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Jasa Marga sees growth soar amid toll road craze
State-owned toll road operator Jasa Marga enjoyed robust business growth last year, which is predicted to persist this year, thanks to the government’s ambition in building more roads to improve connectivity across the country as well as the rising number of toll road users and their willingness to accept higher tolls
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State-owned toll road operator Jasa Marga enjoyed robust business growth last year, which is predicted to persist this year, thanks to the government’s ambition in building more roads to improve connectivity across the country as well as the rising number of toll road users and their willingness to accept higher tolls.
The publicly listed firm booked Rp 16.66 trillion (US$1.25 billion) in revenue last year, up 69 percent from 2015.
Its revenue from the construction business skyrocketed, more than tripling to Rp 7.83 trillion from Rp 2.22 trillion in 2015, according to the company’s financial statement filed with Indonesia Stock Exchange (IDX) on Wednesday.
President Joko “Jokowi” Widodo has made infrastructure development one of his administration’s top priorities. The government aims to build 1,000 kilometers of new toll roads by the end of its term in 2019, to which Jasa Marga looks set to contribute the lion’s share of 732 km.
Currently, it operates 593 km of toll roads and targets to double that figure to 1,261 km from additional roads it will build and operate by 2019.
Meanwhile, Jasa Marga pocketed Rp 8.83 trillion in revenue from toll road operations and other businesses, up more than 69 percent year-on-year (yoy). It booked net profit of Rp 1.89 trillion throughout last year, a 28 percent yoy increase.
“What caused the hike in net profit was the increase in toll income in the last two years, in line with the inflation rate, and the greater number of vehicles using the roads, especially the Jakarta-Cikampek and Simatupang [in South Jakarta] toll roads,” NH Korindo Securities analyst Bima Setiaji wrote in a text message on Wednesday.
On the other hand, he went on, toll road operating costs had increased only moderately, causing its margin to grow to 74 percent from 64 percent in 2015.
Jasa Marga’s costs jumped by more than 106 percent yoy to Rp 11.8 trillion, mainly due to construction expenses of Rp 7.78 trillion last year, up from Rp 2.2 trillion in the previous year.
This year, Bima further projected, the company’s ongoing toll road construction and more prudent management would help it perform better. “Around 230 km of new toll roads will be completed this year. The new management is also more prudent, as shown in its plan to issue Rp 4.7 trillion of bonds, instead of the previously planned Rp 9 trillion.”
The bond proceeds will be used to refinance burdening high-interest bonds falling due in 2018. This will slash Jasa Marga’s interest costs and strengthen its net profit.
Binaartha Sekuritas senior analyst Reza Priyambada projected the firm’s net profit to reach Rp 2.3 trillion this year and its revenue to grow by more than 20 percent to Rp 20 trillion. He estimated that toll road construction would make a smaller contribution to this year’s revenue, given that most of the toll roads projects had been carried out last year.
“The revenue growth will be supported by revenue gained from toll road operations,” he said by phone.
However, like a double-edged sword, the government’s ambitious plan to build more toll roads may jeopardize Jasa Marga’s cash flow, according to Bima. “Sourcing funds for its huge capex [capital expenditure] will be a headache for Jasa Marga. This is less favored by big investors, such as asset management firms or pension funds,” he said.
