You can contact the author (Teguh Hidayat) by email, teguh.idx@gmail.com. The author live in Jakarta, Indonesia.

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Bakrie: Still Believe?

Bakrie Group is still one of the most controversial conglomerates in the stock exchange, and it's not because one of the owners, Aburizal Bakrie, run for the President. But because all of the listed companies of the Group has a very ugly financial performance. To this day, there were at least eight companies of the Bakrie Group which has released their financial statements for the period of Full Year 2013. The following table is a summary of the performance of their income, figures in millions of US Dollar:

Companies
Net Profit 2013
Net Profit 2012
Change (%)
Bakrie & Brothers
(1,157)
32
NM
Bumi Resources
(660)
(706)
(6.5)
Bakrie Sumatera Plantations
(252)
(97)
159.2
Bakrie Telecom
(241)
(285)
(15.7)
Bumi Resources Minerals
(146)
(59)
146.5
Darma Henwa
(52)
(41)
24.9
Visi Media Asia
10
7
45.1
Energi Mega Persada
173
28
529.0

Notes:
  1. Bakrie & Brothers (BNBR), Bakrie Sumatera Plantations (UNSP), Bakrie Telecom (BTEL), and Visi Media Asia (VIVA), present their financial statements in Rupiah. The figures above have been converted to US Dollar using the rate of Rp11,000 per US Dollar.
  2. One more company, Bakrieland Development (ELTY), have not released its financial statement.

Well, from the table above you can see that six of the eight Bakrie Group companies suffered losses. While the net profit of US$ 173 million attributed to Energi Mega Persada (ENRG) is of course nothing compared to a loss of Rp1.2 billion suffered by BNBR. If Bumi Resources (BUMI) had loss of US$ 660 million, then it could be explained as the coal business was in heavy state in the last two years. But what about the extremely huge losses suffered by BNBR? What happened with the company?

And if you look at the fact that almost all of the eight companies suffered losses in the last two years (not just BUMI), then the question is, has the Indonesian economy had bad condition in the last two years? So the Group failed to make a profit? Apparently not. Our economy is still going well in the past two years, and the majority of listed companies are still made a good financial performance as usual.

So what's the problem? Well, I do not know! Perhaps the Bakrie Group is simply incompetent in managing their assets? Or maybe they are deliberately ‘engineer’ their financial statements to look so bad like that, so they are actually still make profits? But whatever it is, one thing that is clear is that the performance of the whole company of the Bakrie Group is very bad, not only at this time but since the very beginning they've always been so, and thus we can not invest in the stocks.

And if you think that the series of losses suffered by the Bakrie Group was bad enough, then wait until you see the data of net equity of the eight companies above, figures in millions of US Dollar:

Companies
Equity as of Dec 31, 2013
Bumi Resources
(303)
Bakrie & Brothers
(184)
Bakrie Telecom
(92)
Visi Media Asia
190
Darma Henwa
222
Bakrie Sumatera Plantations
442
Energi Mega Persada
888
Bumi Resources Minerals
1,308

Well, note that of the eight companies above, three of which had a negative value of its equity, aka capital deficiency. They are Bumi Resources (BUMI), Bakrie Telecom (BTEL), and BNBR. That means, if all the assets of these companies are sold, and the money then used to pay all the debts they incur, then the debts would not paid off as there was not enough money. Its like you have a house valued at fifty grand, and it is the only asset you have, but you also had a bank debt of seventy grand. So even if your house was sold, you still will not be able to pay off the debt, because there is a shortfall of twenty grand. It’s like overdrawn!

And for the three companies with capital deficiencies, the value of the shortfall amounting to US$ 303 million for BUMI, US$ 184 million for BNBR, and US$ 92 million for BTEL. The three companies have practically no value because the value of their liabilities are already greater than the total assets. This means that, even if you acquire a 100% stake in BUMI at the price of zero Dollar aka free, then you’re not only got nothing, but you also still have to pay US$ 303 million, unless if BUMI in the future successfully gaining net profit that could restore its capital. But as you can see above, BUMI still had a loss, had not it?

In the end, There are lots of stocks/companies that have good fundamentals, so why you chose the above companies? Stock investing is simple: Pick a good stock, and ignore the bad. That's it! There are many causes of losses in the stock market, ranging from the lack of knowledge of the investor, lack of experience, or just have not been lucky. But of the many causes, most often is due to stuck in crap like Bakrie’s.

But specifically for the Bakrie Group, for some reason they are not bankrupt at all.. And why the FSA is still do nothing? Anyone know about this? Why the Bakrie Group was desperately trying to take BUMI back from the hands of the Rothschild?

And why Aburizal Bakrie desperately trying to be the President instead of took care of his companies?

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