JAKARTA (TheInsiderStories) – Indonesian construction firm, PT PP Tbk (IDX: PTPP) has budgeted capital expenditure Rp6.52 trillion (US$462.41 million) for 2021, said the management on Tuesday (12/22). The values was 92.89 percent higher than this year’ budget of Rp3.38 trillion.
“(The capital expenditure) consists of carry-over projects worth of Rp4.36 trillion and new investments of Rp1.89 percent,” wrote the statement.
As for new investment, the company will still focus on toll roads, industrial estates, drinking water supply systems, and airport projects. To finance the budget plans, the constructor has plans to release bond and use the internal cash.
Throughout 2020, the issuer was able to secure new contracts from various projects, including the Kolaka Ferronickel Line 2,5,6 Smelter project, Tiu Suntuk Paket II Dam, Pekanbaru – Kampar water treatment, Mandalika Circuit, and Banten Sport Center. As of Nov. 23, PTPP booked new contracts worth of Rp17.42 trillion or nearly 70 percent of this year’ targets.
The management is also optimistic that it can realize the new contract target set for this year amounting to Rp25 trillion. Currently, the developer had completed the divestment of a 25 percent stake in PT Prima Multi Terminal for Rp378 billion, the manager of the Kualatanjung Multipurpose Port.
PTPP has also completed the divestment of 14 percent of its shares in PT Citra Karya Jabar as the concession owner and manager of the Cisumdawu toll road with a valued of Rp50.25 billion.
Currently, the constructor is in the process to divest at least four toll roads to a number of strategic investors with a target fund up to Rp1.6 trillion by the end of this year. The divestment include the Pandaan – Malang (15 percent) and Medan – Kuala Namu – Tebing Tinggi Toll Road (35 percent).
The CEO, Novel Arsyad, said that the divestment are part of PTPP‘ strategy to get a new contract worth of Rp25 trillion in 2020. He explained, the buyers of the toll road assets came from several domestic investors, who were considered big players.
Until July, he added, the company has pocketed new contracts of Rp10.05 trillion, which are around 45 percent from state-owned enterprises, 31 percent from the government, and the rest from private sectors. The company is targeting to raises a new contracts of Rp25.5 trillion in this year.
According to Arsjad, there were several projects in the company’ pipeline such as energy, infrastructure and buildings projects. 58 percent of PTPP projects majority are new contracts will come from construction sectors and the second largest contributor to the engineering procurement and construction business line.
This year, the issuer ready to spends Rp7.5 trillion of capital expenditure, derived from retained earning, dividends from the subsidiaries, bank loans, divestment, bond and equity. This year, the company claimed that it will be hassle to achieve double digit growth for revenue and net profit.
Then recurring income assets are derived from water supply system projects in Bekasi in West Java and Tangerang. The developer also wants to strengthen recurring income’ businesses from toll and renewable energy, like biomass energy project for East Indonesia.
Currently, the contractor managed several projects such as two steam power plants in East Nusa Tenggara and North Sulawesi with total costs Rp8 trillion. The capacity of each steam power plant is 2×50 megawatts (MW). The first steam power plant was carried out on an area of 30 hectares in West Kupang, East Nusa Tenggara.
The second steam power plant was built on 32 hectares of land in the Bolaang Mongondow, North Sulawesi. The construction firm was optimistic to complete the first projects in West Kupang in three years time and in Bolaang Mongondow in 39 months.
Its also expected the two steam power plants will be ready to operate in 2022, so it will be able to electrify several villages and sub-districts in the East Nusa Tenggara and North Sulawesi regions. PTPP also become a contractor for ferro nickel smelter construction located in Kolaka, Southeast Sulawesi with a total investment of Rp14.5 trillion. The contractor has signed a contract to build a smelter with PT Ceria Nugraha Indotama as an investor in April 2019.
The developer will be cooperate with Chinese’ ENFI consortium to construct the smelter project. The management said that the project to build the ferronickel smelter will require an investment of Rp4 trillion in the first phase. The plant has a total capacity of 4×72 MVA and targeting to operate in 2021. The production is projected to reach 229,000 tons of ferronickel annually.
In addition, the company also eyes construction projects in the Philippines and port development project in Malaysia worth of Rp2 trillion, after getting the project in Vietnam with worth of Rp500 billion.
Throughout the first semester of 2020, PTPP posted operating revenues of Rp6.75 trillion or dropped by 36.56 percent from the same period of 2019 which posted Rp10.64 trillion. While, the cost of goods was recorded at Rp6.04 trillion and make the gross profit declined by 49.96 percent to Rp705.69 billion. At the end, the end the net profit fell 95.36 percent to Rp15.95 billion from a year ago Rp343.72 billion.
Until June 2020, the issuer has received a new contract of Rp8.9 trillion after participated in 76 tenders. Of these, 11 projects were declared winners, 45 tenders are still waiting for the next process, and 20 other projects delayed due to the pandemic.
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