State-owned toll road operator Jasa Marga plans to issue up to Rp 1 trillion (US$68 million) of commercial paper (SBK) with one-year maturity date to provide additional capital, executives say. Jasa Marga’s corporate finance head Eka Setia Adrianto on Wednesday said the company was looking for alternative ways to fund its running projects and toll road maintenance, including with the issuance of bond and commercial paper.
“We’re not aiming for the size, because [commercial paper] is a new product for us. [We plan to raise] between Rp 500 billion and Rp 1 trillion from the paper’s issuance,” he said during an online press conference. Besides the issuance of commercial paper, Eka said, the company was preparing to issue Rp 1 trillion worth of bonds to inject fresh capital into the company.
He said the company had acquired a large amount of debt and obligations over the last years as it had gone through a “massive construction phase” with 20 toll road construction projects. “Loans from banks and the capital market fund 70 percent of Jasa Marga’s toll road projects, while 30 percent comes from our equity.
That’s why our debt has increased significantly in recent years,” he said. As of June 30, Jasa Marga has Rp 42.2 trillion worth of long-term debt from banks, a 90 percent year-on-year (yoy) increase, according to the company’s financial report published on the Indonesia Stock Exchange website. Jasa Marga’s financial report also shows that the company’s debt-to-equity ratio increased to 3.3 from 3.1 in the same period last year. The company set the maximum debt at 5 times its equity. Amid the rising debt, Jasa Marga’s financial director Donny Arsal assured investors that the company would enjoy an increase in revenue, as 18 of its 20 toll road projects were already in full operation.
“We will have a steady cash flow on a long-term basis, as our toll roads are already in full operations. We also will not take massive projects in the future, maybe just one or two projects per year,” he said. He added that Jasa Marga would not start a new construction project at least until 2023, as the company shifted its focus to optimizing revenue from existing toll roads. According to the company’s data, the toll roads operated by Jasa Marga and its subsidiaries increased by around 500 kilometers between 2015 and 2019 and currently total 1,165 km across Indonesia.
Besides revenue optimization, Donny said, the company had also reduced its capital expenditure by Rp 2 trillion and operational expenditure by Rp 500 billion to maintain its profitability amid the recent downturn in revenue caused by the COVID-19 pandemic. “To face the impact of the COVID-19 pandemic, we reduce our operational expenditure by canceling business travel and reducing nonessential toll road maintenance costs, among other things. That’s why we could still post a positive result this year,” he said. Jasa Marga posted a Rp 105 billion profit during the first half of 2020, a 90 percent yoy drop from Rp 1.05 trillion in the same period of last year, according to its financial reports.
The company’s revenue fell by 25.8 percent during the period, mainly due to the government’s Idul Fitri exodus ban and large-scale social restrictions. “We have to understand that the impact of the COVID-19 pandemic is affecting all sectors, including transportation. However, we saw a quick rebound in the toll road sector with the recent traffic increase” he said. According to the company’s data, vehicle traffic on toll roads had dropped by 50 percent from the pre-pandemic level in May, but the gap has been reduced to around 10 percent in August.
