TheJakartaPost

Please Update your browser

Your browser is out of date, and may not be compatible with our website. A list of the most popular web browsers can be found below.
Just click on the icons to get to the download page.

Jakarta Post

Wika slashes new contract target by third to $1.46 billion

The decision to lower the contract target was made after the company’s net profit decreased 72 percent during this year’s first half to Rp 250.42 billion.

Yunindita Prasidya (The Jakarta Post)
Jakarta
Wed, August 26, 2020

Share This Article

Change Size

Wika slashes new contract target by third to $1.46 billion A billboard bearing Wijaya Karya’s logo is installed near a project in Jakarta. (kontan.co.id/Daniel Prabowo)

S

tate-owned construction firm PT Wijaya Karya (Wika) has set a target of achieving Rp 21.38 trillion (US$1.46 billion) worth of new contracts in 2020, a third of its initial target of Rp 65.5 trillion due to postponed projects during the pandemic.

Wika president director Agung Budi Waskito said the majority of the new contracts, at Rp 13.08 trillion, would be from the company’s infrastructure and building segment. The rest will come from its industry, energy and industrial plant, and its property segment. 

“As of the second quarter we have achieved Rp 3.4 trillion. We will gain the rest in the third quarter, especially in the fourth quarter,” Wika president director Agung Budi Waskito said during a virtual public expose event hosted by the Indonesia Stock Exchange (IDX) on Tuesday.

The target for new contracts is 48 percent lower than the value of new contracts booked last year, as the company recorded a total of Rp 41.18 trillion in new contracts in 2019. The decision to lower the contract target was made after the company’s net profit decreased 72 percent during this year’s first half to Rp 250.42 billion.

Meanwhile, Wika’s revenue dropped 37 percent to Rp 7.13 trillion. The biggest fall in sales was experienced in the company’s property segment, which saw a decrease of 53 percent yoy to Rp 264.11 billion.

Agung explained that the company had struggled to book contracts in the first half of the year as many projects had been postponed as a result of the social restriction measures imposed to limit the spread of COVID-19.

The pandemic has taken a toll on infrastructure projects globally. In Indonesia, supply chain disruption has slowed the construction of ongoing projects, while reallocation of the state budget to social programs has decreased disbursement of funds to new projects.

During the first six months of the year, the company managed to book Rp 3.42 trillion in new contracts, or 15.98 percent of its target this year. During the same period last year, the company booked a total of Rp 15.23 trillion in new contracts. In other words, new contracts attained so far declined by almost 78 percent year-on-year (yoy).

“Wika’s performance throughout this year is below our expectation and consensus due to minimal new contract attainment until the first half of 2020,” Mirae Asset Sekuritas Indonesia equity analyst Joshua Michael told The Jakarta Post on Tuesday. 

Joshua projected that the Indonesian construction sector would recover in the second half of the year with the assumption that the country gradually recovered from the COVID-19 pandemic, in addition to being supported by the projects coming from the government and state-owned firms in recent months.

“For 2021, the budget increase for infrastructure is a positive catalyst for all issuers in the construction sector, including Wika,” Joshua added. He went on to say that Wika’s balance sheet condition, which was considerably good, would support the company to increase its revenue and profitability next year. 

Artha Sekuritas Indonesia analyst Dennies Christoper, on the other hand, said that Wika and other issuers in the construction sector would still have poor prospects this year driven by a slowdown in cash flow and the postponement of project tenders. 

“The performance will not be aggressive until the end of the year,” Dennies told the Post on Tuesday. 

The company is finishing up several major projects in 2020 including the Cengkareng-Kunciran toll road located in Jakarta and Tangerang, which is at 86 percent completion and the the Kuwil Kawangkoan dam in North Sulawesi, which is 73 percent finished.

The company’s total order book, albeit declining by around 15 percent yoy, is still at Rp 100.05 trillion in 2020.

Wika’s shares, traded on the IDX under the code WIKA, closed at Rp 1,320 apiece on Tuesday, up 0.38 percent against the previous trading day. Throughout the year, it has lost 33.67 percent of its value as of Tuesday.

The company stock performed moderately worse than its sectoral index. The property, real estate and building construction index has fallen by 29.65 percent during the same period. Meanwhile, the Jakarta Composite Index, the main gauge of the IDX, dropped 15.25 percent year-to-date.

{

Your Opinion Matters

Share your experiences, suggestions, and any issues you've encountered on The Jakarta Post. We're here to listen.

Enter at least 30 characters
0 / 30

Thank You

Thank you for sharing your thoughts. We appreciate your feedback.