Indonesia’s Astra Raises Capex for Acquisition Plans

Photo by Astra International

JAKARTA (TheInsiderStories) – President Director of PT Astra International Tbk (IDX: ASII) Prijono Sugiharto said this year’ capital expenditure (capex) will escalate to around Rp30 trillion (US$2.07 billion) from initial planned Rp29 trillion for business expansion. The statement this statement was conveyed by him at the Investor Summit at Indonesia Stock Exchange on Tuesday (28/08).

Previously, its unit PT United Tractor Tbk (IDX: UNTR) has announced to purchase Martabe gold mine in North Sumatera from existing shareholders. According to Sugiharto, at least the purchase of mining concession need funds around $1.2 billion.

Martabe mine was acquired by a consortium led by  EMR Capital, a specialist mining private equity fund bought 95 percent of the mine from Hong Kong’s G Resource in 2016 for $775 million.

At this mine, EMR Capital has 61.4 percent of shares. The consortium also includes a global financial investor Farallon Capital (20.6 percent), North Sumatra’ businessman Martua Sitorus (11 per cent) also Robert Hartono and Michael Bambang Hartono (7 percent).

With tis investment, he said, Astra’ investment will soaring. The transaction itself, Sugiharto added, need time, could be finalize this year or in 2019, depends on the financial closing plan. He explained, the acquisition of the Martabe’ mine was one of UNTR’s ways to reduce dependence on coal and diversify into gold mines with high reserves.

Since early of this year, Astra more aggressively to expand its business and seeking various opportunity in the country, including inject capital to ride-hailing firm Go-Jek. Sugiarto believed going-forward business in Indonesia will grow well and Astra would like to take part in it.

More detail he explained, its heavy equipment subsidiary PT United Tractors Tbk (IDX: UNTR) will spend Rp13 trillion, agribusiness division Rp2 trillion, toll road and infrastructure division Rp2 trillion, branches expanding Rp2.7 trillion, infrastructure and logistics unit (PT Serasi Autoraya ) Rp1.8 trillion, and Go-Jek Rp2 trillion.
With a strong net cash, Sugiarto said, the company’s have ability to fund this year’s investments. He also reported,
Automotive Business
According Sugiarto, since last year the automotive business slower amid the fall of Rupiah against U.S dollar and the weak demand. Last year total car sales recorded 1,079,886 units and Astra’s market shares slightly dropped from 57 percent to 54 percent.
This year, Director Johny Bunarto Tjondro sees the four-wheeled sales about 1.1 million units and Astra’s market shares around 50 percent. Its unit, PT Toyota Astra Motor (TAM) is targeting a market share of 32 percent while PT Astra Daihatsu Mobil (ADM) around 18 percent.
While Johannes Lohman saw vehicle sales this year in the range of 6.1 million units. PT Astra Honda Motor (AHM), he said, also continued to develop export markets and from year to year increase. In 2015, AHM export 26,000 units, 60,000 units in 2016 and 120,000 units last year.
In the past year, the net profit of the automotive business decreased by 8 percent to Rp2.1 trillion, primarily due to increased competition in the car market. Astra Group has launched seven new models and two models revamped during this period.
On the other hand, national motorcycle sales increased by 4 percent to 1.5 million units which AHM stable sales of 1.1 million units which resulted in market share declined from 77 percent to 73 percent. The Group has launched a new model and five revamped models during this period.
In the first quarter of 2018, profit its component producer’s unit PT Astra Otoparts Tbk (IDX: AUTO) grow flat to Rp146 billion, despite a revenue increase of 11 percent primarily due to lower contribution from joint ventures and associates and are affected by foreign currency translation losses.
Financial Business
Last quarter, the financial services business also experienced a decline 6 percent to Rp1.1 trillion due to a decrease in the contribution from PT Bank Permata Tbk (IDX: BNLI). The bank, which is 44.6 percent owned by Astra, reported net income of Rp164 billion.
As a group, consumer finance business sector decreased by 5 percent in total financing into Rp19.7 trillion and net profit decrease of 17 percent to Rp225 billion. PT Federal International Finance, which focuses on the financing of two-wheelers, recorded a net profit increase of 22 percent to Rp542 billion, mainly due to increasing loan portfolio.
Total financing of heavy equipment also lowered 35 percent to Rp846 billion, PT Asuransi Astra Buana, a general insurance company of the Group, recorded an increase in net profit by 15 percent to Rp247 billion, due to increased return on investment.
During last year, the joint venture life insurance company of the Group, PT Astra Aviva Life, adding 78,000 new customers and 411,000 individual life insurance new customers insurance employee benefits programs.
Mining Business
Meanwhile, Heavy Equipment, Mining, Construction and Energy profit increased by 68 percent to Rp1.5 trillion. United Tractors, which is 59.5 percent owned by the company, reported a net profit increase of 69 percent to Rp2.5 trillion.
This increase is mainly due to the increase in business performance of construction machinery and mining contracting and mining activities, as a result of the increase in coal prices.
In the business segment of construction machinery, PT Komatsu heavy equipment sales volume increased by 38 percent to 1,171 units, of which revenues from spare parts and maintenance services has also increased.
Other unit PT Pamapersada Nusantara sales rose by 6 perent to 26.5 million tons and contract stripping (overburden removal) increased by 22 percent to 207 million bank cubic meters. UNTR’s unit reported an increase in coal sales by 36 percent to 2.6 million tons.
Its new coking coal company PT Suprabari Mapanindo Minerals also began operating at the end of 2017, managed to record coal sales amounted to 111,000 tons.
PT Acset Indonusa Tbk (IDX: ACST), a general contracting company also recorded an increase in net profit by 27 percent to Rp39 billion, due to increased revenue primarily from infrastructure construction projects.
Agribusiness player, PT Astra Agro Lestari Tbk (IDX: AALI), which is 79.7 percent owned by the company, the net profit dropped by 55 percent to Rp355 billion, mainly due to the declining price of crude palm oil (CPO). The average price of palm oil decreased by 12 percent to Rp7.855 per kilogram, while the sales of palm oil and its derivatives increased by 17 percent to 480,000 tonnes.
Furthermore, Infrastructure and Logistics Group recorded a net loss of Rp23 billion, compared with net income of Rp67 billion in the first quarter of 2017. This was caused by the early loss of Cikopo-Palimanan tollr road acquired the Group in the first half of 2017.
Toll Roads
Portfolio Group’s toll road business reached 353 km, in which 269 km has been operating. Tangerang-Merak toll along 72.5 km, operated by PT Marga Mandala Sakti, the operator of the toll road that 79.3 percent owned by Astra, recorded an increase in revenue of 14 percent to Rp253 billion.
In Jombang-Mojokerto toll road along the 40.5 km, along the 39,6km fully operational in September 2017 and recorded revenue of Rp39 billion in the first quarter of 2018. Cikopo-Palimanan toll road along 116.8 km, which is 45 percent owned by the company, recorded an increase in revenue of 4 percent to Rp296 billion.
While the 40.1 km of the 72.6 km segment of the Semarang-Solo toll road, which is 40 percent owned by the Group, has been in operation, and recorded revenue of Rp 50 billion or 36 higher than the first quarter of the previous year. The Group also has a 40 percent stake in Kunciran-Serpong toll road along the 11.2 km and a 25 percent stake in Serpong toll road-Balaraja along 39,8 km, where both the toll road is still in the development stage.
IT and Property Business
PT Serasi Autoraya increased net profit by 45 percent to Rp58 billion, due to increases in margin financing business and rental cars, despite a decline of 4 percent in the vehicle rental contract. PT Astra Graphia Tbk (IDX: ASGR), which is 76.9 percent owned by the company, recorded an increase in net profit to Rp 35 billion, mainly due to higher revenues from all business segments.
Property Group reported net income of Rp6 billion compared to net profit of Rp42 billion in the previous year. This is mainly due to the decrease of the profit recognition Anandamaya Residences project.
Arumaya, residential projects are 60 percent owned by the Group, which is located in South Jakarta, has started marketing in March 2018 and scheduled for completion in 2022.
Other firm, PT Astra Land Indonesia, which is 50 percent owned by the Group and owns 67 percent of PT Astra modern land, is developing 67 hectares of land in East Jakarta and the first quarter of 2018 has started marketing activities for the first two clusters of houses footprint.