Toll Road Industry Update (1)
Despite criticism over regulatory issues, two foreign investors are in the process of acquiring toll road assets in Indonesia. They are Canada Pension Plan Investment Board (CPPIB) and Astra Infrastructure consortium, which offers US$500 million for 55% shares in the Cikopo-Palimanan section and a consortium of Road King Infrastructure, operator of toll roads in China, which acquires Solo-Ngawi and Ngawi-Kertosono sections of trans-Java toll road from Waskita Toll Road.
Survival of the fittest: Airline
Sriwijaya Air is counting its days in the airline business. Following the collapse of partnership with Garuda Indonesia, commercial operation of Sriwijaya has been downsized significantly. After the airline’s departure, we will only see three groups in the business; Lion, Garuda, and AirAsia. Will it go further down to two?
Revisiting INALUM (1)
About a year ago, September 27, 2018, INALUM entered into various agreements with Freeport McMoRan, Rio Tinto, and other relevant parties related to acquisition of a 51.2% shares in Freeport Indonesia for a cash consideration of US$3.85 billion. In November 2018, INALUM sold US$4 billion worth of global bonds to finance the acquisition, consisted of 3-year 5.23% bonds (US$1 billion), 5-year 5.71% bonds (US$1.25 billion), 10-year 6.53% bonds (US$1 billion), and 30-year 6.757% bonds (US$750 million).
Key takeaways from PLN’s first half
State-owned electricity utility PT Perusahaan Listrik Negara (PLN) is the largest company in Indonesia by total assets. By June 30, 2019, it had total assets of Rp1.54 trillion, of which liabilities reached Rp604.5 trillion. Should we worry about its financials like some have perceived in the past few years?
More ICT Acquisitions
Indonesia’s information and communications technology (ICT) sector continues to attract global players. Other than digital start-ups, global players have acquired companies engaged in ICT consulting, cloud services, application development, and other technology solution providers.
Short-term correction on Chandra Asri
Petrochemical giant Chandra Asri (TPIA) has fallen 11.8% from its recent peak (Rp9,350 = Rp167 trillion) to Rp8,250 yesterday following spike in crude oil. But, even lower average prices of naphtha—-main raw material—-failed to generate stronger bottom line in the first half. Chandra Asri’s net profit collapsed 71% to US$32.9 million only in the period.
Metal processing continues to attract investors
On August 13, 2019, PT New Asia International (NAI) has kicked off construction of new steel rolling plant in Sidoarjo Industrial Estate (KIS), East Java. The ground breaking ceremony was relatively modest, attended only by local government and military officials.
External Trade Briefs
Indonesia booked trade surplus of US$85.1 million in August 2019 against deficit of US$64.3 million in the previous month. This was attributable to 7.6% decline in export revenues to US$14.28 billion, while impor fell 8.3% to US$14.2 billion. In general, Indonesia’s export declined 8.28% year-on-year to US$110.07 billion in the first eight months of 2019, dragged down by falling average price of key commodities.
Travel Note: Labuan Bajo
I recently travelled to Manggarai, Flores Island to pay homage to my uncle. One thing, due to its growing popularity, it is difficult to get airline ticket on short notice. All three direct flights from Jakarta (Garuda Indonesia, Citilink, and Batik Air) were fully booked. I had no choice than to travel via Denpasar, Bali Island. I took Wings Air (ATR aircraft) with about one hour flight to Komodo airport in Labuan Bajo, Manggarai Barat regency, Flores Island.
Improved infrastructure
Landed at New Yogyakarta International Airport in Kulonprogo, Yogyakarta on Thursday (Aug 29), President Joko ‘Jokowi’ Widodo was informed by port operator PT Angkasa Pura I that the airport will be fully operational early next year. The airport is crucial to revitalize tourism industry in Yogyakarta and development of emerging destination Borobudur Temple in Central Java province.