Chapter 2

Earnings Quality

Over FY2023–FY2025, roughly a third of PBSA's record pretax profit came not from building things but from investment results: a one-time Rp165bn stake sale in 2023, then growing marks on a fund portfolio that reached Rp328bn. FY2025's Rp111.5bn fair-value gain — 31% of pretax — is an unrealized, non-cash mark on Nusadana-managed funds. Strip the investment line and construction-only earnings per share is about Rp68, against the reported Rp106.61 [1].

The chapter Two Profit Engines named the second engine. This one takes it apart: what the investment income actually is, how much of it is cash, how much is taxed, and what the construction business earns on its own.

The gap between operating and reported profit

For most of PBSA's listed history, operating income and pretax profit tracked each other closely — the company earned what it built. That link broke in FY2023 and has not been restored. In FY2023, pretax profit of Rp243.5bn was more than double the Rp111.5bn the construction operation produced; in FY2025, operating income of Rp243.0bn carried up to a pretax figure of Rp360.9bn [2].

Source: consolidated income statements as reported; FY2023 per Annual Report 2023 [3] and FY2024–FY2025 per Annual Report 2025 [4]; FY2019–FY2022 from company filings.

The wedge between the two bars is non-operating income, and it is almost entirely investment income. It was 54% of pretax profit in FY2023, 21% in FY2024, and 33% in FY2025. Summed across the three years, investment results delivered about Rp290bn of a cumulative Rp846bn of pretax profit — a third of the total — in a business whose reported story is construction for the palm-oil industry.

Two different investment engines

The label "investment income" hides two very different things, and the distinction is the heart of the earnings-quality question.

FY2023 — a real, cash, taxed windfall. The Rp165.1bn "gain on sale of investments" that dominated FY2023 was the disposal of PBSA's 10% stake in PT EcoOils Jaya Indonesia, a palm-oil-linked venture it had built up from 2018. It sold the entire 24,000-share holding in October 2023 for USD 13.75mn, equivalent to Rp216.0bn [5]. This was a genuine, arm's-length cash exit that multiplied the original outlay several times over — a well-executed strategic investment. It was also taxed like one: FY2023 income tax jumped to Rp38.9bn, from Rp0.1bn a year earlier [6]. In the same year, the separate trading portfolio actually lost Rp38.3bn on fair-value marks [7]. The windfall was real; it was also, by definition, not repeatable.

FY2024–FY2025 — unrealized marks on a fund book. What replaced the EcoOils gain is different in kind. The Rp111.5bn that supplied 31% of FY2025 pretax profit is a "gain on fair value change on investments" — an unrealized mark-to-value adjustment on a held-for-trading portfolio, recognized in profit whether or not anything is sold [8]. Realized gains on actual sales were only Rp5.7bn [9]. Ninety-five percent of the FY2025 investment result never touched a buyer.

Source: FY2023 income statement [10] and FY2025 income statement [11]. FY2023 realized gain is the EcoOils stake sale.

What the portfolio holds, and how it is valued

The short-term investment line grew from Rp88.9bn to Rp327.8bn during FY2025 and now equals 23% of total assets [12]. All but Rp0.85bn of it is mutual-fund units and a discretionary managed account, valued at manager-reported net asset value per unit rather than exchange-quoted prices. Only one holding — a Rp0.85bn stake in PT Indah Kiat Pulp and Paper — carries a market share price [13].

Source: FY2025 Annual Report, Note 11 Short-Term Investments [14].

Two features of this book deserve a professional reader's attention.

First, the marks are large and are set on units the company already owned. KPD Nusadana — a Kontrak Pengelolaan Dana, a bilateral discretionary managed-account mandate rather than a publicly traded fund — was carried at Rp883.68 per unit at end-2024 and Rp2,533.33 per unit at end-2025, a 187% rise, on an unchanged 46,255,167 units [15]. Juara Capital's unit value rose 133% over the same year. Nearly a third of pretax profit rests on the NAVs assigned to these vehicles.

Second, the manager. Three of the four funds — Nusadana Fixed Income, KPD Nusadana, and Nusadana Balanced Fund — carry the Nusadana name and together hold Rp271.8bn, or 83% of the portfolio [16]. Two of PBSA's own board members held senior positions at Nusadana group entities: Director Evelyn Tanuwidjaja was Finance Director of PT Nusadana Capital Indonesia [17], and President Commissioner Halim Susanto was President Director of PT OSK Nusadana Securities Indonesia and President Commissioner of PT Nusadana Capital Indonesia [18]. The company discloses these holdings as third-party, and the board roles ended over a decade ago, so this is not a disclosed related-party transaction. But when the funds setting a third of reported profit share a name with vehicles two directors once ran, an investor is entitled to ask how independent the NAVs that drive earnings really are.

Cash and tax: the paper gains are both

For all the weight the fair-value line carries in profit, it is absent from cash flow — and that cuts both ways.

FY2025 operating cash flow was a strong Rp367.0bn, built from Rp1,715.6bn of cash collected from construction customers, which exceeded the year's revenue as receivables were drawn down [19]. None of that came from the portfolio. On the contrary, PBSA was a net buyer, placing Rp121.7bn of fresh cash into short-term investments during the year [20]. So the reassuring part: FY2025's construction core genuinely converted to cash, and the year's large Rp165bn dividend was funded by operations, not by liquidating the fund book. The uncomfortable part: the Rp111.5bn that lifted headline profit is money the company has not received and, on current behaviour, is not trying to receive.

The prior year shows the same point from the other side. In FY2024, PBSA reported Rp215.0bn of net profit but operating cash flow of negative Rp43.1bn as working capital absorbed cash [21]. Reported earnings and cash have diverged sharply in both directions.

Tax tells a parallel story. Because the FY2025 fair-value gain is unrealized, it is untaxed: the income statement carries a Rp39.7bn final tax levied on construction revenue and only Rp1.1bn of income tax, against Rp360.9bn of pretax profit [22]. That is not aggressive accounting — it is how Indonesia taxes construction revenue and unrealized gains. But it means the Rp111.5bn mark carries an unbooked tax cost on the day it is realized. The scale of that cost is not hypothetical: in FY2024, when PBSA did harvest part of the book, it paid Rp38.8bn of cash tax on investment sales [23].

Construction-only earnings

Removing the investment result leaves what the contracting business earns on its own. Stripping the unrealized fair-value gain and the small realized gain from FY2025 net profit takes Rp320.1bn down to about Rp202.9bn, and reported EPS of Rp106.61 down to roughly Rp67.6 [24].

Source: derived from FY2025 reported income statement; investment gains per Note 11 [25].

Source: FY2025 Annual Report, income statement and Note 11 [26] [27].

Construction-only EPS of about Rp67.6 is still a record for the company and still cash-backed, so this is not a case of a hollow business dressed up by a portfolio. It is a case of a headline number that overstates the repeatable one by roughly a third. A valuation multiple placed on Rp106.61 is a very different thing from the same multiple placed on Rp67.6.

Two caveats keep this measure honest. The construction line itself rests on percentage-of-completion revenue, which PBSA's auditor flags as a Key Audit Matter every year — earned-but-unbilled contract assets and retention receivables together stood at Rp288bn at end-2025 [28] [29]. And the investment gains, while low-quality as earnings, are not fictitious: the FY2023 EcoOils exit proves the company can turn an investment into real cash, and FY2025's construction cash collection was strong.

What would change the read

The investment income is genuine profit under the accounting rules and has, at least once, become genuine cash. The concern is quality, not existence: a third of the record depends on unrealized marks, concentrated in Nusadana-managed vehicles, that would swing back through the income statement in a down year exactly as they swung up — FY2023's Rp38.3bn fair-value loss is the reminder. The read would ease if PBSA redeems a meaningful slice of the fund book at or above carrying value, or discloses the funds' underlying holdings and valuation basis; it would harden if the marks keep climbing without redemptions, or if a weak year reveals how much of the NAV was ever realizable. For any forward estimate, the construction-only figure — near Rp68 of EPS — is the more defensible base, with the portfolio treated as a separate, volatile asset rather than an earnings stream.