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Waskita Beton Precast (WSBP IJ. IDR196 BUY. TP: IDR240) - 29 Juni 2020
June 30, 2020 08:23


Waskita Beton Precast 

Weak 1Q20 results


WSBP booked weak net income of IDR105bn in 1Q20, slumping by 64.1%yoy on the back of lower revenues. The top line is down by 61.8%yoy to IDR754bn. New contracts booked in 5M20 reached IDR713bn, accounting for 6% of the management’s FY target of IDR11.9tn. The DER stood at 0.83x as of Mar20, with an interest coverage ratio of 4.90x. We maintain our forecast while we await new guidance from the management to be released soon.

WSBP’s 1Q20 earnings sank 64.1%yoy to IDR105bn (1Q19: IDR291bn) on the back of lower revenues and margins. The result is 14.4% of our FY target and 12.6% of the consensus. Previously, we cut our FY20 bottom line target by 19.5% expecting 10.2%yoy lower FY20 earnings at IDR724bn. We are awaiting the company’s guidance as it plans to revise down its FY20 targets on the back of the Covid-19 pandemic. The new targets are expected to be released soon.

The 1Q20 top line fell 61.8%yoy to IDR754bn (1Q19: IDR2.2tn) on the back of lower new contracts and the implementation of PSBB (wide-scale social distancing restrictions) due to the pandemic. The revenues are ~10% of our estimate and the consensus. New contracts as of Mar20 reached IDR577bn and IDR713bn as of May20. The 5M20 figure is 6.0% of the management’s FY target of IDR11.9tn.

Margins, leverage, and cash flow. Gross margins were higher at 24.9% in 1Q20 vs. 17.8% in 1Q19. WSKT remained as the largest revenues contributor with a contribution of 47.1% (1Q19: 50.8%). Total debts were relatively stable at IDR6.0tn as of Mar20, resulting in a 0.83x DER. The ratio is higher than 0.75x as of Dec19 on the back of lower 1Q20 earnings. The interest coverage ratio in 1Q20 slipped to 4.90x from 11.13x in 1Q19. Interest expenses grew by 17.6%yoy to IDR30.3bn. Operating cash flow was negative IDR155bn or relatively stable compared to negative IDR136bn last year.

Lower ratings from Fitch Ratings Indonesia. Fitch cut WSBP’s National Long- Term rating and Standalone Credit Profile (SCP) to BB (Idn) from BBB- (Idn) at the end of May20. The outlook was downgraded to negative on the back of rising risk due to the pandemic.

Maintain our forecast. We maintain our forecast on WSBP as we await the new guidance from the management. WSBP is trading at 2020 PE of 7.1x. Our TP is IDR240, implying 8.4x 2020PE. 


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