FOCUS ACSET Indonusa Company Update 26 March 2014

Transcription

1 FOCUS ACSET Indonusa Mandiri Sekuritas Analyst Handoko Wijoyo SECTOR: CONSTRUCTION NOT RATED Current Price 52-wk range Stock Data Rp2,245 Rp1,700-Rp3,475 Bloomberg Code ACST IJ Mkt.Cap (Rp bn/us$ mn) 1,123/99 Issued Shares (mn) 500 Avg. Daily T/O (Rp mn/us$ thd) 487.0/42.7 Major shareholder Cross Plus Indonesia 38% Loka Cipta Kreasi 30% Other 32% Share price performance 3m 6m 12m Absolute (%) 17.5 (11.1) (10.2) Relative to JCI (%) 5.6 (17.8) (16.4) Not your ordinary contractor Different than most of private contractors, one-third of ACST business came from high margin segment (foundation works), where gross margin could reach 25-30% (vs. 10% of general contracting works). The 9.8% net margin is also higher than most of listed contruction peers. Despite US$39.5k ADTO, counters is quite attractively valued at 9.4x 2014PE (mgmt guidance). Led by its original founders. Established in 1995 by Mr. Ronnie Tan and Mr. Hilarius Arwandhi (both construction veterans), ACST is a premium building contractor and a foundation works specialist. Both founders are actively managing the company. One-third of revenue coming from high margin foundation works. ACST is an established foundation works specialist. Besides general contracting works that are more crowded market (~10% gross margin business), one-third of its revenue comes from foundation works (~25-30% gross margin), where it emerges as one of the largest player in the market. The foundation works has normally shorter project cycle (3-6months), hence lower materials price risk. ACST is looking for 65% and 35% revenue split between general contracting and foundation works. Targeting Rp122bn FY2014 net profit. The company is currently working on Rp1.8tn carry over from last year, and is aiming for Rp1.5tn new contract this year (Rp200bn 2014 YTD). Management is targeting Rp1.3tn (up 31% yoy) revenue and Rp121.5bn (up 20% yoy) net profit for this year. Net income CAGR F is 63%. ACST is trading at 9.4x 2014 mgmt PE, 35% discount to TOTL 2014cons. Attractive net margin level. Despite its smaller size compare to its peers, the company has been able to generate 9.6% 2013F net margin with minimal interest income (TOTL FY2013A net margin is 8.5%, while NRCA is 6.4%). 2013F ROE was also attractive at 17.6%, despite the IPO impact in the year. Key risk. Slower growth in property (high rise), material price increase, higher interest rate and declining A/R quality are the key risks for ACST. FINANCIAL SUMMARY YE Dec (Rpbn) 2010A 2011A 2012A Revenue EBITDA Net Profit Net Margin 9.2% 8.5% 7.8% P/E Ratio (x) P/B Ratio (x) ROAA 12% 9% ROAE 25% 27% Please see important disclosure at the back of this report Page 1 of 8

2 FIGURE SALES BREAKDOWN ACST At a Glance FIGURE 2. SEGMENTAL GROSS PROFIT Foundation works 23.4% ~25-30% ~10% General contracting 76.6% General contracting Foundation works FIGURE 3. REVENUE (RP BN), Rpbn % % M13 Revenue (LHS) growth (%) (RHS) 60% 50% 40% 30% 20% 10% 0% FIGURE PROFITABILITY COMPARISON 9.9% 7.8% 4.6% ACST TOTL NRCA Source: respective companies FIGURE 5. NET EARNINGS GROWTH TREND Rp % % % 20 24% F 2014F Net income (LHS) growth (%) (RHS) (2013 & 2014 are management number) 100% 80% 60% 40% 20% 0% FIGURE 6. LEVERAGE TREND 18.0% 16.0% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% % % 15.7% Net debt/equity (LHS) Int coverage (RHS) x Please see important disclosure at the back of this report Page 2 of 8

3 Notes Company structure 69% of ACST is owned by the company founders. Mr. Ronnie Tan and Mr. Hilarius Arwandhi, both construction veterans, control 68% of the company after the 2013 IPO. Ronnie is the CEO and Hillarius is the Director of ACST. Public owns the other 31% of the company. FIGURE 7. COMPANY STRUCTURE Order book summary Rp1.8tn carry over from last year and Rp1.5tn target new contract this year. 65% of the company s order book is general construction works (~10% gross margin), while the rest is foundation works with ~25-30% gross margin. The company is aiming for Rp1.3tn revenue (31% yoy growth) and Rp120bn net income (20% yoy growth) this year. The slight margin decline may be caused by increased leverage on its balance sheet. FIGURE 8. REVENUE MIX % 37% % 19% 23% * 2014F Foundation works General construction % foundation to total revenue (* unaudited, 2014 is management forecast) 40% 35% 30% 25% 20% 15% 10% 5% 0% Please see important disclosure at the back of this report Page 3 of 8

4 What is foundation works really? These types of works are required in high rise building with a basement structure. It involves constructing concrete (from ready-mix concrete and steel) structure as the base of buildings. Due to its high technical know-how, strong track record requirement and time-critical step of construction, the segment can generate 25-30% gross margin. The head-to-head competition in the segment is a foundation service company called Indonesia Pondasi Raya. The project cycle of this service is relatively short (3-6months cycle), hence lower material price increase risk. FIGURE 9. BORED PILING FIGURE 10. DRIVEN PILING FIGURE 11. DIAPHRAGM WALL FIGURE 12. FORMWORK SYSTEM Please see important disclosure at the back of this report Page 4 of 8

5 Earnings growth and profitability performance 52% EPS CAGR F. Compare to the other private listed contractors (Total Bangun Persada TOTL IJ, Nusa Raya Cipta NRCA), ACST grew faster than TOTL (39% EPS CAGR F) but lower than NRCA (81% EPS CAGR F). Most of these contractors work on residential and commercial high rise projects, such as apartments, offices and hotels, except NRCA that has 116km Cikampek - Palimanan contract on its order book (Rp3tn). FIGURE 13. PEERS REVENUE TREND F 2014F 2015F ACST TOTL NRCA Source: respective companies and Bloomberg (Mansek doesn t cover the respective companies) Strong margin performance than its peers. Thanks to its differentiation in the business, the company has been able to generate in line margin with TOTL and higher than Nusa Raya Cipta. FIGURE 14. PEERS GROSS MARGIN TREND 21.1% 18.7% 17.2% 20.6% 12.7% 15.6% 19.0% 18.8% M % 8.9% 9.6% 9.6% Source: companies ACST TOTL NRCA Please see important disclosure at the back of this report Page 5 of 8

6 FIGURE 15. PEERS NET MARGIN TREND 9.2% 8.5% 7.8% 8.0% 7.9% 9.9% 8.7% 7.4% M13 5.2% 4.6% 3.0% 2.9% ACST TOTL NRCA Source: companies Past projects highlights FIGURE 16. PAST CONSTRUCTION PROJECTS Source: companies FIGURE 17. PAST FOUNDATION WORKS PROJECTS Source: companies Please see important disclosure at the back of this report Page 6 of 8

7 ACSET Indonusa Profit and Loss YE Dec (Rp Bn) 2010A 2011A 2012A 9M13A Revenue Gross profit Operating profit EBITDA Net Interest Interest expense (2) (3) (7) (13) Interest income Forex Losses/Gains Net Other Pre-Tax Profit Income Tax (8) (13) (20) (18) Others Minority Interests 0 0 (0) (0) Net Profit Cashflow Statement YE Dec (Rp Bn) 2010A 2011A 2012A 9M13A Net cash provided (used) operation (20) (125) Net cash provided (used) investing (18) (36) (69) (86) Net cash provided (used) financing Net Change in Cash (7) Non cash (0) (0) 1 1 Cash at beginning Cash at End , Mandiri Sekuritas estimates Balance Sheet YE Dec (Rp Bn) 2010A 2011A 2012A 9M13A Cash and ST Investment Acct Receivable Inventory Others Current Assets Investments Fixed Assets Others Total Assets ,024 Current Liabilities Acct. Payable ST Borrowings Others Long-Term Liabilities Long-Term Payable Others Total Liabilities Shareholder's Equity Key Ratios YE Dec (Rp Bn) 2010A 2011A 2012A 9M13A Growth (% YoY) Sales 41.6% 56.1% n/a EBIT 37.1% 51.5% n/a EBITDA 38.2% 45.4% n/a Net Profit 31.4% 43.2% n/a Profitability (%) Gross Profit Margin 21.1% 18.7% 17.2% 20.6% Oper. Margin 12.2% 11.8% 11.5% 13.0% EBITDA Margin 17.2% 16.8% 15.6% 18.5% Net Margin 9.2% 8.5% 7.8% 8.0% ROAA 12.5% 9.4% n/a ROAE 24.7% 27.2% n/a Leverage Net Debt / Equity (%) 4% 7% 17% 1% EBITDA / Gross Interest (x) Please see important disclosure at the back of this report Page 7 of 8

8 Mandiri Sekuritas A subsidiary of PT Bank Mandiri (Persero) Tbk Plaza Mandiri 28 th Floor, Jl. Jend. Gatot Subroto Kav , Jakarta 12190, Indonesia General: , Fax : (Equity Research), (Equity Sales) RESEARCH John Rachmat Head of Equity Research, Strategy john.rachmat@mandirisek.co.id Tjandra Lienandjaja Banking tjandra.lienandjaja@mandirisek.co.id Handoko Wijoyo Construction, Toll Road handoko.wijoyo@mandirisek.co.id Hariyanto Wijaya, CFA, CFP, CA, CPA Plantation, Heavy eq., Energy hariyanto.wijaya@mandirisek.co.id Herman Koeswanto, CFA Consumer, Poultry herman.koeswanto@mandirisek.co.id Liliana S Bambang Property, Building Material liliana.bambang@mandirisek.co.id Ariyanto Kurniawan Telecom, Coal & Metal Mining ariyanto.kurniawan@mandirisek.co.id Aldian Taloputra Economist aldian.taloputra@mandirisek.co.id Leo Putra Rinaldy Economist leo.rinaldy@mandirisek.co.id Rizky Hidayat Research Assistant rizky.hidayat@mandirisek.co.id Vanessa Ariati Tanuwijaya Research Assistant vanessa.tanuwijaya@mandirisek.co.id Wisnu Trihatmojo Research Assistant wisnu.trihatmojo@mandirisek.co.id INSTITUTIONAL SALES Lokman Lie Co-Head Institutional Equities lokman.lie@mandirisek.co.id Silva Halim Co-Head Institutional Equities silva.halim@mandirisek.co.id Andrew Handaya Institutional Sales andrew.handaya@mandirisek.co.id Cindy Amelia P. Kalangie Institutional Sales cindy.amelia@mandirisek.co.id Jane Theodoven Sukardi Institutional Sales jane.sukardi@mandirisek.co.id Janefer Amanda Soelaiman Institutional Sales janefer.soelaiman@mandirisek.co.id Karmia Tandjung-Nasution Institutional Sales karmia.tandjung@mandirisek.co.id Mirna Santikara Salim Institutional Sales santikara.salim@mandirisek.co.id Oos Rosadi Institutional Sales oos.rosadi@mandirisek.co.id Vera Ongyono Institutional Sales vera.ongyono@mandirisek.co.id Yohan Setio, CFA Institutional Sales yohan.setio@mandirisek.co.id Zahra Aldila Niode Institutional Sales zahra.niode@mandirisek.co.id Kusnadi Widjaja Equity Dealing kusnadi.widjaja@mandirisek.co.id Edwin Pradana Setiadi Equity Dealing edwin.setiadi@mandirisek.co.id RETAIL SALES Ridwan Pranata Head Retail Equities ridwan.pranata@mandirisek.co.id Boy Triyono Jakarta Branch boy.triyono@mandirisek.co.id Yohanes Triyanto Kelapa Gading Branch yohanes.triyanto@mandirisek.co.id Hendra Riady Mangga Dua Branch hendra.riady@mandirisek.co.id Umar Abdullah Pondok Indah Branch umar.abdullah@mandirisek.co.id Indra Mas ari Bandung Branch indra.mas ari@mandirisek.co.id Yuri Ariadi Pontianak Branch yuri.ariadi@mandirisek.co.id Ruwie Medan Branch ruwie@mandirisek.co.id INVESTMENT RATINGS: Indicators of expected total return (price appreciation plus dividend yield) within the 12-month period from the date of the the last published report, are: Buy (10% or higher), Neutral (-10% to10%) and Sell (-10% or lower). DISCLAIMER: This report is issued by PT. Mandiri Sekuritas, a member of the Indonesia Stock Exchanges (IDX). Although the contents of this document may represent the opinion of PT. Mandiri Sekuritas, deriving its judgement from materials and sources believed to be reliable, PT. Mandiri Sekuritas or any other company in the Mandiri Group cannot guarantee its accuracy and completeness. PT. Mandiri Sekuritas or any other company in the Mandiri Group may be involved in transactions contrary to any opinion herein to make markets, or have positions in the securities recommended herein. PT. Mandiri Sekuritas or any other company in the Mandiri Group may seek or will seek investment banking or other business relationships with the companies in this report. For further information please contact our number or fax ANALYSTS CERTIFICATION: Each contributor to this report hereby certifies that all the views expressed accurately reflect his or her views about the companies, securities and all pertinent variables. It is also certified that the views and recommendations contained in this report are not and will not be influenced by any part or all of his or her compensation.