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tate construction firm PT Adhi Karya (ADHI) has formed a joint venture with PT Terminal Teluk Lamong (TTL), a subsidiary of state port operator Pelabuhan Indonesia III, to supply electricity, an official with Adhi Karya says.

Adhi Karya corporate secretary Ki Syahgolang Permata said on Monday that his firm had signed a contract for the establishment of the joint venture under the name PT Lamong Energi Indonesia on Jan. 7. The new company will run a gas-fueled power plant and provide area utility management services.

With Rp 36.40 billion (US$2.87 million) in core capital, Adhi Karya owns 49 percent shares in the joint venture, while the remaining 51 percent shares are controlled by Terminal Teluk Lamong.

Ki previously said Adhi Karya was looking to disburse more than Rp 800 billion in capital expenditure (capex) this year, most of which would be for the state-run construction firm'€™s property unit, as the company hopes to expand to book stable recurring income.

Ki said his company was planning to pour around Rp 824.70 billion for its expansion this year, 68.64 percent or around Rp 566.10 billion was allotted for the company'€™s hotel business.

About 24.59 percent or Rp 202.8 billion will be used for an investment participation project while the remaining 8.19 percent or Rp 68.39 billion will be used to purchase new assets.

'€œWe will source the funding for our capex from our previous bond proceeds, bank loans and from our internal cash,'€ Ki explained.

Adhi Karya has been looking to strengthen its property business, hoping to double its new contracts in its property unit from Rp 913.2 billion in 2014 to Rp 1.7 trillion this year.

Property was the second-largest contributor to Adhi Karya'€™s new contracts last year after construction, making up around 10 percent of the company'€™s Rp 9.2 trillion new contracts in 2014. Construction contributed around 89 percent to new contracts with Rp 8.2 trillion last year, while precast concrete made up the remaining Rp 74.3 billion.

If Adhi Karya achieves its annual target, property is expected to contribute 11.18 percent to its projected new contracts of Rp 15.2 trillion this year.

Adhi Karya director Giri Sudaryono said earlier that to mitigate construction business volatility, the company was looking to book additional revenue from recurring income through its property and realty units starting next year.

The company is building three hotels worth Rp 432 billion, located in Medan, Jakarta and Semarang. The hotels will start operations next year and are expected to contribute 5 percent recurring income to the company'€™s 2016 revenue.

Adhi Karya has high hopes for its property unit Adhi Persada Properti. The company had aimed to see the subsidiary offer shares in an initial public offering (IPO) this year but postponed the plan to next year on account of lackluster business last year.

In 2014, Adhi Karya '€” along with other publicly listed builders '€” experienced contracted business on sluggish investment in the election year, as well as cuts to the infrastructure budget made by the previous government in response to ballooning fuel subsidies '€” a move that affected construction demand from government institutions and state-run companies.

Adhi previously aimed to book Rp 15.2 trillion in new contracts last year '€” similar to the initial target for this year -- but later revised down to Rp 10.5 trillion.

Despite having revised its target, Adhi still missed its 2014 new contracts target, as it only generated 87.62 percent from the targeted figure.

The company also expects to book declining revenue and net profit for 2014, down by around 6 percent from Rp 9.8 trillion and 8 percent from Rp 405.9 billion, respectively, in 2013.

Ki said that his company aimed to book Rp 13.2 trillion in revenue and Rp 440.1 billion in profit this year, up 43.47 percent and 36.42 percent, respectively, from last year'€™s projected financial result. The company is optimistic that will secure the target on the back of a boost in infrastructure construction this year.