Concern Over Financial Ratios Indonesia's State-Controlled Companies
There are 20 state-controlled, yet publicly-listed (on the Indonesia Stock Exchange) companies that have poor financial ratios, reflected by a high debt-to-equity ratio. This ratio indicates how much debt a company uses to finance its assets relative to the value of shareholders' equity, thus it measures a company's financial leverage. The ratio is calculated by dividing the company's total liabilities by its stockholders' equity.
The table at the bottom of the page shows the ratios for 20 companies. All these companies are state-controlled (the central government being the majority shareholder) and are listed on the Indonesia Stock Exchange.
Aditya Perdana Putra, analyst at Semesta Indovest, commented on the list stating that national airline Garuda Indonesia is among the most worrisome companies as it created a significant amount of new debt in Q1-2018, while its corporate earnings are not too good.
Garuda Indonesia reported a USD $64.3 million net loss for the January-March 2018 period, improving from (a revised) USD $101.2 million loss in the same period one year earlier. The management of the airline said it expects to see a small net profit in full-year 2018, after reporting a net loss of USD $216.5 million for 2017. However, it depends pretty much on the movement of the fuel price whether numbers can go in the green or stay in the red. Therefore, shares of Garuda Indonesia are not too attractive at the moment.
The construction companies, however, seem fine despite the high debt-to-equity ratio as it is more common for this type of company to invest in debt to finance a new project. After completion of the project there should emerge a new revenue stream, hence safeguarding a healthy cash flow. However, the high amount of debt that is taken on by these state-controlled construction companies (which act as agents in the government's ambitious infrastructure development program) does worry investors, evidenced by the fact that most of the companies' shares have been declining so far in 2018.
A company that is worth to be on investors' watch-list is steel manufacturer Krakatau Steel, Perdana Putra said. Despite its high debt-to-equity ratio, the company has not taken on much more debt and its net loss has declined drastically in Q1-2018. However, Perdana Putra added that investors are advised to remain in a wait and see mode (the company's Q2-2018 corporate earnings need to be studied first) before investing in the company.
Financial Ratios Publicly-Listed, State-Controlled Companies in Q1-2018:
| Company | Debt to Equity Ratio (%) |
Cash Ratio (%) |
Quick Ratio (%) |
Current Ratio (%) |
| Indofarma | 190.62 | 20.44 | 75.71 | 104.22 |
| Kimia Farma | 148.93 | 34.41 | 116.50 | 183.91 |
| Perusahaan Gas Negara | 98.18 | 216.26 | 354.03 | 365.25 |
| Krakatau Steel | 125.06 | 18.59 | 39.13 | 71.71 |
| Adhi Karya | 358.58 | 25.65 | 116.70 | 140.99 |
| Wijaya Karya | 240.53 | 44.02 | 153.95 | 161.95 |
| Pembangunan Perumahan | 187.03 | 36.92 | 137.41 | 158.79 |
| Waskita Karya | 353.93 | 14.18 | 110.34 | 116.45 |
| Bank Negara Indonesia | 606.17 | 8.97 | 113.55 | 113.55 |
| Bank Rakyat Indonesia | 596.77 | 11.16 | 115.42 | 115.42 |
| Bank Tabungan Negara | 1,091.39 | 8.25 | 101.69 | 101.69 |
| Bank Mandiri | 564.75 | 13.96 | 114.12 | 114.12 |
| Aneka Tambang | 66.73 | 106.73 | 146.65 | 175.24 |
| Bukit Asam | 56.11 | 163.52 | 245.96 | 264.37 |
| Timah | 87.80 | 41.77 | 131.44 | 219.36 |
| Semen Baturaja | 54.62 | 71.79 | 162.21 | 201.77 |
| Semen Indonesia | 60.96 | 45.24 | 116.83 | 159.30 |
| Jasa Marga | 346.42 | 22.45 | 55.21 | 55.66 |
| Garuda Indonesia | 354.37 | 13.92 | 41.68 | 47.93 |
| Telekomunikasi Indonesia | 71.97 | 62.11 | 116.47 | 117.82 |
Source: Bisnis Indonesia