PTPP became a contractor for ferronickel smelter construction located in Kolaka, Southeast Sulawesi with a total investment value of Rp14.5 trillion (US$1.01 billion) - Photo: Privacy.

JAKARTA (TheInsiderStories)PT PP Tbk (IDX: PTPP), a state-owned construction and investment companies in Indonesia, became a contractor for ferronickel smelter construction located in Kolaka, Southeast Sulawesi with a total investment of Rp14.5 trillion (US$1.01 billion), the company announced on Sunday (06/16).

The state-owned contractor has signed a contract to build a smelter with a Rotary Kiln Electric Furnance (RKEF) technology with PT Ceria Nugraha Indotama (CNI) as an investor in April 2019.

Abdul Haris Tatang, PTPP’ Operations Director in a written statement stated, that the company will be cooperate with Chinese’ ENFI consortium to construct the smelter project,

“The company is optimistic that it can complete the project for 24 months. Our company has experience in working on power and oil and gas projects. The company is starting to plunge into the mineral processing industry,” he said.

PTPP’ 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 targeted to operate in 2021. Production is projected to reach 229,000 tons of ferronickel annually at a rate of 22 percent – 24 percent.

Meanwhile, PTPP’ Managing Director Lukman Hidayat said the company had booked a new contract of Rp10.57 trillion as of April. The realization was equivalent to 21 percent of the target of Rp50.30 trillion targeted by the company this year.

In detail, Hidayat said that the achievement of the new contract up to April 2019 consisted of a new parent company contract of Rp9.23 trillion and a subsidiary of Rp1.34 trillion.

Some of the projects that have been pocketed include Balikpapan refinery development for Phase II Rp3.38 trillion and the Indrapura Kisaran toll road (continued) Rp3trillion.

In the some month, he continued, the acquisition of a new contract from the State-owned Enterprises dominated with 65.88 percent. The second position was followed by the private sector 25.04 percent and the government 9.08 percent.

In terms of the type of work, the composition is 33.70 percent power plant, road, and bridge 28.46 percent, building 24.58 percent, airport 4.31 percent, railway 4.26 percent, industry 3.06 percent, and irrigation 1.66 percent.

In 2019, the company allocated Rp8.73 trillion capital expenditure, 28.76 percent higher than last year’ realization. The company also planned to sell part of its ownership in three toll road concessions, namely Pandaan – Malang toll road in East Java (35 percent), Kualanamu – Tebing Tinggi toll road (15 percent) and Kuala Tanjung Port (25 percent) in North Sumatera.

The company expects to raise around Rp500 billion from share sales. Last week, the company issue local bond as much as Rp1.5 trillion local bond for its alternative funding in fulfilling company’ needs this year. The funds also use for business expansion. Beside, this year, the company planned to set aside net income for reserves Rp1.2 trillion from last year has pocketed Rp16.31 trillion.

At the last shareholders meeting in May, PTPP has to get approval to distributed dividend 20 percent of last year’ net income or equivalent to Rp48,452 per share for the fiscal year 2018. This dividend payout ratio provides a large financial flexibility space to fund the company’ working capital from infrastructure project development, investment, and at the same time to strengthen the capital structure.

In 2019, the constructor eyes new contract Rp50 trillion. in the first quarter of this year, the construction firm has bag Rp9.5 trillion of new contracts such as the development of Makassar’ train depot, Makassar Pare-Patre train development project, Swissbell Hotel, smelter, and other projects.

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.

Recently, the government aimed to establish Housing and Regional Development holding company under the control of Perusahaan Umum Pembangunan Perumahan Nasional (Perumnas). PTPP join with PT Wijaya Karya Tbk (IDX: WIKA), PT Amarta Karya, PT Bina Karya and PT Indah Karya in the new holding company.

Around 51 percent of government-owned series B shares are transferred to state capital participation in Perumnas’ share capital, while Series A Shares remain owned by the Government. With the establishment of a holding, it will increase funding capacity, capital expenditure, revenues, cost efficiency, profits, and equity.

Last year, PTPP booked a revenues Rp25.11 trillion or grew by 16.82 percent compared to the previous year of Rp21.50 trillion. Then, the net profit worth of Rp1.95 trillion, or rose 13.64 percent compared to the previous year of Rp1.72 trillion.

US$1: Rp14,300

Written by Lexy Nantu, Email: lexy@theinsiderstories.com