Darma Henwa (DEWA IJ)

A Turnaround in Progress

• 8bn shares were issued from an NPR in Feb25, where new equity investors MTN, ATP, and AMM currently hold 46% of outstanding shares.
• DEWA is expanding its fleet to increase in-house works and reduce dependency on subcontractors, which should help lift margins.
• GMR is a copper and gold mine that is under exploration phase. Though promising, it is still in the early stages and was originally owned by BUMI.

Turning over a new chapter: new management and equity investors

DEWA underwent a major transformation in FY24 that started with a change of management in Jun24 with the goal of efficiency. In Jul24, it secured Rp2.6tr in syndication loan led by BCA, which was mainly used for purchase of heavy equipment (Rp2tr) and to refinance loans and leases (Rp340bn) at a lower interest rate of 9% vs. existing leasing rate of up to 18%. Efficiency also led to the reduction of headcount from >5,900 in 2022 to c.3,000 by 2025, eliminating inefficient and redundant positions. Finally, in Feb25, DEWA completed an NPR of 18.8bn shares at Rp75/share, or equal to Rp1.4tr of payables that was converted into equity. On this occasion, there was a 46% dilution in which the new equity holders, MTN, ATP, and AMM, own 24.8%, 11.8%, 9.7%, respectively. Meanwhile, BUMI’s combined ownership through Goldwave Capital and Zurich Assets declined to 15.5%. After the NPR, DEWA’s DER declined from 1.3x to 0.6x.

Fleet expansion to resume operational control and improve margins

DEWA's contracts are exclusively with BUMI’s KPC and Arutmin. Before the company's revitalization in FY23, DEWA handled 40Mbcm of in-house work at KPC while outsourcing 108Mbcm of KPC’s contract to subcontractors. However, after purchasing new equipment using BCA’s syndicated loan, DEWA will increase its in-house work in KPC by 30Mbcm, to a total of 60Mbcm. Nonetheless, as the equipment will fully arrive by Mar25, the impact of cost efficiency from in-house work should only be visible starting in 2Q25. In 3Q25, DEWA will collaborate with XCMG on a vendor financing scheme to deliver heavy equipment worth another 30Mbcm of annual work. Thus, by 4Q25, DEWA will have 90Mbcm of in-house capacity for KPC on top of the existing 31.6Mbcm of capacity for Arutmin (Exh.3).

GMR: A Copper & Gold mine in Aceh

DEWA owns a porphyry copper concession in Aceh that is currently under the exploration and drilling phase, aiming for a JORC evaluation in the near future. Although the prospect of the asset is exciting, with over 11-12 potential areas that span over c.7,000 Ha and indicative gold and copper grades of 0.48g/t and 0.29%, the concession is located beside a protected forest, which could hinder mining operations. Furthermore, note that the asset was originally owned by BUMI through Bumi Resources Investment (BRI).

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