Hi, how was your day? During this pandemic, I hope you will always in good shape. Okay, tonight I’m going to write about one of the holding companies in Indonesia. Incorporated by Mr. Sudwikatmono in 1996, Indika Group engages in mass media, mining, equipment service, property, and infrastructure. Among the sectors, I shall explain just the mining sector, usually known as a PT Indika Energy Tbk with ticker (INDY). Perhaps, you have to know about this company. In 2015, INDY has been an outstanding company as of the price rising during the year. Want more knowledge about this company? Let’s follow it!
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The Main Sector, Energy Resources
Indika, as called INDY, is one of the biggest mining companies in Indonesia. It’s because one of the subsidiaries, Kideco Jaya Agung (KJA), holds coal mining rights until 2023 and be the third-largest coal mining in Indonesia measured by productions. Located in Paser Regency, East Kalimantan, KJA operates six mine concession sites using open-pit mining methods in Roto North, Roto South, Roto South (Biu), Roto Middle, Susubang, and Samarangau. KJA produces various of sub-bituminous coal containing very low levels of sulfur. The customers of KJA are from various countries such as South Korea, Taiwan, Malaysia, as well as Indonesia with an annual capacity of up to 55 million tonnes. Not only have KJA, but INDY has another coal mining also, through Multi Tambangjaya Utama (MUTU). MUTU produces a high-rank bituminous thermal and coking coal based in Central Kalimantan. In 2019, MUTU produced coal approximately about 1,6 million tonnes.
Not Just Energy Resources, but Energy Services also
Yups, INDY has two subsidiaries that engage in Energy Services. There are Tripatra and Petrosea Tbk. Tripatra provides engineering, procurement, and construction (EPC), operations and maintenance (O&M), and logistic service in the energy sector with the longest service history in Indonesia. Tripatra has two associate companies, that are following; Cotrans Asia (Cotrans) and Sea Bridging Shipping Indonesia (SBS). Cotrans owned by 45% by Tripatra. Cotrans provide coal transportation and transshipment services. Sea Bridging Shipping Indonesia is an associate company owned by 46% by Tripatra. SBS provides coal services shipping including tug boats, barges, gearless floating cranes, and transshipment services. In 2019, Tripatra’s revenue about US$462.3 million.
Petrosea Tbk offers contract mining, engineering & construction (E&C) services, with complete pit-to-port services. Petrosea is one of the market-leading of EPC services in Indonesia. Furthermore, Petrosea successfully implemented 4.0 technology to drive financial and operational performance and was recognized by the World Economic Forum which selected Petrosea as one of 26 companies all over the world to join the Global Lighthouse Network. In 2019, Petrosea recorded revenue amounting to US$476.4 million. It consists of revenue from contract mining to US$287 million (60,2%), engineering & construction to US$98.9 million (20,8%), and Petrosea logistics & support services to US$45,9 million. Also, Petrosea has a subsidiary, is Kuala Pelabuhan Indonesia (KPI). As an operator of marine fleets and ports, KPI provides ship docking integrated operations, management, logistics, maintenance, and portside services.
Energy Infrastructure; Terminal Storage, Power Plant, and Transporation & Logistics
INDY has subsidiaries within the Energy Infrastructure business pillars. The subsidiaries as the following; Mitrabahtera Segara Sejati Tbk (MBSS), Cirebon Electric Power (CEP), Cirebon Energi Prasarana (CEPR), and Kariangau Gapura Terminal Energi (KGTE). Established in 1994, MBSS is an integrated one-stop coal transportation and logistics company, which provides coal handling management services from the port, barging, river, and sea-based transportation to offshore vessels using its floating crane systems. Has been experiencing for 20 years of operations, MBSS has succeeded in customer portfolio which includes a long term contract from the top tier coal producers in Indonesia such as; KJA, Adaro, Berau Coal, and Kaltim Prima Coal as well as end-user such as Indocement Tunggal Prakarsa Tbk. In 2019, MBSS recorded has 62 barges, 78 tug boats, six floating cranes, and one support vessel. Last year, MBSS’s revenue amounting to US$77,8 million.
Cirebon Electric Power (CEP) is a 660 MW coal-fired power generation plant with supercritical technology for high efficiency, consuming less coal and producing fewer emissions located in Cirebon, West Java. CEP was established in 2007 by INDY through its subsidiaries Indika Power Investment and Indika Infrastructure Investindo with partners Marubeni Corporation, Samtan Co Ltd, and Komipo Global Ltd. In 2019, CEP’s net income contributes to INDY based on owned amounting to US$6.9 million. Cirebon Energi Prasarana (CEPR) was established in 2007, is an international consortium for the expansion of CEP project. INDY indirectly owns 6.25% of CEPR with the remainder held by Marubeni Corp, Samtan Ltd, Komipo Ltd, Imeco Multi Sarana, and Chubu Electric Power Ltd. This project its an ongoing process and begin commercial operation in 2022. Kariangau Gapura Terminal Energi (KGTE) is an indirect subsidiary owned by INDY and engages in terminal fuel storage. KGTE signed an agreement with ExxonMobil to provide storage facility services in East Kalimantan. This project is ongoing construction and the progress is 77% in December 2019.
Other Portfolios Company
INDY not just has portfolios in coal and the services, but in other mining like gold and digital services. In the 4.0 era, all of the companies should apply digital technology expertise with their operations. Why? If a company uses digital technology to the operations, it will expedite business running and flatten the cost (high efficiency). INDY has a gold mining through Nusantara Resources Limited, an indirect subsidiary through Indika Mineral Investindo, that operates the gold project in 14.390 hectares in Sulawesi. The project is namely by Awak Mas gold project. Awak Mas gold project has potential resources of 2.0 million ounces and potential reserves of 1.1 million ounces. INDY has fully-owned of Indika Digital Teknologi (IDT). IDT was established in 2018 aims to oversee the digital activities in Indika Energy.
IDT has two subsidiaries, there are PT Zebra Cross Teknologi and Xapiens Teknologi Indonesia. All of the companies provide digital services, cyber security services, system integration & business solution, and other services to Indika Energy. As for the services, Indika Energy able to become a company with integrated digital services. Likely said before, digitalized runs a vital role in the company. Indika Energy realizes it, so they built their own digital company that provides digital services for them. It’s successful! INDY has become one of the integrated energy company in Indonesia. Any such another company like Adaro Energy, but I think INDY still the best among Adaro. I don’t know whosoever Adaro has a digital company or not, but so far I never heard it.
This article, not a recommendation for you to buy INDY. I only share the competitive advantage of Indika Energy. Investors should know the business, not the price. So, I advise you to know how the business process, the sectors, the competitive advantage, and others. Know the company is the fundamental of investment.