Pembangunan Perumahan (PTPP IJ) BUY (Unchanged) 17 January 2018 Company Update Equity Indonesia Construction Stock Data Target price (Rp) Prior TP (Rp) Shareprice (Rp) Rp4,700 Rp4,700 Rp3,030 Upside/downside (%) +55.1 Sharesoutstanding (m) 6,200 Marketcap. (US$ m) 1,410 Free float (%) 49.0 Avg. 6m dailyt/o (US$ m) 3.5 Price Performance 3M 6M 12M Absolute (%) 8.2 1.3 13.4 Relative to JCI (%) 0.2 12.8 34.9 52w high/low (Rp) 3,770 2,290 130 120 110 100 90 80 70 60 Jan17 Feb17 Feb17 Mar17 Apr17 May17 May17 PTPPRebase Major Shareholders Government of Indonesia 51.0% Public 49.0% Estimate Change; Vs. Consensus 2017 2018 Latest EPS (Rp) 210 259 Vs. Prior EPS (%) 0.0 1.8 Vs. Consensus (%) (6.7) (3.5) Source: Bloomberg Jun17 Joey Faustian PT Indo Premier Sekuritas joey.faustian@ipc.co.id +62 21 5793 1168 Jul17 Jul17 Aug17 Sep17 Sep17 Oct17 Nov17 Nov17 JCI IndexRebase Dec17 Jan18 Solid fundamental with stellar performance Outstanding FY17 contract achievement at 102% of FY17 target. Strong cash flow and solid balance sheet. Promising FY18 with several potential pipeline projects. Revise up earnings and Reiterate Buy with TP of Rp 4,700. FY17 contract achievement exceeding FY17 target. PTPP booked total new contract of Rp40.9tn (+25.5% yoy) in FY17, cumulating 102% of our/company s FY17 target of Rp40tn. PTPP posted FY17 s total order book of Rp95tn, which is only 8.4% lower than Wijaya Karya. Given this exceptional contract achievement, PTPP is guiding for FY17 s Revenue and Net Profit of Rp2223tn and Rp1.45tn, respectively. In addition, PTPP s subsidiaries PPRO and PPRE also have a strong performance in FY17, achieving 103% and 102% of companies marketing sales and new contract target, respectively. Solid balance sheet with ample room to finance more projects. As of FY17 PTPP has of the healthiest balance sheet in the sector with no turnkey projects and contractor prefinancing (CPF) vs. SOE peers which has up to Rp30tn worth. Given this prudent contract attainment, PTPP is guiding for positive FY17 operating cash flow of Rp1.7tn (vs. FY16: Rp986bn), the only SOE contractor which has positive OCF in FY17. In addition, PTPP also has a low leverage level with debttoequity ratio stands at 0.6x which enable them to seize any sizeable projects ahead and to finance some turnkey or CPF projects if needed. Robust FY18F growth target with substantial pipeline projects. PPTP is guiding for total new contract target of Rp49.1tn (+20% yoy) in FY18F, which is 6% above our forecast. It targets Revenue of Rp28.5tn and Net Profit of Rp1.7tn (4% above our forecast). To be able to achieve its FY18 target, PTPP has such sizeable pipeline project such as Kali Baru project worth Rp8.7tn, Kulon Progo airport worth Rp6.5tn, Bakauheni tollroad worth Rp4.4tn, PandaanMalang tollroad worth Rp3.4tn, BitungManado tollroad worth Rp2.9tn, Kuala Tanjung Port worth Rp2.2tn, Tanjung Ucang project worth Rp1.1tn, and CPF project namely Kulonprogo and SerangPanimbang toll road. Despite potentially acquiring projects with CPF payment terms into our forecasts, we estimate that PTPP would still have positive operating cash flows in FY17F19F. Revise up earnings and reiterate Buy at TP Rp4,700. We maintain our earnings expectation for FY17 as we PTPP contract achievement as FY17 is in line with our forecast. However, we increase FY18F earnings by 2% as we revise up new contract targets by 5% to Rp46tn for FY18F. PTPP is our top pick in the construction sector as we like the company s strong balance sheet and capability to achieve contracts target. We reiterate Buy recommendation for PTPP with unchanged TP of Rp4,700, which implies 17.8x PE FY18F. Year To 31 Dec 2015A 2016A 2017F 2018F 2019F Revenue (RpBn) 14,217 16,459 22,706 27,614 33,612 EBITDA (RpBn) 1,677 2,071 2,866 3,746 4,601 EBITDA Growth (%) 27.7 23.5 38.4 30.7 22.8 Net Profit (RpBn) 740 1,163 1,306 1,637 2,072 EPS (Rp) 119 188 211 264 334 EPS Growth (%) 39.2 57.0 12.3 25.4 26.6 Net Gearing (%) 12.7 (22.0) 5.1 19.7 12.7 PER (x) 25.4 16.2 14.4 11.5 9.1 PBV (x) 3.7 1.7 1.5 1.4 1.2 Dividend Yield (%) 0.6 0.8 1.1 1.4 1.7 EV/EBITDA (x) 12.3 8.1 8.5 7.8 5.8 Source: PTPP, IndoPremier Share Price Closing as of : 16January2018
Fig. 1: Orderbook to grow at CAGR 29% 201618F Fig. 2: Orderbook Comparison in FY17 Rp bn 140,000 Carry over New contract Rp Bn WSKT WIKA PTPP ADHI 250,000 120,000 200,000 100,000 80,000 150,000 60,000 100,000 40,000 50,000 20,000 2013A 2014A 2015A 2016A 2017A 2018F WSKT WIKA PTPP ADHI Fig. 3: Revenue to grow at CAGR 27% 201619F Fig. 4: Gross profit to grow at CAGR 27% 20162019F 40,000 35,000 30,000 25,000 6,000 5,000 4,000 Gross profit 14.9% Gross margin 14.8% 15.1% 15.2% 15.0% 14.8% 14.6% 20,000 3,000 14.3% 14.4% 15,000 10,000 5,000 2,000 1,000 14.1% 14.2% 14.0% 13.8% 13.6% Fig. 5: Operating profit to grow at CAGR 25% 20162019F Fig. 6: Net profit to grow at CAGR 27% 20162019F Operating profit Operating margin Net income Net margin 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 12.9% 12.2% 12.1% 11.7% 11.7% 13.0% 12.8% 12.6% 12.4% 12.2% 12.0% 11.8% 11.6% 11.4% 11.2% 11.0% 2,500 2,000 1,500 1,000 500 6.2% 6.2% 5.9% 5.8% 5.2% 6.4% 6.2% 6.0% 5.8% 5.6% 5.4% 5.2% 5.0% 4.8% 4.6% 2
Fig. 7 : Earnings change Old New Change 2017F 2018F 2017F 2018F 2017F 2018F Revenue 22,706 27,072 22,706 27,614 0% 2% Gross profit 3,248 4,025 3,248 4,099 0% 2% Operating profit 2,648 3,274 2,656 3,342 0% 2% Net profit 1,306 1,608 1,306 1,637 0% 2% Margin Gross margin 14.3% 14.9% 14.3% 14.8% Operating margin 11.7% 12.1% 11.7% 12.1% Net margin 5.8% 5.9% 5.8% 5.9% 3
Year To 31 Dec (RpBn) 2015A 2016A 2017F 2018F 2019F Income Statement Net Revenue 14,217 16,459 22,706 27,614 33,612 Cost of Sales (12,210) (14,003) (19,458) (23,515) (28,531) Gross Profit 2,007 2,456 3,248 4,099 5,081 SG&A Expenses (410) (487) (762) (936) (1,166) Operating Profit 1,597 1,968 2,485 3,163 3,916 Net Interest (342) (360) (407) (553) (635) Forex Gain (Loss) 71 22 (63) (63) (63) OthersNet (38) 213 152 141 135 PreTax Income 1,288 1,843 2,168 2,688 3,353 Income Tax (442) (552) (699) (849) (1,029) Minorities (105) (128) (163) (202) (252) Net Income 740 1,163 1,306 1,637 2,072 Balance Sheet Cash & Equivalent 3,302 9,424 8,208 7,560 8,793 Receivable 8,833 11,154 11,553 14,314 16,980 Inventory 2,499 2,656 2,629 3,799 4,612 Other Current Assets 797 1,110 3,632 4,073 5,758 Total Current Assets 15,431 24,344 26,021 29,747 36,143 Fixed Assets Net 3,351 5,640 10,459 13,026 13,420 Goodwill 0 0 0 0 0 Non Current Assets 1 523 242 391 634 Total Assets 19,129 30,994 37,393 43,979 51,191 ST Loans 1,256 1,996 3,860 5,523 5,714 Payable 7,888 470 0 15,877 19,820 Other Payables 1,462 1,943 1,932 2,308 2,767 Current Portion of LT Loans 509 1,702 1,899 2,054 2,244 Total Current Liab. 11,114 6,112 20,689 25,762 30,544 Long Term Loans 1,913 3,048 2,656 2,205 2,235 Other LT Liab. 982 1,510 1,887 2,213 2,604 Total Liabilities 14,010 10,670 25,232 30,180 35,383 Equity 2,335 6,874 6,874 6,874 6,874 Retained Earnings 2,047 2,922 4,023 5,398 7,143 Minority Interest 737 1,000 1,263 1,527 1,790 Total SHE + Minority Int. 5,119 10,796 12,160 13,799 15,807 Total Liabilities & Equity 19,129 21,466 37,392 43,979 51,190 Source: PTPP, IndoPremier 4
Year to 31 Dec 2015A 2016A 2017F 2018F 2019F Cash Flow Net Income (Excl.Extraordinary&Min.Int) 846 1,291 1,469 1,839 2,324 Depr. & Amortization 81 526 381 583 685 Changes in Working Capital (301) (10,173) 9,305 (1,385) (1,087) Others 352 705 363 667 644 Cash Flow From Operating 977 (7,651) 11,518 1,705 2,565 Capital Expenditure (2,581) (3,337) (4,918) (3,300) (1,323) Others (175) (114) (116) (102) (208) Cash Flow From Investing (2,756) (3,450) (5,034) (3,402) (1,531) Loans 646 3,068 1,669 1,367 411 Equity (30) 4,414 0 0 0 Dividends (106) (148) (205) (261) (327) Others 1,836 508 51 (96) (59) Cash Flow From Financing 2,345 7,842 1,516 1,010 24 Changes in Cash 567 (3,260) 8,000 (687) 1,059 Financial Ratios Gross Margin (%) 14.1 14.9 14.3 14.8 15.1 Operating Margin (%) 11.2 12.0 10.9 11.5 11.6 PreTax Margin (%) 9.1 11.2 9.5 9.7 10.0 Net Margin (%) 5.2 7.1 5.8 5.9 6.2 ROA (%) 4.4 4.6 3.8 4.0 4.4 ROE (%) 19.7 14.6 11.4 12.6 14.0 ROIC (%) 11.4 9.8 8.3 8.6 9.3 Acct. Receivables TO (days) 67.1 85.4 63.4 47.0 47.1 Acct. Receivables Other TO (days) 139.6 136.2 119.1 124.0 122.8 Inventory TO (days) 4.8 5.4 7.4 7.3 6.8 Payable TO (days) 222.8 108.9 126.3 224.1 228.3 Acct. Payables Other TO (days) 0.0 0.0 0.0 0.0 0.0 Debt to Equity (%) 71.8 62.5 69.2 70.9 64.5 Interest Coverage Ratio (x) 0.2 0.2 0.2 0.2 0.2 Net Gearing (%) 12.7 (22.0) 5.1 19.7 12.7 Source: PTPP, IndoPremier 5
Head Office PT INDO PREMIER SEKURITAS Wisma GKBI 7/F Suite 718 Jl. Jend. Sudirman No.28 Jakarta 10210 Indonesia p +62.21.5793.1168 f +62.21.5793.1167 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.