Friday , April 16 2021

Highlighted by Dahlan Iskan, This is a poor performance by BUMN Kary



Jakarta, CNBC Indonesia – The construction sector was indeed one of the sectors most affected by the Covid-19 pandemic. Construction projects were forced to halt when Indonesia first received uninvited guests from Wuhan, China.

The downtime of this project was certainly caused by the capital-intensive construction sector due to large cash flows due to large losses. In the meantime, a huge financial burden has to be paid due to large business debts.

This is of course reflected in the financial statements of state-owned enterprises Karya (BUMN) for 2020 whose results are very unsatisfactory. Several BUMN Karyas had to reduce their net profit by up to 90%.

That is the concern of BUMN Minister Dahlan Iskan who published the article Haus Kerongkongan. Dahlan highlighted a number of BUMN Karyas who have achieved unsatisfactory performance amid ongoing infrastructure projects.

Of all the Karya BUMNs, there is one company whose losses are very serious compared to her siblings. PT Waskita Karya Tbk (WSKT) was forced to reserve a net loss of Rp 7.38 trillion in 2020.

This huge net loss wiped out all of Waskita’s retained earnings that had accumulated since the company was founded in 1973, leaving WSKT’s capital currently remaining only Rp 7.53 trillion, more precisely more than half, 57.88% of last year’s Rp position. 17.88 trillion.
Even the WSKT was forced to reserve a gross loss of Rs 1.97 trillion. Gross losses themselves are a very negative thing because operating income, ie turnover, cannot cover the costs of income either.

A company that experiences a gross loss is likely to swell the net loss because even before paying the costs of sales, general and administrative expenses, and tax costs, it has lost because it is unable to cover the cost of the goods.

As a result, the loss of WSKT caused the deletion of the company’s cash and cash equivalents. It was recorded that by the end of 2019, the company had cash and cash equivalents of IDR 9.2 trillion, while at the end of 2020, the company’s cash and cash equivalents amounted to only IDR 1.2 trillion or a decrease of 87%.

This is of course very dangerous for a capital intensive company like WSKT. Because if cash runs out amid the company’s swelled debt of Rs 89 trillion, the risk of default will of course increase, especially amid economic uncertainty over the Covid-19 pandemic, which is unclear when it will end.

Of the recorded WSKT debt of 89 trillion Rp, most, or 48 trillion Rp, is short-term, so that the cash ratio of the company to its short-term debt or known as the cash ratio is 2.5%.

This figure, of course, shows that the financial position of the company is very small and that the potential for default is quite large and of course there will be opportunities for the company to go bankrupt.

In fact, not only did WSKT suffer losses, but it was also noted that its subsidiaries recorded a serious net loss which was of course burdensome for the parent entity. Note that PT Waskita Beton Precast Tbk (WSBP) recorded a net loss of 4.75 trillion Rp and PT tolls with Waskita tolls lost 965 billion Rp.

Unlike WSKT, its BUMN counterpart Karya PT Wijaya Karya Tbk (WIKA) can still make a net profit in 2020 of IDR 50 billion. There is no loss, but that figure is 92% lower than last year’s net profit.

However, WIKA can actually make a net profit not because of the company’s operations but because of other revenues that have increased from IDR 1.18 trillion to IDR 3.06 trillion. This second revenue mainly stemmed from the recovery of a one-time drop in value of Rp 2.37 trillion.

Despite this, WIKA did not recoup this decline in value in cash, but mainly by converting receivables from WIKA Realty customers into a capital stake in PT Jakarta River City, PT Makassar Coastal City called debt in exchange for shares.

Debt-to-equity swaps usually hurt companies because they are usually forced to replace their claims with shares of companies whose performance is questionable (because they are unable to pay the debt) at a high price.

Despite this, WIKE’s condition is still much better than its brother WSKT as WIKA can still make a gross profit of IDR 1.52 trillion, with the company’s revenue still able to cover revenue costs.

In addition, WIKA still has money and cash equivalents that are more appropriate than WSKT. It was recorded that the company’s cash and cash equivalents managed to increase from a position of IDR 10.3 trillion in 2019 to IDR 14.9 trillion at the end of 2020.

With this cash, the company’s cash ratio is 33.85%, much better than WSKT, but that figure is certainly not certain.

Finally, there is also PT PP Tbk (PTPP) because PT Adhi Karya Tbk (ADHI) did not report its financial results. By the same fate as WIKA, which can still make a net profit, although it has fallen badly since last year, PTPP managed to earn 128 billion Rp this year, which is 86% less than last year’s position.

The state of PTPP is actually ‘the best’ among other Karya BUMNs where PTPP has successfully recorded a gross profit of Rs 2.1 trillion, which is ‘only’ 43% less than last year.

In addition, operating costs and revenue costs were also successfully suppressed, saving the company from serious losses such as those forced by WSKT to bear.

In terms of cash, the company’s cash and cash equivalents decreased from the position in 2019 from 9 trillion Rp to 7.5 trillion Rp at the end of 2020. On that figure, the company’s cash to short-term liabilities ratio is 26.84%.

Realizing this, it is only natural that Minister for State-Owned Enterprises for the period 2011-2014 Dahlan Iskan believes that economists predict the resilience of BUMN infrastructure is only a matter of time. According to him, the position of BUMN is difficult or very difficult.

In addition to Dahlan, veteran investor Lo Kheng Hong also mentioned that he was afraid to invest in BUMN Kary shares because of his growing debt.

CNBC INDONESIA RESEARCH TEAM

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