Wika pursues growth target
This article has been translated by PwC Indonesia as part of our Indonesia Infrastructure News Service. PwC Indonesia has not checked the accuracy of, and accepts no responsibility for the content.
Investor Daily - Wika Kejar Target Pertumbuhan
11 May 2021
PT Wijaya Karya Tbk (WIKA) is targeting new contracts to grow 20% every year from 2021. The new contract growth is expected to increase revenue and net profit by 20%.
Wika’s management is optimistic about global and domestic economies improving in 2021. This is supported by various steps in handling the pandemic and the distribution of Covid-19 vaccines.
In line with the global recovery, Indonesia’s economy is predicted to grow 4.4% this year. The construction sector is one of the sectors that is predicted to recover. “However, there are still risks and challenges that are matters of concerns, especially regarding Covid-19 cases,” the management explained in a yearly report released recently.
Wika reckoned that 2020 was the lowest momentum in the company’s business growth and 2021 would provide better growth. To handle this issue, the company has prepared a road map for the next five years. Moreover, in 2024, the company is set to return to the normal growth condition of 2019.
Several strategic steps that are implemented by the company include new contracts growing 20% every year. Then, sales are also set to grow more than 20%, so net profit will automatically grow more than 20% as well, then it will return to normal in 2024.
Besides that, Wika is boosting several subsidiaries to conduct an initial public offering (IPO) from 2022 to 2025. The subsidiaries are PT Wika Industri & Konstruksi or Wika Ikon and PT Wijaya Karya Realty or Wika Realty in 2023.
“Wika Realty has been set as part of the hotel SOE (State-owned Enterprise) holding in December 2020, and it has an excellent business prospect in the future. So, the company is expected to secure satisfactory revenue from Wika Realty,” the management explained.
Business diversification
In 2021, Wika also secured several new business portfolios, including a portfolio in the industry sector. Wika is planning to construct a large asphalt factory in Buton with a capacity of 2x100 tonnes this year. The factory is constructed to lower asphalt import that reaches 1 million tonnes per year.
Then, Wika wants to take over the industry sector as the industry sector will be clustered for construction SOEs. Besides that, Wika will strengthen their business portfolios in mineral, oil, and natural gas sectors. This is conducted to support the provision of materials to produce batteries.
Wika will also lower their investments in sectors where there are many other corporations, so they will invest in sectors with few companies such as Waste-to-Energy Power Plants (PLTSa). The company is cooperating with Jakpro and has won the renewable energy project in East Jakarta. Besides that, Wika will also enter water management by investing in Jatiluhur SPAM.
Moreover, in 2020, Wika recorded lower revenue and net profit. The revenue in 2020 reached Rp16.54 trillion, which declined by 39.23% compared to the revenue in 2019 that reached Rp27.21 trillion.
The decline due to the Covid-19 pandemic also impacted Wika’s net profit that declined by 87.7% in 2020 to Rp322.34 billion. Meanwhile, in 2019, Wika recorded a net profit of Rp2.62 trillion.
The pandemic in 2020 forced Wika to save up. Hence Wika must cut their capital expenditure from Rp11.51 trillion to Rp2.39 trillion. Wika must also repay some of Global IDR Bond (Komodo Bond) that is due on 31 January 2021. By issuing bonds and sukuk worth Rp2 trillion for debt refinancing, Wika recorded an excess demand of 2.5 times.
