PTPP : A Challenging Start, With Opportunities Ahead
11 Jun 2025
PTPP recorded revenue of IDR3.51 trillion in 1Q25 (–39.6% QoQ; –23.9% YoY), mainly due to a significant contraction in the construction services segment (–35.5% QoQ; –24.3% YoY) and a sharp drop in the EPC segment (–63.8% QoQ; –43.2% YoY). The revenue weakness reflects a larger portion of joint operation projects, which contribute less to recognized income compared to regular contracts. Net profit fell to IDR59 billion (–60.0% QoQ; –37.2% YoY), in line with a decline in operating profit to IDR214 billion. Despite this, contributions from other income and joint ventures helped maintain net profit margin at 1.7%. PTPP currently manages 76 active projects, mostly located in Java (37 projects), Kalimantan (13), and Sumatra (9).
New contract realization reached IDR7.39 trillion, falling short of both our estimate (Phintas: 27%) and management’s target (~26%). Notably, funding composition shifted significantly in 4M25, with private sector contribution increasing to 45% (vs 18% in 4M24), SOEs at 38% (vs 24%), and government share declining to 17% (vs 57%). This reflects the rising role of private and SOE projects amid fiscal consolidation. By segment, new contracts were dominated by port (32%), building (30%), and road & bridge (19%) projects, with notable contributions from the NPEA Section 2 (IDR2.3 trillion) and Kataraja Toll Road Phase 2 (IDR1.3 trillion).
On the macro front, the government is enhancing focus and project efficiency by restructuring the Ministry of Public Works and Public Housing. Through the 2025 State Budget, several Physical Special Allocation Funds (DAK Fisik) are prioritized—including road and bridge development across 35 provinces, irrigation networks, flood control, and SPAM (drinking water infrastructure) expansion. Meanwhile, the Ministry of Housing was allocated IDR5.3 trillion to support the 3-million-home program aimed at reducing the housing backlog.
We initiate coverage on PTPP with a BUY recommendation and a target price of IDR600, based on a DCF valuation (WACC: 7.11%, Terminal Growth: 0.5%). We are optimistic on PTPP’s outlook, driven by strong project pipelines, momentum from industrial downstreaming policy, and the reopening of IKN funding. Additionally, the company’s asset divestment strategy is expected to enhance its balance sheet and support long-term profitability. Downside risks to our view include: 1) project delays from budget cuts or tender postponements, 2) raw material cost volatility, and 3) tightening liquidity that could pressure margins.
By PHINTRACO SEKURITAS | Research
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