Adhi Karya Monorel update

Adhi Karya: Monorel update (ADHI, Not rated, Rp3000)

A newspaper reported yesterday that PT Jakarta Monorel (JM) has agreed to acquire monorel pillars that has been constructed by ADHI previously. The agreed figure came at Rp190bn, which was higher that the government audit body (Rp130bn), but a bit lower than ADHI appraisal’s figure (Rp212bn). JM will then report this agreement to Jakarta Governor to start the monorel construction process. JM management also indicated that payment to ADHI will be completed in the next two weeks.

It was also just revealed that Edward Soeryadjaya, the brother of Edwin Soeryadjaya of Saratoga, is backing up the project through Ortus Holding Ltd (majority shareholder of JM).

Based on our last meeting with ADHI, the company has taken full provision on the works related to the project. As a result, any recoverable amount from this project will go directly to ADHI bottom line. The management guides Rp454bn net earnings this year, which has not taken into account this recoverable payment. Therefore, earnings surprise is possible due to the payment from JM.