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 - Divestasi kunci pertumbuhan PTPP
12 March 2024
By Muawwan Daelami
Jakarta, ID – PT PP Tbk (PTPP) is planning to divest some of its assets to pursue profitability this year. Sustained by other business strategies, the company hopes to pursue a double-digit performance growth in 2024.
“This year, we will also carry out divestments. They are expected to contribute to the company’s profitability. However, they are still in the early stage,” PTPP President Director Novel Arsyad told Investor Daily recently.
Towards the end of last year, PTPP, via its subsidiary PT PP Energi, successfully divested all its shares in PT Inpola Meka Energi. The sales purchase agreement, signed on 28 December 2023, involved PT PP Energi divesting 38.77% or 496,645 of its shares in PT Inpola Meka Energi with a divestment value of Rp45.17 billion to an Indonesian investor, PT Energi Infranusantara.
Energi Infranusantara is an investor in the renewable energy sector with more than 11 years of experience in Indonesia. Energi Infranusantara is a subsidiary of PT Nusantara Infrastructure Tbk (META), an entity of Salim Group.
Besides asset divestment, Novel revealed that, this year, the company was focused on organising its portfolio to return to its core business as a construction company. Moreover, the company is ready to expand to the private sector that encompasses local and foreign private companies to balance out its government project portion.
Novel continued that the company’s performance this year, in accordance with its work, programme, and budget, would continue to explore potential markets that are easily improved upon. On the other hand, PTPP is also continuously optimising and maximising its performance on the field to increase its profitability.
Novel continued that, this year, PTPP was targeting a performance growth of around 5-10% compared to the company’s performance last year. To achieve this target, the company is focusing on government markets, including projects funded by the state budget (APBN) and state-owned enterprises (SOEs). Additionally, its strategies involve selectively expanding into domestic and foreign private sectors while prioritising risk management.
Rp1.5 trillion capex
PTPP is allocating Rp1.5 trillion capital expenditure this year. The capex will be used to complete PTPP’s investment in national strategic projects (PSNs), which includes Semarang-Demak toll road.
On the contrary, its capex this year will not be used to increase new investments. The company is currently focused on its core business in the construction segment and wants to achieve its divestment target this year that reaches Rp3 trillion.
Novel explained that funds obtained by PTPP from investments would serve as working capital for construction activities and support investments in areas aligned with the company's core business. This approach ensures a comprehensive assessment in terms of risk management and cash flow.
“Areas that smell of energy are areas that are not aligned with PTPP’s core business. So, we will cut down these areas so that they will not burden the company. So, we have made organisations so that the profit that we acquire can be optimised and attract stakeholders,” Novel said.
New contracts
This year, the state-owned construction issuer is targeting new contracts worth Rp31 trillion. Until the end of January 2024, PTPP has secured new contracts worth Rp3.5 trillion, which increased by 99.96% from last year.
PTPP Corporate Secretary Bakhtiyar Efendi revealed that PTPP’s contract value until January 2024 was an excellent initial step. This reflects the company's commitment and steadfast focus on reinforcing its core construction business, aligning with its goal for the conclusion of 2024.
“We are thankful for securing promising new contracts at the start of 2024. It motivates us to achieve our target this year. We are also focused on completing national strategic projects (PSNs) and projects within Nusantara Capital City (IKN) this year by still focusing on quality, HSE, and risk management,” Efendi said.
Surging by 106%
Similar to PTPP, the new contracts of PT Adhi Karya Tbk (ADHI) until January 2024 also surged by 106% to Rp4 trillion compared to its new contract realisation last year. According to ADHI Corporate Secretary Farid Budiyanto, the new contracts secured until January 2024 consist of water resource projects reaching 79%, building projects reaching 16%, and manufacturing, property, roads, and bridges that contribute the rest. Meanwhile, based on the source of funding, 90% of the projects are funded by the government, and the remaining are funded by private companies.
“ADHI is currently collecting. It is being prudent in selecting each project to increase its cash flow and operational excellence. It is also implementing appropriate project financing and funding schemes to optimise its performance this year,” Farid said.
