Wika receives Rp700 billion capital loan from SMI
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 - Wika Raih Pinjaman Modal SMI Rp700 Miliar
25 October 2021
By: Muawan Daelami
Jakarta – PT Wijaya Karya Tbk is receiving a capital loan or receivables from PT Sarana Multi Infrastruktur (SMI). The financing provided for Wika is worth Rp700 billion at most with an insurance value of Rp1.6 trillion.
PT Wijaya Karya Tbk Corporate Secretary, Mahendra Vijaya, revealed that the transaction would provide loans and grant guarantees that would be directly provided by the infrastructure financing company, in line with Article 6 of OJK Regulation Number 42/2020. “Consideration for this transaction is to provide working capital to carry out or complete the company’s infrastructure project constructions,” Mahendra wrote in a disclosure at the Indonesia Stock Exchange (IDX) on Friday (22/10).
This transaction between the issuer with the ticker code WIKA and PT SMI is an affiliate transaction as both are SOEs (State-owned Enterprises) mostly owned by the government. This affiliate transaction will be carried out on 18 October 2021.
“[The transaction] between the company and SMI is an affiliate transaction as both are directly controlled by the same majority shareholder, which is the Indonesian government. 65.05% of Wijaya Karya shares are owned by the government, while 100% of PT SMI shares are owned by the government,” he stated.
Increasing the market’s optimism
Meanwhile, Praus Capital Research Head, Alfred Nainggolan, reckoned that the impact of the loan to Wika’s stock price would be minor as this transaction was an affiliate transaction between a financing SOE and a construction SOE.
Moreover, this transaction is not carried out for the first time. Previously, Alfred continued that PT SMI had provided working capital for Wika and their subsidiaries directly or through a syndicate.
“Funding is currently a crucial issue for construction SOEs. The covid-19 pandemic has made funding from the state budget and SOE banks – which were the main sources of funding for construction SOEs – harder to come by,” Alfred said to Investor Daily on Friday (22/10).
The support of SMI for Wika is expected to improve the optimism of the market towards the funding issue of construction SOEs. Meanwhile, from SMI’s perspective as a state-owned financing company, Alfred sees that it will be a signal for the market that shows the government’s commitment to support construction SOEs in their funding issue.
“It does not have a direct impact. However, this loan is also good news for Wika, regarding the support received by the company from the financing SOE,” he added.
BNI Sekuritas Head of Equity Research, Kim Kwie Sjamsudin, said that the loan provided for Wika from SMI was normal. “The impact is neutral as loans are routine financial activities for every company,” Kim told Investor Daily on Friday (22/10).
Regarding the construction sector, Kim continued that reopening the economy should provide positive sentiment for the construction sector. This sector is crucial for economic recovery.
Previously, Wika was targeting to secure new contracts worth Rp36 trillion until the end of this year. To maximise project realisation, Wika will focus on sustainable projects. In terms of their role as a contractor and investments, the company will focus on their core business.
“Our future investments will be investments in technology or something new and sustainable, such as water or buton asphalt. There is also new and renewable energy in the form of waste-to-energy power plants as we will continue to prioritise sustainable projects in the future,” PT Wijaya Karya Tbk President Director, Agung Budi Waskito, said some time ago.
According to Agung, the Covid-19 pandemic that has continued for almost two years has had a large impact. However, profit in the first half of 2021 reached Rp136 billon, which met the company’s expectation.
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