Sinar Mas Multiartha sets Rp1.5t for capex in 2014

JAKARTA. Investment holding company PT Sinar Mas Multiartha plans to disburse Rp 1.5 trillion (US$126.2 million) of capital expenditure (capex) next year, a 200 percent increase on this year’s capex of Rp 500 billion.

Kurniawan Udjaja, the company’s corporate secretary and finance director, told a press conference that most of the capex to be disbursed next year would be allocated to finance Multiartha’s insurance business, which provides the biggest contribution to the company’s revenue and assets.

 “About Rp 1.1 trillion of the planned capex will be used to fund our insurance subsidiaries, including building a head office next year,” he said on Tuesday.

The publicly listed company is planning to set up an office for its insurance subsidiaries, the location of which will be in the commercial district in Setiabudi, Central Jakarta.

Sinar Mas Multiartha’s insurance subsidiaries are PT Asuransi Jiwa Sinarmas MSIG, PT Asuransi Jiwa Mega Life, PT Arthamas Konsulindo, PT Asuransi Sinar Mas, Sinar Mas Insurance, PT Asuransi Sumit Oto and PT LIG Insurance.

Sinarmas MSIG, the second-largest life insurer in Indonesia with a 10 percent market share as of the end of 2012, accounts for 42.2 percent of Multiartha’s total assets at Rp 21.28 trillion, while Asuransi Sinar Mas accounts for 10.8 percent of its holding company’s total assets.

Multiartha’s total assets stood at Rp 50.38 trillion according its financial report for the first nine months of the year.

Kurniawan said that Multiartha aimed to garner Rp 1.6 trillion in profits next year, a slight increase compared to this year’s estimated profits of Rp 1.5 trillion. He said that the expected composition of its revenue and profits would remain unchanged compared to its current financial profile, which is mostly composed of insurance and banking.

According to Multiartha’s latest financial report published on September, the holding company recorded Rp 13.21 trillion of revenue from January to September this year.

The figure rose 4.41 percent compared to the same period last year, in which the company booked total revenues of Rp 12.65 trillion.

In comparison with the company’s January to September report for last year, underwriting insurance profit still made up most of the revenue, 67.58 percent, or Rp 8.93 trillion. The underwriting profit, however, slumped by 9.23 percent compared to the same period last year to Rp 9.84 trillion.

Kurniawan attributed the decline to the country’s economic condition and uncertainty in the stock market, saying that “insurance is basically an investment business”.

 “We are, however, quite sure we can boost profits in this last quarter,” he said, adding that his company expected to see 10 percent growth in its insurance sector next year.

Apart from underwriting profits, the company also booked Rp 1.46 trillion in interest revenue and Rp 1.04 trillion from trading stocks.

At the conference, Kurniawan also clarified that his company had yet to conduct talks with Malaysia’s largest lender Malayan Banking Bhd. (Maybank), over a potential bid for Multiartha’s subsidiary PT Asuransi Jiwa Mega Life, as previously reported by Bloomberg.

Bloomberg reported on Monday that Maybank’s Etiqa insurance unit was considering a bid for Mega Life, owned by Multiartha and tycoon Chairul Tanjung’s CT Corp, in an offer worth between $200 million and $300 million. (Anggi M. Lubis/The Jakarta Post)