Adhi Karya Spent Most of Its Rights Issue Proceeds on LRT Project
In line with the progress in the light rail transit (LRT) project, Indonesian construction company Adhi Karya has used the majority of funds that were assembled through the company's rights issue. Based on a report released by the state-controlled company, it has already used IDR 2.4 trillion (approx. USD $179 million) - or about 88 percent of rights issue proceeds. The rights issue took place on 22 September 2015.
Adhi Karya, which is state-controlled yet listed on the Indonesia Stock Exchange, allotted all proceeds from the rights issue to the LRT project in the Greater Jakarta region (Jakarta-Bogor-Depok-Tangerang-Bekasi). The project is a transit-oriented development (TOD) project, meaning that it is a type of urban development that maximizes the amount of residential, business and leisure space within walking distance of the LRT. The project aims at reducing severe traffic congestion in the Greater Jakarta area.
The IDR 309.59 billion (approx. USD $23.1 million) that is left from the rights issue is currently "parked" on a deposit account (with an average 7 percent interest rate) until it is spent on the LRT project.
Budi Harto, President Director of Adhi Karya, recently stated that physical construction of the LRT project has been completed for 30 percent now. The Cawang-Cibubur (East Jakarta) part of the track is already finished for 50 percent. Harto added that not all land acquisition has been concluded for the project. Land acquisition is one of the biggest obstacles in infrastructure and property projects in Indonesia.
The LRT in the Greater Jakarta region (known as Jabodebek) will be able to carry 116,000 passengers per day at the beginning of its operations (targeted in 2019). Later, its daily passenger capacity is expected to rise to 474,000 passengers.
Adhi Karya posted a net profit of IDR 205.07 billion (approx. USD $15.3 million) during the January-September 2017 period, up 78 percent compared to net profit in the same period one year earlier. The company's sales grew 53 percent (y/y) to IDR 8.7 trillion (approx. USD $649 million) over the same period.
Shares of Adhi Karya rose 2.83 percent to IDR 2,180 a piece on Tuesday (16/01). So far this year the company's shares have climbed 15.65 percent.
Stock Quote Adhi Karya - ADHI: