State construction issuer: WIKA’s chance to win investors' hearts
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.
Bisnis Indonesia - Emiten BUMN karya: Peluang WIKA merebut hati para investor
28 October 2024
By Thomas Mola
Opportunities for construction state-owned enterprise (SOE) issuers are highlighted amid the new administration of Prabowo Subianto and Gibran Rakabuming Raka's selective approach to developing landmark projects.
The share performance of PT Wijaya Karya (Persero) Tbk (WIKA) has been satisfactory this year compared to other construction SOEs, such as PT Adhi Karya (Persero) Tbk (ADHI) and PT Pembangunan Perumahan (Persero) Tbk (PTPP).
At market closing on Thursday (24/10), WIKA's shares were valued at Rp348 per share, marking an 88.32% increase since the start of the year (year-to-date/YtD).
On the other hand, ADHI's shares remained at Rp290 per share, reflecting a decrease of 7.05% since the start of the year, while PTPP's shares were at Rp444 per share, showing a slight increase of 3.74% since the start of the year.
The market appreciates WIKA’s shares as the company has completed its restructuring, resulting in a positive bottom line performance, at least until the first half of 2024.
After incurring losses since the second quarter of 2022, WIKA made a profit of Rp401.95 billion in the first half of 2024. Citing the Bloomberg Terminal (22/10), out of the four analysts who discussed WIKA, none recommended purchasing the shares of this construction SOE.
Three analysts recommended holding WIKA's shares, while one analyst recommended selling them. The target price set by the analysts for WIKA's shares is Rp438.40 per share over the next 12 months.
Analysts are more optimistic about PTPP, followed by ADHI and then WIKA. Out of the six analysts who discussed PTPP, all recommended buying, with a target price of Rp648.33 per share.
Meanwhile, ADHI's shares have a more neutral outlook, with two analysts recommending to purchase and two recommending to hold. The target price for ADHI's shares, as collected by Bloomberg from four analysts, is set at Rp420 per share.
Interestingly, several large investors are starting to purchase WIKA's shares. In the last five days, according to the Bloomberg Terminal, Dimensional Fund Advisors LP purchased 1.53 million WIKA shares.
The institution is one of the investors that has regularly purchased WIKA’s shares in 2024. Currently, Dimensional Fund has accumulated 65.42 million shares, making it the fourth largest holder of WIKA’s shares.
A similar step has been taken by BlackRock in the last five days, purchasing 134,417 WIKA shares. Currently, BlackRock has accumulated 43.43 million WIKA shares, making it one rank below Dimensional.
BlackRock has been purchasing WIKA's shares since August 2024. Other investors that have returned to WIKA's shares include the Teachers Insurance & Annuity Association of
America and State Street Corp, both of which started to resume collecting WIKA's shares in August and September 2024.
In a new development, WIKA reported that it acquired new contracts worth Rp15.5 trillion in September 2024. The largest contribution came from the infrastructure and building sectors, followed by the industrial, property, and engineering, procurement, and construction (EPC) sectors.
WIKA's new contract realisation in the first nine months of 2024 is still lower than its position in 2023, which stood at Rp21.44 trillion.
To illustrate, WIKA's new contracts reached Rp13.5 trillion in August 2024. This new contract value is close to ADHI's realisation at Rp13.6 trillion, but it remains significantly lower compared to PTPP, which acquired new contracts worth Rp17.38 trillion.
Positive signal
Mirae Asset Sekuritas Senior Market Chartist Nafan Aji Gusta previously stated that President Prabowo Subianto's commitment to continuing the development of Nusantara Capital City (IKN) would enhance the performance of construction SOEs in the future.
“This will be the main factor in recovering the performance of construction SOEs. Previously, their performance was overshadowed by a negative cash flow sentiment,” he told Bisnis.
On the other hand, the Public Works and Housing (PUPR) Ministry has acquired additional funding of Rp40.59 trillion, bringing its total budget ceiling in the 2025 state budget (APBN) to Rp116.22 trillion. However, this amount is still lower than its 2024 budget, which reached Rp149.74 trillion.
As of now, government projects continue to dominate the new contracts of construction SOEs. WIKA has prepared a strategy by targeting projects in the infrastructure, building, and EPCC sectors.
Wijaya Karya Corporate Secretary Mahendra Vijaya stated that the company is quite enthusiastic about the potential for increased infrastructure development in 2025, in line with the company's competencies.
“WIKA's extensive experience in carrying out infrastructure, building, and EPCC projects makes the company well-prepared to support government initiatives,” he said to Bisnis recently.
On a previous occasion, Mahendra stated that WIKA plans to boost the EPCC sector next year to balance the company's project portfolio.
He explained that the EPCC sector is generally funded by the capital expenditure of SOEs and the private sector, which construct projects such as battery factories, gas processing plants, and power plants.
“One of our strategies to maintain a balanced portfolio, in case of a decrease in government expenditure, is to optimise opportunities in the EPCC sector,” he stated.
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