CENTRALBATAM.CO.ID, JAKARTA-PT Astra International Tbk (ASII) will allocate as much as Rp 20 trillion capital expenditure (capex) in 2017. This number includes an amount of Rp 5 trillion for its unconsolidated subsidiaries. The amount of the cape is equal with the 2016 budget.
ASII also prepares as much as Rp 15 trillion for its consolidated subsidiaries in several business lines, such as agribusiness, heavy equipment, retail development, and infrastructure projects.
“As much as Rp 2.2 trillion will be allocated for agribusiness sector, about Rp 5 trillion-Rp 6 trillion for PT United Tractors Tbk (UNTR), mainly for the heavy equipment, and for Astra’s retail development as much as Rp 1.5 trillion to Rp 2 trillion,” said President Director of ASII Prijono Sugiarto.
Astra Group is also planning to work on infrastructure projects in a gradual manner, such as the project of Kertosono-Mojokerto toll road worth Rp 4 trillion, as well as Kunciran-Serpong toll road project.
ASII would rely on the internal cash to support the capital expenditure in this year, instead of through the corporate actions or banking loans.
“We will use the internal cash flow, on the grounds that our financial position remains solid,” Prijono said.
Previously, ASII has allocated as much as Rp 6 trillion to property and infrastructure projects. The funds will be allocated to acquire 40% of PT Bhaskara Utama Sedaya from PT Interra Indo Resources.
Analyst at JP Morgan Aditya Srinath said, some positive sentiments will affect to the price of ASII share in this year, including the sales of two wheels and four wheels vehicles, which are potentially to increase. The performance of ASII subsidiaries, such as UNTR and PT Astra Agro Lestari Tbk (AALI), as well as the financial service business line will also affect to the price of ASII share.
“We predict that the palm oil, vehicle, and heavy equipment divisions of Astra Group will give significant contributions (to ASII share price),” Aditya said in his research.
However, Aditya also mentioned that some factors might be the risks for ASII’s shares in the future such as the prolonged problems on asset quality of PT Bank Permata Tbk (BNLI) and the growing competition. Those might affect to the profits and market share of Astra Group in the financial service business line.(ktn/ctb)