Jakarta, CNBC Indonesia – The construction sector has indeed been one of the sectors most affected by the Covid-19 pandemic. Construction projects were forced to stall when Indonesia first received uninvited guests from Wuhan, China.
The stalling of this project has certainly caused the capital-intensive construction sector to suffer severe losses due to bad cash flow. Meanwhile, the huge financial burden due to large business debts must still be paid.
This is of course reflected in the financial statements of Karya State Owned Enterprises (BUMN) in 2020 whose performance is very unsatisfactory. Several BUMN Karya have had to cut their net profit by 90%.
This is the concern of BUMN Minister Dahlan Iskan who published the article Haus Kerongkongan. Dahlan highlighted a number of BUMN Karya which produced unsatisfactory performance amidst the incessant infrastructure projects.
Of all Karya BUMNs, there is 1 company whose losses are very severe when compared to its siblings. It is PT Waskita Karya Tbk (WSKT) which in 2020 was forced to book a net loss of Rp. 7.38 trillion.
This massive net loss wiped out all of Waskita’s retained earnings that have been collected since the company was first established in 1973 so that WSKT’s current equity is only Rp 7.53 trillion, more than half, to be exact, 57.88% from last year’s position of Rp. 17.88 trillion.
Even WSKT was forced to book a gross loss of Rp 1.97 trillion. Gross loss itself is a very negative thing because business income, aka turnover, cannot even cover the cost of revenue.
A company that experiences a gross loss, the net loss is likely to swell because even before paying sales expenses, general and administrative expenses, and tax expenses, the company has lost because it is unable to cover the cost of goods.
As a result, WSKT’s loss caused the company’s cash and cash equivalents to be wiped out. 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 was 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 is running low amidst the company’s swelling debt of Rp. 89 trillion, the risk of default will of course increase, especially in the midst of economic uncertainty due to the Covid-19 pandemic, which is unclear when it will end.
Of the Rp. 89 trillion WSKT debt recorded, most of it, namely Rp. 48 trillion, is short-term, so that the company’s cash ratio with its short-term debt or commonly known as the cash ratio is at 2.5%.
This figure, of course, shows that the company’s cash position is very small and the potential for default is quite high and of course there will be opportunities for the company to bankruptcy.
In fact, it was not only WSKT that suffered losses, but its subsidiaries were also observed to record a severe net loss which of course was burdensome to the parent entity. Just note that PT Waskita Beton Precast Tbk (WSBP) recorded a net loss of Rp. 4.75 trillion and PT Waskita Toll Road which lost Rp. 965 billion.
Unlike WSKT, its fellow BUMN Karya PT Wijaya Karya Tbk (WIKA) is still able to book a net profit in 2020 of IDR 50 billion. There is no loss, but this figure is down 92% from last year’s net profit.
However, WIKA can actually book a net profit not because of the company’s operations but because of other income that has increased from IDR 1.18 trillion to IDR 3.06 trillion. This other income was mainly derived from the recovery of a one-off decline in value of Rp 2.37 trillion.
Even so, WIKA did not recover this decline in value in the form of cash, but mostly through the conversion of WIKA Realty’s trade receivables into equity participation in PT Jakarta River City, PT Makassar Coastal City aka debt to equity swap.
Debt to equity swaps are usually detrimental to companies because usually companies are forced to exchange their receivables with shares of companies whose performance is questionable (because they are unable to pay debts) at high prices.
Even so, WIKA’s condition is still much better than its brother WSKT because WIKA is still able to book a gross profit of IDR 1.52 trillion, where the company’s revenue is still able to cover the cost of revenue.
In addition, WIKA also still has cash and cash equivalents that are more adequate than WSKT. It is recorded that the company’s cash and cash equivalents managed to increase from the 2019 position of IDR 10.3 trillion to IDR 14.9 trillion at the end of 2020.
With this cash, the company’s cash ratio is at 33.85%, much better than WSKT, but this figure is certainly not safe.
Finally, there is PT PP Tbk (PTPP), because PT Adhi Karya Tbk (ADHI) has not reported its financial performance. With the same fate as WIKA which is still able to book a net profit even though it has fallen badly from last year, PTPP has succeeded in earning Rp. 128 billion this year, down 86% from last year’s position.
PTPP’s condition is actually the most ‘better’ among the other Karya BUMNs where PTPP has successfully booked a gross profit of Rp 2.1 trillion, ‘only’ down 43% compared to last year.
In addition, operating expenses and income expenses were also successfully suppressed, thus saving the company from severe losses such as those that were forced to bear by WSKT.
In terms of cash, the company’s cash and cash equivalents have decreased from its 2019 position from IDR 9 trillion to IDR 7.5 trillion at the end of 2020. In this figure, the company’s cash ratio compared to its short-term liabilities stands at 26.84%.
Seeing this, it is only natural that the Minister for State-Owned Enterprises for the 2011-2014 period, Dahlan Iskan believes that there is a prediction from economists regarding the resilience of BUMN Infrastructure a matter of time. According to him, the position of BUMN is difficult or very difficult.
Apart from Dahlan, veteran investor Lo Kheng Hong also mentioned that he was afraid to invest in BUMN Karya shares because of his mounting debt.
CNBC INDONESIA RESEARCH TEAM
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