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Danareksa Equity Snapshot - WSKT 21 November 2017
November 21, 2017 09:58 WIB

Waskita Karya(WSKT IJ)

No glory without sacrifice

We maintain our BUY call on WSKT with a new TP of IDR2,700 (old: IDR2,800). The development of toll roads and the funding remain the key issues. We expect the order book in 2018 to grow 6%yoy to IDR155tn despite the lower new contracts target. WSKT’s order book is the largest among its peers.

2018 contracts target. WSKT’s order book is the largest among the construction companies in Indonesia. We expect the 2018 order book to reach IDR155tn (+6%yoy) despite the lower new contracts target. The new contracts in 2018 are expected to reach IDR50.0tn, or lower than the IDR60.0tn of new contracts targeted in 2017.

Acquiring toll road projects… WSKT, through Waskita Toll Road (WTR), owns 18 toll roads with a total length covering 997km of which more than 82% is still under construction. The management claims that the investment needed for the toll roads will reach more than IDR100tn while “toll road concession rights” booked as of Sep reached IDR27.1tn, indicating that around IDR73tn of funds is needed to develop the toll roads.

…to enlarge assets. Since entering the toll road business in 2015, WSKT’s balance sheet has increased significantly. Total assets, which only reached IDR12.5tn at the end of 2014, have since grown to IDR87.7tn as of Sep17. However, the leverage also increased (up from 1.1x in Dec16 to IDR1.7x as of Sep17). This includes the IDR5.2tn of additional equity received in 2015. However, with only IDR22.0tn of equity as of Sep17, WSKT will have difficulties in carrying out all the toll road projects. As such, the company plans to divest 10 of its toll roads through IPO and direct divestment. We have not included the divestments into our forecast.

Waiting for the payment of receivables. WSKT’s receivables (trade receivables, retention receivables, and gross amount due from customers) as of Sep17 reached IDR24.8tn with the Ministry of Transportation (MoT) as the biggest debtor with unpaid bills reaching IDR5.3tn or 21% of the receivables. Other large debtors include Hutama Karya, which owes IDR4.8tn (19.3% of the receivables) and Jasamarga Semarang Batang, which owes IDR2.7tn (11.1%).

Valuation. We expect single-digit growth in the 2018 net income due to higher financing costs and minorities and 22%yoy growth in revenues. We maintain our BUY call on WSKT with a lower TP of IDR2,700 (old: IDR2,800). Our new TP is based on: 1) -1SD PE multiple of 11.0x (old: +1SD of 16.5x PE), and 2) 2018 EPS of IDR246 (old: 2017 EPS of IDR176).

… read more 20171121 WSKT


Danareksa Equity Snapshot - LPPF 21 November 2017
November 21, 2017 09:57 WIB

Matahari Department Store(LPPF IJ)

Expansion on track; valuation looks attractive

We maintain our BUY recommendation on LPPF with a higher TP of IDR12,500. From our recent meeting with the management, we learnt that: 1) the December 2017 injection in MatahariMall.com will be the final injection, potentially creating positive sentiment on the stock, 2) there will still be three more new store openings in 4Q17, and 3) expansion will continue in 2018.

Final injection in MatahariMall.com. LPPF’s management stressed that the company would make its final injection in MatahariMall.com of around IDR212.5bn in December 2017. This will maintain LPPF’s ownership in MatahariMall.com at around 18%. Encouragingly, the management has provided reassurances that there will be no further investments in MatahariMall.com. We view this positively since the investment in MatahariMall.com has been a source of worry for some investors and any signs that further investments were planned would likely revive these concerns. As such, this final injection in MatahariMall.com should generate positive sentiment and pave the way for a rerating, in our view.

More store openings in 4Q17. The management has confirmed 3 new store openings in 4Q17: 2 Matahari Department Stores in South Sulawesi (6,500 sqm each) and 1 Nevada store in Pakuwon Mall (1,000 sqm), totaling 14,000 sqm. As such, new additional gross retail space will total 46,500 sqm this year, as LPPF previously opened 5 new stores in Tegal, Madiun, Jember, Medan, and Cirebon. In our calculations, we expect the net additional gross retail space to stay positive at 3,500 sqm, taking into account store closures in Taman Anggrek (16,000 sqm), Lombok (6,500 sqm), and Pasaraya & Blok M (20,000 sqm).

Expansion to continue in the pre-election year of 2018.  The management has provided reassurances that expansion will continue in 2018, with about 6-8 new store openings in the next 3 years. The company foresees stronger consumption as the public should benefit from populist government policies such as higher subsidies on healthcare and energy in 2018. Profitability should also be maintained at the same level given the management’s continued focus on operational efficiencies concerning employee productivity.

Key Financials Year to 31 Dec 2015A 2016A 2017F 2018F 2019F Revenue, (IDRbn) 9,007 9,897 9,897 10,542 11,209 EBITDA, (IDRbn) 2,570 2,788 2,671 2,879 3,092 EBITDA Growth, (%) 9.9 8.5 (4.2) 7.8 7.4 Net profit (IDRbn) 1,799 2,020 1,928 2,079 2,234 EPS (IDR) 611.0 692.4 660.8 712.6 766.0 EPS growth (%) 27.3 13.3 (4.6) 7.8 7.5 BVPS, (IDR) 375.8 636.0 810.6 1,063.6 1,337.9 DPS, (IDR) 295.5 435.6 491.6 469.2 506.0 PER (x) 18.5 16.3 17.1 15.9 14.8 PBV (x) 30.1 17.8 13.9 10.6 8.4 Dividend yield (%) 2.6 3.9 4.4 4.2 4.5 EV/EBITDA (x) 12.6 11.2 11.6 10.5 9.5 Source : LPPF, Danareksa Estimates Maintain BUY with a TP of IDR12,500. We increase our 2018F revenues and net profit estimates by 1.2% and 2.4%, respectively. Meanwhile, we rerate our valuation using 17.5x P/E 2018F, nearly -1 std based on the 5 years P/E band, giving rise to a TP of IDR12,500 from IDR10,500 previously at 15x P/E 2018F, about -1.5 std. The stock trades at an attractive valuation of 15.7x P/E 2018F. We also like LPPF for its healthy balance sheet and high dividend yield. Risks to our call include lower-than-expected GDP growth in 2018.

… read more 20171121 LPPF


Danareksa Equity Snapshot - 21 November 2017
November 21, 2017 09:30 WIB

FROM EQUITY RESEARCH

Indofood CBP Sukses Makmur:  More room for growth  (ICBP IJ. IDR 8,925. BUY. TP IDR 9,700)

ICBP reported solid 3Q17 sales volume growth in both noodles and dairy, reaching 8.5% yoy and 3% yoy respectively. Looking forward, we are confident that the positive momentum can be maintained, especially since sales should receive a boost from more populist government policies in the pre-election year of 2018. Maintain BUY with an unchanged TP of IDR9,700. 

 

Matahari Department Store: Expansion on track; valuation looks attractive (LPPF IJ. IDR 11,300. BUY. TP IDR 12,500)

We maintain our BUY recommendation on LPPF with a higher TP of IDR12,500. From our recent meeting with the management, we learnt that: 1) the December 2017 injection in MatahariMall.com will be the final injection, potentially creating positive sentiment on the stock, 2) there will still be three more new store openings in 4Q17, and 3) expansion will continue in 2018.

 

Waskita Karya:  No glory without sacrifice (WSKT IJ. IDR 2,210. BUY. TP IDR 2,700)

We maintain our Buy call on WSKT with a new TP of IDR2,700 (old: IDR2,800). The development of toll roads and the funding still become the main issues. We expect order book in 2018 to have 6%yoy growth to IDR155tn despite the lower new contracts target. WSKT’s order book is the largest among contractors in Indonesia.

To see the full version of our snapshot, please click here

MARKET NEWS

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Corporate

  • Adhi Karya: New contracts as of Oct reached IDR31.6tn
  • Waskita Karya: New contracts as of Oct reached 75% of the full year target

TECHNICAL ANALYSIS CORNER

Market Maker

  • IHSG. 6,053. POSITIVE. TP 6,065.

Stock Shoot

 

  • UNTR. IDR 32,200. BUY. TP IDR 36,500.

To see the full version of our technical analysis corner, please click here