Hutama Karya (HAKAIJ)

The current credit profile should be viewed as investment-grade when government support is incorporated, but as a quasi-sovereign issuer whose high rating is difficult to explain on standalone cash flow alone. The credit direction is improving moderately, supported by 2025 profitability, lower finance costs and debt reduction. However, this should not be read as rapid standalone improvement, given the continuing investment burden from JTTS and the issuer’s reliance on the timing of government support. A sharp change in either the level or direction of credit quality is not the base case. However, if delays in government support, deterioration in Indonesia’s sovereign outlook, weaker refinancing terms for unguaranteed debt and weak JTTS traffic materialise together, downward pressure could intensify, particularly on unguaranteed bonds.

PT Hutama Karya (Persero) (“Hutama Karya” or “HK”) is an Indonesian state-owned construction and infrastructure investment company. For credit analysis, it should not be viewed as an ordinary construction contractor, but rather as a quasi-sovereign issuer with a policy mandate from the government to develop, build and operate the Trans Sumatra Toll Road (Jalan Tol Trans Sumatera, “JTTS”). The company has construction businesses centred on roads and bridges, toll roads, property, asphalt, precast, operations and maintenance, and rest areas. For bond investors, however, the essence of the credit lies in the government’s road-infrastructure policy, state capital injections, government guarantees, continuing government control after the transfer to Danantara, and the capital burden of toll-road concession assets.

HK’s credit strength is difficult to explain as that of a highly rated issuer based solely on its standalone business cash flow. In its 2025 audited financial statements, HK reported revenue of IDR25.13 trillion, operating profit of IDR2.74 trillion, net profit of IDR3.09 trillion, total assets of IDR189.10 trillion, total liabilities of IDR47.92 trillion and equity of IDR141.18 trillion, which superficially suggests a strong balance sheet. Finance costs fell to IDR1.24 trillion, taking operating profit/finance costs to more than 2x. Operating cash flow also returned to a positive IDR1.15 trillion. At the same time, investing cash flow was an outflow of IDR11.66 trillion, as additional investment in toll-road concession rights continued at IDR17.44 trillion. Therefore, while 2025 profitability and lower leverage are positive, HK cannot yet be described as having a structure that can independently fund JTTS investment and refinancing without government support and asset recycling.