54 billion from the manufacturing business, and Rp98.58 billion from the investment and concession business.
Interestingly, this decline contrasts with the company’s net profit performance. ADHI recorded a net profit of Rp10.15 billion, attributable to the parent entity owner. This represents a growth of 20.14% compared to the previous year.
A similar fate was also experienced by WIKA that logged a revenue of Rp3.53 trillion in the first quarter of 2024, marking a YoY decrease of 18.75% from Rp4.34 trillion.
WIKA’s revenue derived from various sectors, with Rp1.53 trillion from the infrastructure and building segment, Rp1.15 trillion from the industrial segment, Rp585.97 billion from the energy and industrial plant segment, and Rp192.29 billion from the hotel segment.
After accumulating other revenues and expenses, it turns out WIKA recorded a current-year loss of Rp1.13 trillion, attributable to the parent entity owner.
Conversely, PTPP reported a YoY revenue increase of 5.68%, amounting to Rp4.61 trillion in the first quarter of 2024. This amount comprises of Rp3.81 trillion from the construction sector, Rp158.89 billion from the realty sector, and Rp462.07 billion from the EPC sector.
PTPP also reported a net profit of Rp96.60 billion attributable to the parent entity owner, marking a significant surge of 176.43% from the Rp34.22 billion recorded in the first quarter of 2023.
Waskita Karya disclosed a net loss of Rp939.55 billion for the current year in the first quarter of 2024. This represents a substantial increase of 150.59% from the Rp374.93 billion loss reported in the first quarter of 2023.
One contributing factor to Waskita’s increased loss is the 56.17% YoY rise in its financial burden, which now stands at Rp1.09 trillion.
Besides that, the company’s revenue also experienced a YoY decrease of 20.38% from Rp2.73 trillion to Rp2.17 trillion in the first quarter of 2024.
Wijaya Karya Corporate Secretary Mahendra Vijaya said that the company was currently still focused on recovering and strengthening its fundamentals and governance.
“The company appreciates the investors’ trust to purchase WIKA’s shares. We are committed to maintaining this trust,” he said when contacted by Bisnis on Wednesday (3/7/2024).
In terms of performance, WIKA has secured new contracts worth Rp5.5 trillion up until April 2024. The industrial segment is the largest contributor, accounting for 41.71% of the contracts, followed by the infrastructure and building, EPC, property, and investment segments.
Wager
The performance in this year’s second quarter serves as both a wager and evidence of the government’s current focus on the organisation of construction SOEs.
The SOEs Ministry is persistently carrying out structural transformations and restructuring across the 12 clusters of SOEs. This is done to maintain their health and ensure the sustainability of each state-owned company, including construction SOEs.
Analysts acknowledge that certain obstacles could restrict the performance enhancement of construction SOEs this year. These obstacles encompass the rise in the benchmark rate and the depreciation of the rupiah.
An analyst from Kiwoom Sekuritas Indonesia, Vicky Rosalinda, said that these two factors were significant to construction SOEs.
Starting with the escalation in the cost of raw materials due to the depreciation of the rupiah, leading to the surge in loan amounts caused by the rise in the benchmark rate.
“Currently, the benchmark rate is at 6.25%. Meanwhile, the rupiah depreciation is also affecting the construction sector. If The Fed lowers its benchmark rate, we predict SOE shares can grow,” he said recently.
On the other hand, Rosalinda said that the continuity of Nusantara Capital City (IKN) was a positive catalyst for construction SOEs this year.
Moreover, the megaproject has also been guaranteed by the new government that will take office in October.
An analyst from NH Korindo Sekuritas Indonesia, Leonardo Lijuwardi, sees that the continuity of IKN will be a breath of fresh air for the construction sector that was previously impacted by the Covid-19 pandemic.
As there is certainty from the new central government regarding the project, the performance of construction SOEs is expected to improve.
“The breath of fresh air from the continuity of IKN is expected to recover the performance of construction SOEs, such as PTPP and ADHI,” he stated.
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