Who doesn’t know
Bakrie Group?
Their lineup of companies is scattered across the Indonesian Stock Exchange, spanning industries from
energy to property.
And who hasn’t heard of Salim Group? This powerhouse is everywhere and often “
partners up” with Bakrie in various ventures.
But wait, not every Bakrie Group company has caught
Salim’s attention. There are still a few they haven’t explored, and one of them is
PT Darma Henwa Tbk (DEWA).
DEWA isn’t just another mining contractor,
it’s one of Indonesia’s largest, known as the backbone of mining operations for several big players, including
PT Bumi Resources Tbk (BUMI), the country’s biggest coal producer.
What sets DEWA apart?
Their all in one mining services, from exploration and hauling to infrastructure development. In short, DEWA is a one-stop solution for the mining industry’s upstream and downstream needs.
DEWA’s history is nothing short of impressive. They’ve worked with some of the biggest names in the industry, including Berau Coal, Tanito Harum, and BRMS.
On top of that, they’ve partnered with global mining giants like Newmont and BHP. Even local heavyweights like Antam and Freeport Indonesia have been their clients.
The story of DEWA gets even more interesting when we look at its ownership structure.
DEWA’s largest shareholder is BUMI, holding 29% ownership through its two subsidiaries, Zurich Asset International and Goldwave Capital Ltd.
DEWA can be seen as one of BUMI’s key pillars, supporting its coal mining operations.
But wait, DEWA isn’t just about coal. They’ve diversified into multiple sectors, including mining services, port management, construction, and machinery repair.
This shows DEWA has a solid strategy for diversification.
In 2021, DEWA made a bold move by stepping into gold mining, acquiring a mining asset in Aceh through PT Gayo Mineral Resources. While the project is still in the exploration phase, its potential reserves could be a strategic game changer, expanding DEWA’s portfolio beyond coal.
Now, imagine if Salim Group, known for its sharp eye for strategic investments, suddenly took interest in DEWA. With a developing gold mining portfolio, a partnership could create a stronger and more resilient player in the mining sector.
And don’t forget, gold is in a league of its own. If the Aceh project succeeds, it wouldn’t just boost revenue but could also become a valuable asset that significantly elevates DEWA’s valuation.
DEWA has also made remarkable improvements in its financial structure over the past five years. After increasing debt in 2019 to upgrade heavy equipment, they successfully reduced their gearing ratio to 1.28% by 1H24.
Recently, DEWA secured a loan facility of
IDR 2.6 tn from BCA and several other local banks. This reflects strong confidence in the company’s operational prospects and growth potential.
Last year, DEWA made headlines with plans to convert nearly
IDR 1 tn in payables and loans through a private placement and convertible bonds.
If successful, this would have
significantly improved their balance sheet,
though it wouldn’t bring in immediate cash. Unfortunately, the plan didn’t go through.
If revived in the future, this initiative could be a game-changer for DEWA,
strengthening its financial position.
Who knows? It might even attract major investors like
Salim Group.
Speaking of valuation, DEWA is currently “
on sale” compared to its competitors.
Its
PBV stands at just 0.6x, far below the industry average of
2.4x. This means DEWA’s stock is significantly undervalued relative to its net assets.
Not only that, DEWA’s
EV/EBITDA is also very low at just
2.2x, compared to the industry average of
5.9x. This suggests the market is still “
not fully convinced” about DEWA’s performance, which has historically lagged behind bigger players in the mining industry.
With such a low valuation, if DEWA manages to turn things around, whether through its gold mining expansion or ongoing financial improvements, the potential for a “
re-rating” to a fairer valuation is massive.
In short,
DEWA is like a hidden gem waiting to be polished.
Comments