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Danareksa Equity Snapshot - TOWR, 21 February 2019
February 21, 2019 11:07 WIB

Sarana Menara Nusantara(TOWR IJ)

4Q18 Preview - still upbeat

 

Based on TOWR’s partial disclosure, the headline numbers came in slightly short on a qoq basis with growth in tenancies on a net basis using build-to-suit (bts) towers. TOWR reported progress in installing new fiber adding another 2.2km for fiberization of towers in 4Q18. Our TP has been achieved and it is currently under review to incorporate the new contracts which recently came to light.

 

Organic and inorganic growth for TOWR in FY18. TOWR’s FY18 revenues and EBITDA were in line with our estimate and the consensus. TOWR’s revenues rose 9.9%yoy to Rp5.87tn boosted by: a) the acquisition of KIN Komet in late 2Q18 which helped TOWR end the year with 2,044 new tenancies (1,972 in 2Q18) from 1,455 towers (1,369 in 2Q18), b) organic growth with the addition of 1,264 tenancies on a net basis from 1,128 BTS towers and c) additional equipment leases on existing tenancies. The FY18 performance resulted in Rp4.93tn of EBITDA translating into an 84% margin. By end-FY18, leverage was higher with the net debt / EBITDA ratio increasing to 2.1x from 1.8x given higher capex for towers as the majority of the increase in organic tenancies came from the construction of BTS towers. FY18’s capex was also marked by aggressive rollout to fiberize towers (ytd 4,400km) with a view to install and serve ~18,000km of fiber in the next 1-2yrs. TOWR also used some of its funds to pay interim dividends in Nov.  

 

4Q18 revenues fell slightly. The revenues edged down 1.1%qoq to Rp1.52tn in 4Q18 although, at the same time, tenancies increased (+206) mainly through BTS towers which require new tower installations (+203). We have limited information on the results but we think that the drop in the margin by ~5pp yoy to 82% is either due to churn on a lower tenancy ratio (1.62x) and/or lower pricing of tenancies. Nonetheless, the quarterly revenues rose on a yearly basis (+12%yoy in 4Q18) as a result of upside in previous quarters given the contract nature of the business. 

 

Despite shortcomings in 4Q18, the outlook for new orders is rosy. TOWR’s tenancy ratio is 1.62x – the lowest in recent years, indicating room for tenancy growth through collocation. TOWR plans to add 3,000 gross organic tenancies in 2019, with ~1,600 due for delivery from 2018’s standing orders and the remaining from new orders expected in the year. With a strong commitment to invest in 4G and the network rollout currently underway for all 5 large operators, the trend is for tenancies to grow given a greater need for coverage in ex-Java areas and network densification. As such, we are confident TOWR can reach its FY19 tenancy target. We are currently reviewing our projections to incorporate Rp5.8tn of new master lease agreements that encompass leases for tower space, fiber and satellite capacity. We remain upbeat on TOWR with room for the valuation multiples to rerate given strong CF which will ultimately reduce leverage. As news resurfaced that Indosat contemplates the sale of its towers, TOWR remains the strongest potential buyer for infrastructure assets.

 

 

… read more 20190221 TOWR


Danareksa Equity Snapshot - 21 February 2019
February 21, 2019 09:58 WIB

FROM EQUITY RESEARCH

Sarana Menara Nusantara: 4Q18 Preview - peculiar but remaining upbeat (MAINTAIN)

Based on partial disclosure on TOWR, headline numbers came slightly short on qoq basis with growth in tenancies on net basis using build-to-suit (bts) towers. TOWR reported progress in installing new fiber adding another 2,2km for fiberization of towers in 4Q18. Our TP has been achieved and is currently under review to incorporate new contracts recently came to light.

To see the full version of our report, pleaseclick here

 

United Tractors :  Recovery in Dec 18’s Komatsu sales volume (UNTR IJ.IDR 26,000 .BUY.TP IDR 36,000 )

United Tractors (UNTR) reported Komatsu sales volume of 376 units (+17.1% mom and +17.1% yoy) in Dec 2018. Despite the weak Komatsu sales volume in the last two months of 2018, the sales volume in 2018 rose by 28.8% yoy to 4,878 units. While we expect weak earnings in 4Q18 on the back of lower operational volume, we believe the company will book solid earnings in 2018. Maintain BUY with a target price of IDR36,000.

To see the full version of this report, please Click here

 

To see the full version of our snapshot, pleaseclick here

 

MARKET NEWS

 

MACROECONOMY

Government: State revenues grew by 6.24%yoy

The Ministry of Finance (MOF) announced that state revenues in January 2019 reached IDR 108.1tn or up by 6.24%yoy with a realization rate of 4.99%. The state expenditure, meanwhile, reached IDR 152.85tn or up by 10.34% yoy with a realization rate of 6.25%. The Ministry of Finance said states revenues in January 2019 were restricted by the stronger USD/IDR exchange rate and the lower oil price. This resulted in a budget deficit of IDR 45.8tn. According to sensitivity analysis conducted by the MOF, for every IDR100 depreciation in the rate of the rupiah against the USD, state revenues will decline by IDR 3.9-5.9tn. At the same time, a USD 1/barrel lower oil price translates into IDR 3.1-4.2tn lower state revenues. (Kontan)

 

SECTOR

Consumer: TCID estimates 5-10% yoy revenues growth in 2019

Mandom Indonesia (TCID) targets 5-10% yoy growth in FY19’s revenue vs. -2% yoy growth in FY18 (unaudited figures). This year, the company estimates double digit growth in domestic revenues. The domestic revenues are around 73% of the FY18 top line. (Investor Daily)

 

CORPORATE

SSIA to draw down Less Than Half of Its Loan Facility This Year

Surya Semesta Internusa (SSIA) is planning to draw down loans to fund this year’s expansion i.e. land acquisition. SSIA has a USD 100 million loan facility from International Finance Corporation (IFC) given in May. So far, SSIA has not drawn down any loans. The company will also not draw down more than 50% of its total facility this year. According to the agreement, the drawdown of loans can be done gradually on four occasions up to 2020. The loans will fall due in June 2026. Interest on the loan is LIBOR 6 months plus 2.75% per year.

 


Danareksa Equity Snapshot - UNTR, 21 February 2019
February 21, 2019 09:57 WIB

United Tractors(UNTR IJ)

Recovery in Dec 18’s Komatsu sales volume

 

United Tractors (UNTR) reported Komatsu sales volume of 376 units (+17.1% mom and +17.1% yoy) in Dec 2018. Despite the weak Komatsu sales volume in the last two months of 2018, the sales volume in 2018 rose by 28.8% yoy to 4,878 units. While we expect softearnings in 4Q18 on the back of lower operational volume, we believe the company will book solid earnings in 2018. Maintain BUY with a target price of IDR36,000.

 

Slight recovery in Komatsu sales volume in Dec 2018.  After Komatsu sales volume declined significantly to 321 units in Nov 2018 (-35.8% mom), its sales volume recovered by 17.1% mom to 376 units in Dec 2018. In 2018, the impact of solid coal prices in the beginning of the year resulted in higher Komatsu sales volume (+28.8% yoy to 4,878 units). This number was within our expectations and the management’s estimates. Given the widening price gap between low and high CV coal, some of UNTR’s clients have taken a wait-and-see stance. As such, UNTR expects Komatsu sales volume to decline to 4,000 units in 2019.

 

Favorable weather in 2H18 boosted coal production.  The subsidiary in the mining contracting (MC) division, Pamapersada Nusantara (PAMA) managed to increase its coal production by 11.1% yoy to 125.1mn tons with OB removal up by 22.3% yoy to 979.4mn bcm. This translated into a stripping ratio of 7.8x in 2018 (2017: 7.1x). The number was within our expectations. For 2019, UNTR maintains its coal production target of 126mn tonnes and OB removal target of 950 – 980mn bcm even though PAMA has OB removal capacity of 1.0bn bcm.

 

4Q18 preview: expect soft earnings, but sturdy earnings in 2018.  We expect soft quarterly earnings in 4Q18 on: a) a decline in Komatsu sales volume (-6.6% qoq) with a lower contribution from the mining sector of 46.4% in 4Q18 (3Q18: 48.3%). And b) a lower stripping ratio of 7.6x in 4Q18 (3Q18: 8.0x) amid higher coal production (+2.1% qoq) and strengthening of the rupiah vs. the US Dollar in 4Q18 to impact on MC’s earnings. However, for the full year of 2018, we expect solid earnings for UNTR backed by higher operational volume. In 2019, we believe the completion of the recent acquisition of Martabe gold mining company at the end of December 2018 can sustain the company’s earnings amid the expectation of lower Komatsu sales volume.

 

Maintain BUY with a target price of IDR36,000 (based on DCF valuation with WACC of 12.8% and long-term growth of 3%). The stock is trading below -1SD. Our new TP implies 11.0x 2019F PE. While we expect coal price consolidation going forward, upside potential may come from the recent narrowing of the gap between low CV and Newcastle coal prices which would help to improve Komatsu sales volume from customers who have postponed purchases of heavy equipment.

 

… read more 20190221 UNTR