Equity Research Result Notes Thursday,30 November 2017 BUY Maintain Last price (IDR) 600 Target Price (IDR) 800 Upside/Downside +33.3% Previous Target Price (IDR) 1,100 Stock Statistics Sector Bloomberg Ticker Construction WTON IJ No of Shrs (mn) 8,338 Mkt. Cap (IDR bn/usdmn) 5,003/371 Avg. daily T/O (IDR bn/usdmn) 9.7/0.7 Major shareholders Wijaya Karya 78.4% Public 21.6% Estimated free float (%) EPS Consensus(IDR) n/a 2017F 2018F 2019F Danareksa 41.9 50.4 61.9 Consensus 41.8 51.1 63.2 Danareksa/Cons 0.4 (1.4) (2.1) WTON relative to JCI Index Wijaya Karya Beton (WTON IJ) Strong revenues on the back of a solid order book WTON has just released its 9M17 result. Earnings grew briskly by 34%yoy to IDR220bn underpinned by strong revenues and a solid order book. The result is in-line with our target and consensus estimates. The 9M17 order book of IDR8.1tn was up 36.6%yoy and it reached 58.6% of the full year target. We maintain our forecast given that the result is in-line but roll over our valuation to 2018 and arrive at a new target price of IDR800. BUY maintained. Earnings in 9M17 grew 34%yoy: in-line. WTON s 9M17 earnings of IDR220bn rose 34.1%yoy. This figure is in-line with our full year target (63%) and the consensus (61%) since last year s result reached 60% of the full year figure. The brisk earnings growth came on the back of strong revenues growth of 52.8%yoy to IDR3.4tn. This was supported by a strong order book. The 9M17 revenues are 72% of our full year target and 76% of the consensus (last year the figure was 71%). Solid 9M17 order book. The 9M17 order book reached IDR8.1tn, up 80%yoy compared to IDR4.5tn in 9M16. The 9M17 order book consists of IDR4.1tn of new contracts (9M16: IDR3.0tn, +36.6%yoy) and IDR4.0tn of carry over contracts. The 9M17 figure is 58.6% of the full year target. Slightly lower gross margin of 12.7% compared to 13.6% in the previous year. This resulted in a slightly lower operating margin of 10.1% (9M16: 10.8%). Interest expenses jumped to IDR62bn from IDR39bn last year due to higher debts. Total debt reached IDR1.3tn as of Sep 17, up from only IDR670bn in Dec 16. Consequently, the DER increased to 0.50x in Sep 17 from 0.27x as of Dec 16. However, interest coverage in 9M17 reached 5.63x - still good. Valuation. We maintain our forecast on WTON but roll over our model to 2018 and arrive at a new target price of IDR800 (IDR1,100 previously). Our new target price is based on: 1) -1SD PE of 16.0x (old: median between -1SD PE and Avg. PE of 27.0x, and 2) 2018 EPS of IDR50.4 (old: 2017 EPS of IDR41.9). BUY maintained. Source : Bloomberg Maria Renata (62-21) 29 555 888 ext.3513 maria.renata@danareksa.com Key Financials Year to 31 Dec 2015A 2016A 2017F 2018F 2019F Revenue, (IDRbn) 2,653 3,482 4,785 5,766 7,057 EBITDA, (IDRbn) 149 271 361 446 562 EBITDA Growth, (%) (54.4) 82.6 33.2 23.3 26.0 Net profit (IDRbn) 170 291 349 420 516 EPS (IDR) 19.5 34.9 41.9 50.4 61.9 EPS growth (%) (49.9) 79.1 20.2 20.2 22.9 BVPS, (IDR) 253.0 290.5 322.6 360.4 407.2 DPS, (IDR) 11.8 6.3 9.8 12.6 15.1 PER (x) 56.5 31.6 26.2 21.8 17.8 PBV (x) 4.3 3.8 3.4 3.1 2.7 Dividend yield (%) 1.1 0.6 0.9 1.1 1.4 EV/EBITDA (x) 59.8 35.0 26.7 21.6 16.9 Source : WTON, Danareksa Estimates www.danareksa.com See important disclosure at the back of this report 1
Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17 Exhibit 1. REVENUE AND GROWTH Exhibit 2. NET PROFIT AND GROWTH Exhibit 3. MARGINS Exhibit 4. GEARING LEVEL Exhibit 5. PE BAND CHART Exhibit 6. SHARE PRICE CHART 70 2,500 60 50 40 30 20 10 0 +2SD: 57.4x +1SD: 43.6x Avg.: 29.8x -1SD: 16.0x -2SD: 2.1x 2,000 1,500 1,000 500-42.0x 34.0x 26.0x 18.0x 10.0x Source: Bloomberg, Danareksa Sekuritas estimates Source: Bloomberg, Danareksa Sekuritas estimates www.danareksa.com See important disclosure at the back of this report 2
Higher revenues coming from WIKA. Revenues coming from the parent company, Wijaya Karya (WIKA), reached IDR831bn, up from IDR215.5bn last year (+284%yoy). This figure is 24.3% of the total revenues, up from last year s 9.7%. By type of revenues, the revenues from services rose significantly from IDR76bn last year to IDR302bn (+300%yoy) in Sep 17. Hence, the contribution of services revenues increased to 8.8% this year from 3.4% in the previous year. Exhibit 7. 9M17 RESULTS SUMMARY YoY YoY Danareksa 9M17/ Rp bn 3Q16 3Q17 Chg 9M17 Chg FY17F FY17F % % % Revenue 723 1,429 97.6 3,425 52.8 4,785 71.6 Gross profit 105 159 51.4 433 41.7 670 64.7 Op. profit 83 129 56.0 348 43.6 489 71.1 Net profit 55 84 51.7 220 34.1 349 63.1 GPM (%) 14.5 11.1 (3.4) 12.7 (1.0) 14.0 OPM (%) 11.4 9.0 (2.4) 10.1 (0.7) 10.2 NPM (%) 7.6 5.8 (1.8) 6.4 (0.9) 7.3 Exhibit 8. REVENUES CONTRIBUTED BY WIKA 900 800 700 600 500 400 300 200 100 0 Revenues fr WIKA (LHS) Contribution to revenues (RHS) (RpBn) (%) FY15 3M16 6M16 9M16 FY16 3M17 6M17 9M17 30% 25% 20% 15% 10% 5% 0% Source: Company www.danareksa.com See important disclosure at the back of this report 3
Exhibit 9. Income Statement Revenue 2,653 3,482 4,785 5,766 7,057 COGS (2,324) (2,977) (4,115) (4,959) (6,069) Gross profit 329 504 670 807 988 EBITDA 149 271 361 446 562 Oper. profit 238 408 489 589 721 Interest income 37 16 7 23 32 Interest expense (63) (57) (59) (87) (108) Forex Gain/(Loss) (8) 0 0 0 0 Income From Assoc. Co s 0 0 0 0 0 Other Income (Expenses) 1 (16) 0 0 0 Pre-tax profit 206 352 437 525 645 Income tax (34) (71) (87) (105) (129) Minority interest (2) 9 0 0 0 Net profit 170 291 349 420 516 Core Net Profit 179 299 349 420 516 Exhibit 10. Balance Sheet Cash & cash equivalent 824 342 378 541 858 Receivables 582 663 849 1,021 1,247 Inventory 622 694 970 1,168 1,430 Other Curr. Asset 426 740 771 797 833 Fixed assets - Net 1,998 2,219 2,492 2,748 2,988 Other non-curr.asset 4 3 3 3 3 Total asset 4,456 4,662 5,461 6,278 7,360 ST Debt 213 470 631 668 877 Payables 595 674 855 1,028 1,257 Other Curr. Liabilities 986 720 903 1,088 1,332 Long Term Debt 320 200 207 312 323 Other LT. Liabilities 79 108 108 108 108 Total Liabilities 2,193 2,172 2,703 3,205 3,896 Shareholder'sFunds 2,205 2,422 2,690 3,005 3,395 Minority interests 58 69 69 69 69 Total Equity & Liabilities 4,456 4,662 5,461 6,278 7,360 www.danareksa.com See important disclosure at the back of this report 4
Exhibit 11. Cash Flow Net income 170 291 349 420 516 Depreciation and Amort. 90 137 128 144 160 Change in Working Capital 95 (653) (127) (39) (52) OtherOper. Cash Flow 14 79 52 64 76 Operating Cash Flow 369 (147) 402 589 700 Capex (416) (359) (400) (400) (400) Others Inv. Cash Flow 37 16 7 23 32 Investing Cash Flow (379) (342) (393) (377) (368) Net change in debt (35) 137 168 143 220 New Capital 0 0 0 0 0 Dividend payment (99) (52) (82) (105) (126) Other Fin. Cash Flow (71) (68) (59) (87) (108) Financing Cash Flow (205) 17 27 (49) (15) Net Change in Cash (215) (472) 36 163 317 Cash - begin of the year 1,038 824 342 378 541 Cash - end of the year 824 342 378 541 858 Exhibit 12. Key Ratios Year to 31 Dec 2015A 2016A 2017F 2018F 2019F Growth (%) Sales (19.1) 31.3 37.4 20.5 22.4 EBITDA (54.4) 82.6 33.2 23.3 26.0 Operating profit (41.9) 71.2 19.8 20.5 22.4 Net profit (46.6) 71.3 20.2 20.2 22.9 Profitability (%) Gross margin 12.4 14.5 14.0 14.0 14.0 EBITDA margin 5.6 7.8 7.6 7.7 8.0 Operating margin 9.0 11.7 10.2 10.2 10.2 Net margin 6.4 8.3 7.3 7.3 7.3 ROAA 4.1 6.4 6.9 7.2 7.6 ROAE 7.8 12.6 13.7 14.8 16.1 Leverage Net Gearing (x) (0.1) 0.1 0.2 0.1 0.1 Interest Coverage (x) 3.8 7.2 8.3 6.8 6.7 Source : WTON, Danareksa Estimates See important disclosure at the back of this report 5