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Wednesday, February 26th, 2020

Waskita Precast to launch RI’s biggest IPO in five years

by August 12, 2016 General

Concrete maker Waskita Precast, the subsidiary of state-run major builder Waskita Karya, aims to raise up to Rp 5.27 trillion (US$400.5 million) from an initial public offering (IPO) to increase production capacity and working capital.

Waskita Precast will offer 10.54 billion shares, representing 40 percent of its enlarged capital, at between Rp 400 and Rp 500. Total funds raised from the IPO will reach between Rp 4.2 trillion and Rp 5.27 trillion, the biggest since February 2011, when national flag carrier Garuda Indonesia pocketed Rp 4.75 trillion in an IPO.

The share prices are determined based on the firm’s 2017 projected price-to-earning (PE) ratio, which is used to calculate companies’ share value. Waskita Precast’s 2017 forecast PE ratio stands at 15 to 18.5 times, much less expensive than peer Wijaya Karya Beton’s 50 times current PE ratio.

State-owned securities firms Bahana Securities, Danareksa Sekuritas and Mandiri Sekuritas, which have been appointed to underwrite the share offering, will target foreign investors in a road show from Aug. 18 to 25 to promote Waskita Precast’s shares. The public offering is scheduled for Sep. 9 to 14.

“The road show will be done in Singapore first, then Hong Kong and finally Malaysia,” Waskita Precast president director Jarot Subana told reporters after a due diligence meeting with potential investors in Jakarta on Wednesday.

Waskita Beton’s IPO is launched amid bullish local market sentiment toward infrastructure-related stocks, which have gained 21 percent so far this year in line with the broader market, as President Joko “Jokowi” Widodo’s lays out ambitious goals to give boost to the sector.

Proceeds from the IPO will be 54 percent used for day-to-day working capital and the remaining 46 percent for capital expenditure (capex). Waskita Precast allocates Rp 1.1 trillion total capex this year to build concrete plants in Palembang and Klaten, Central Java, with combined capacity of producing 350,000 tons per year.

The two plants scheduled to complete this semester will bring total production capacity of the firm to 2.65 million tons per year. The existing eight plants are mostly located in West Java, Central Java and East Java and South Sumatra.

As of July, Waskita Precast has pocketed new contracts worth Rp 6.6 trillion out of the full-year target of Rp 8 trillion. One of its biggest projects this year include light rapid transit (LRT) in Palembang, South Sumatra, scheduled for completion in 2018 to welcome the Asian Games. For 2017, the company will be working on the trans-Java and trans-Sumatra highways.

Waskita Precast supplies concrete to projects executed by parent company Waskita Karya, which saw new contracts soar almost five times to Rp 45.6 trillion as of June from the same period a year ago. Toll roads and other state projects dominate the portfolio.

Most state construction firms saw double-digit growth last semester thanks to the government’s infrastructure push. President Jokowi’s administration aims to build 8,200 kilometers in new roads, 3,258 km new railroads, 172 new seaports, 15 new airports, 35,000 megawatt-worth of new power plants, 90,000 new household gas networks and 28 dams by 2019.

As of April, Waskita Precast has booked Rp 1.04 trillion in revenue and Rp 150.9 billion in profit. It targets to reap Rp 4.9 trillion revenue and Rp 620 billion net profit this year, respectively almost doubling the Rp 2.6 trillion and Rp 334 billion booked last year.


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