Background
Accordance to bloomberg
indonesia’s economic growth of 2014 was at 5.02 percent and this is lower than
growth in 2013 which was at 5.1 %. The decline of the growth is caused by the
slump of commodities, higher interest rate in US, fuel subsidy cut and etc.
Indonesia exports various commodities such as palm oil, crude oil, coal,
rubber, tin and etc.
In 2015 government plan to reach
target of economic growth at 5.7 %.
The combination of better economy
in US and slowing growth in china is a negative effect for indonesian economy
in the last year. A former trade ministry said that source of growth in 2015
will be depend from investment and fiscal policy stimulus. The advancement of
export sectors will be difficult to do due to the low price of commodities.
In 2015, indonesian government
will reduce about 18% of its bonds issuance in domestic as fuel subsidy
allocation for infrastructure sector had been implemented and the shrinks of
national fiscal deficit.
Debt sales is predicted increase
as government plan to inject fund for infrastructure project to state
enterprises. The target of 5.7 % in 2015 seems difficult to reach as the
commodity price shrinks and currency falls.
Industry Analysis
The sector of construction
increase gradually in every year between 2007-2012 with average growth at about
23 percent. The signicant growth is expected happening in 2015 due to massive
infrastructure projects plan by government through its state company such as
wijaya karya, pertamina, PGN, adhi karya and etc.
Company analysis
Wijaya Karya is state company
which derives many projects from government, other state owner companies and
private company.
Based on annual report in 2013,
the biggest portion of its contract was from others state company, private was
the second. In conclusion, most of the
contracts were derived from related parties, this is the key success factor of
the company’s business.
In term of accounting analysis,
the company used percentage of completion method as its revenue and expense
recognition in its financial statement as the business of the company is
contruction service as the majority part of the revenue. There were contracts
in each project and sales agreement of the company.
Several projects were conducted
with joint venture operation with other companies, the company shared its
profit with its partner in join venture project.
In 2013, 43 % of total revenue is
from construction service segment, mechanical electrical and industrial product
segment are at the second.
In 2013 the company could
increase its sales 20 % up compared to sales of 2012. So does wit its gross
margin, the company is able to improve margin from 10,53 % in 2012 to 12,27 %
in 2013.
The cash cycle is negative in
2013, some accounts in its trade payable are linked with kredit mitra amounting
to rp 1,1 trillion from the total account payable which is amounting to rp 3.08
trillion. Other portions consist of
subcontractor, supplier and supervisor.
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