Waskita Karya (WSKT IJ)

Transcription

1 Waskita Karya (WSKT IJ) BUY(Unchanged) 31 January 2018 Company Update Equity Indonesia Construction Stock Data Target price (Rp) Prior TP (Rp) Shareprice (Rp) Rp3,100 Rp3,100 Rp2,780 Upside/downside (%) Sharesoutstanding (m) 13,572 Marketcap. (US$ m) 2,812 Free float (%) 34.0 Avg. 6m dailyt/o (US$ m) 4.1 Price Performance 3M 6M 12M Absolute (%) Relative to JCI (%) w high/low (Rp) 2,840 1, Jan17 Feb17 Mar17 Apr17 Apr17 May17 Jun17 WSKTRebase Major Shareholders Government of Indonesia 66.0% Public 34.0% Estimate Change; Vs. Consensus Latest EPS (Rp) Vs. Prior EPS (%) (8.4) (8.7) Vs. Consensus (%) Source: Bloomberg Jun17 Joey Faustian PT Indo Premier Sekuritas Jul17 Aug17 Aug17 Sep17 Oct17 Oct17 Nov17 Dec17 JCI IndexRebase Jan18 Jan18 Higher debt level to compensate growth 11M17 new contract achievement at 80% of FY17 target Guiding for new contract growth of 2 in 2018 Plans to raise interest bearing debt to Rp57tn (DER 1.9x) Maintain Buy with unchanged TP of Rp3,100. Reduce new contract target by 8.3% in FY17F. As of mid December 2017, WSKT booked total marketing sales of Rp48tn, accounts for 80% of company s FY17 target of Rp60tn. These lower than expected contract achievement is due to some projects delay, which are now shifted to Thus, we lower our FY17F new contract forecast by 8.3% to Rp55tn and increase FY18 contract by 3.2% to Rp65tn. In addition WSKT s subsidiaries, Waskita Precast (WSBP) booked total new contract of Rp11tn in FY17, cumulating only 90% of our/company s FY17 target of Rp12.3tn, which was caused by project s tender delay, such as ProbolinggoBayuwangi toll road and Penajam Bridge. New contract and earnings target growth of 2 & 19% yoy in FY18F. Company s new contract target of Rp70tn (+2 yoy) in FY18, higher than our forecast of Rp65tn. Most contracts are still expected to come from infrastructure projects such as toll roads, electricity transmissions and transportation infrastructure. However, WSKT will reduce turnkey project attainment until the toll road divestment process is completed. Both Toll road divestment and PT Waskita Toll Road (WTR) new shares issuance phase 2 are still ongoing and expected to be completed by mid FY18. In addition, company targets FY18 Revenue and earnings of Rp55tn (+20% yoy) and Rp5.3tn (+19% yoy), respectively. WSKT has targeted capex to be Rp 26tn in FY18, which will be allocates for toll road (85%), construction (6%) & realty (6%), and precast (3%). DER still below gearing covenant of 2.5x (FY18F: 1.9x). To fund FY18 capex and working capital, WSKT plans to raise Interest Bearing Debt from bank loans and bonds to a total of Rp57tn by end FY18 which accounts for 1.9x DER (vs. FY17F: 1.6x). We believe, WSKT s plan to raise debt would not negatively affect company s performance as WSKT s gearing remains below the covenant 2.5x. Maintain Buy with unchanged TP of Rp3,100. Despite investor s concern regarding WSKT funding constraints, we still like WSKT due to its robust growth and its gearing which is still within the gearing covenant. However, we lowered FY17 and FY18 earnings estimate by 8/9% given WSKT s lower contract achievement and company s plans to raise more debt in FY18. We maintain our Buy call on WSKT with unchanged TP of Rp3,100 as we rolled over the base year for our valuation to Please note that our new TP implies FY18F P/E of 10.0x. Key risk: Failed toll road divestment plan would constraint WSKT s ability to gain new projects. Year To 31 Dec 2015A 2016A 2017F 2018F 2019F Revenue (RpBn) 14,153 23,788 46,679 54,892 61,268 EBITDA (RpBn) 1,261 2,982 6,120 6,976 7,182 EBITDA Growth (%) Net Profit (RpBn) 1,048 1,713 3,686 4,221 4,886 EPS (Rp) EPS Growth (%) Net Gearing (%) PER (x) PBV (x) Dividend Yield (%) EV/EBITDA (x) Source: WSKT, IndoPremier Share Price Closing as of : 30 January 2018

2 Fig. 1: New Contract trend 2013A2018F Fig. 2: Revenue to grow CAGR F 70,000 80,000 70,000 60,000 69,974 55,000 65,000 60,000 50,000 50,000 40,000 30,000 20,000 13,318 22,645 32,084 40,000 30,000 20, A 2014A 2015A 2016A 2017F 2018F 2014A 2015A 2016A 2017F 2018F 2019F Fig. 3: WSKT s DER remains below 2.5x covenant Fig. 4: Gross Profit to grow CAGR 31% F Gross profit Gross margin ,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1, % % 16.4% 16.4% 1 16% 14% 12% 10% 6% 4% 2% 2012A 2013A 2014A 2015A 2016A 2017F 2018F 2015A 2016A 2017F 2018F 2019F 0% Fig. 5: Operating profit to grow CAGR 39% F Fig. 6: Net Profit to grow CAGR 59% F 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 Operating profit Operating margin 14.0% 14.0% 14.2% 13.3% 10.0% 2015A 2016A 2017F 2018F 2019F 16% 14% 12% 10% 6% 4% 2% 0% 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1, Net profit Net margin 7.9% 8.0% % 7.2% 2015A 2016A 2017F 2018F 2019F 2

3 Fig. 7: Earnings forecast change (Old) (New) (%) change 2017F 2018F 2017F 2018F 2017F 2018F Revenue 48, , , , % 0.4% Gross profit 7, , , , % 0.4% Operating profit 6, , , , % 0.2% Net income 4, , , , % 8. Margins Gross margin 16.2% 16.4% 16.2% 16.4% Operating margin 14.1% 14.2% 14.0% 14.2% Net margin 8.2% 8.4% 7.9% 7. 3

4 Year To 31 Dec (RpBn) 2015A 2016A 2017F 2018F 2019F Income Statement Net Revenue 14,153 23,788 46,679 54,892 61,268 Cost of Sales (12,232) (19,820) (39,109) (45,879) (51,194) Gross Profit 1,921 3,968 7,570 9,013 10,075 SG&A Expenses (518) (788) (1,090) (1,244) (1,555) Operating Profit 1,403 3,180 6,480 7,769 8,519 Net Interest (267) (795) (2,030) (2,645) (2,632) Forex Gain (Loss) 13 (1) OthersNet PreTax Income 1,398 2,480 4,963 5,717 6,570 Income Tax (350) (667) (1,076) (1,266) (1,420) Minorities 0 (100) (200) (230) (264) Net Income 1,048 1,713 3,686 4,221 4,886 Balance Sheet Cash & Equivalent 5,522 10,664 2, ,921 Receivable 5,719 8,823 18,049 19,881 22,235 Inventory 826 2,557 3,421 4,318 5,235 Other Current Assets 6,639 14,838 26,835 31,506 36,201 Total Current Assets 18,706 36,882 50,668 56,543 66,593 Fixed Assets Net 1,923 3,275 6,416 15,623 21,286 Goodwill Non Current Assets 9,258 19,197 34,669 36,921 38,745 Total Assets 30,309 61,425 95, , ,956 ST Loans 1,628 15,324 20,305 30,794 40,437 Payable 8,773 7, ,812 19,177 Other Payables 3,259 8,770 11,417 13,282 14,809 Current Portion of LT Loans (247) Total Current Liab. 13,665 31,462 47,366 60,894 74,176 Long Term Loans 5,333 9,890 18,654 18,699 18,732 Other LT Liab. 1,607 3,300 6,457 7,579 8,473 Total Liabilities 20,605 44,652 72,478 87, ,381 Equity 7,614 7,735 7,735 7,735 7,735 Retained Earnings 1,933 3,334 6,538 9,793 13,575 Minority Interest 157 5,704 9,065 9,165 9,265 Total SHE + Minority Int. 9,704 16,773 23,338 26,694 30,575 Total Liabilities & Equity 30,309 61,425 95, , ,956 Source: WSKT, IndoPremier 4

5 Year to 31 Dec 2015A 2016A 2017F 2018F 2019F Cash Flow Net Income (Excl.Extraordinary&Min.Int) 1,048 1,813 3,886 4,451 5,150 Depr. & Amortization ,337 Changes in Working Capital (58) (583) (2,249) (874) (322) Others (428) 1,720 (6,850) (5,906) (1,025) Cash Flow From Operating 702 3,148 (4,853) (1,536) 5,141 Capital Expenditure (9,135) (11,489) (18,972) (12,252) (8,823) Others (328) (1,461) (1,822) (601) (429) Cash Flow From Investing (9,463) (12,950) (20,794) (12,854) (9,252) Loans 3,804 18,254 13,745 10,534 9,423 Equity 5, Dividends (100) (312) (483) (966) (1,104) Others 974 6,378 4,282 (1,553) (1,794) Cash Flow From Financing 10,062 24,321 17,544 8,015 6,524 Changes in Cash 1,302 14,519 (8,104) (6,374) 2,413 Financial Ratios Gross Margin (%) Operating Margin (%) PreTax Margin (%) Net Margin (%) ROA (%) ROE (%) ROIC (%) Acct. Receivables TO (days) Acct. Receivables Other TO (days) Inventory TO (days) Payable TO (days) Acct. Payables Other TO (days) Debt to Equity (%) Interest Coverage Ratio (x) Net Gearing (%) Source: WSKT, IndoPremier 5

6 Head Office PT INDO PREMIER SEKURITAS Wisma GKBI 7/F Suite 718 Jl. Jend. Sudirman No.28 Jakarta Indonesia p f INVESTMENT RATINGS BUY : Expected total return of 10% or more within a 12month period HOLD : Expected total return between 10% and 10% within a 12month period SELL : Expected total return of 10% or worse within a 12month period ANALYSTS CERTIFICATION. The views expressed in this research report accurately reflect the analysts personal views about any and all of the subject securities or issuers; and no part of the research analyst's compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed in the report. DISCLAIMERS This research is based on information obtained from sources believed to be reliable, but we do not make any representation or warranty nor accept any responsibility or liability as to its accuracy, completeness or correctness. Opinions expressed are subject to change without notice. This document is prepared for general circulation. Any recommendations contained in this document does not have regard to the specific investment objectives, financial situation and the particular needs of any specific addressee. This document is not and should not be construed as an offer or a solicitation of an offer to purchase or subscribe or sell any securities. PT. Indo Premier Sekuritas or its affiliates may seek or will seek investment banking or other business relationships with the companies in this report.