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INDY: Superior 2017 Net Profit
03 Apr 2018


Superior 2017 Net Profit – Enjoy Gain From Kideco Revaluation Asset

INDY has released its audited 2017 financial result, in which the company managed to record a superior net profit of US$ 335.4 million compared to the 2016 net loss of US$ 67.6 million. This was fuelled by 1) Kideco’s stronger net profit of US$ 277.1 million (surged by 3.1-fold vs US$ 88.6 million in 2016) which translated into Kideco’s net income to INDY of US$ 116.8 million (eq. 86% portion to its total’s net income from associates of US$ 136.2 million); 2) a one-off extraordinary gain onKideco’s revaluation asset of existing 46% shares of US$ 384.2 million related to the acquisition of 45% ownership in Kideco from Samtan Co Ltd (40%) and PT Muji Inti Utama (5%) and 3)its cost efficiency initiatives which have lowered operating expenses by 14.4% YoY.

Maintain BUY rating – Fair value at Rp 4,910/share
Currently, the share price has corrected by 22% and traded at 1.09x 2018F PBV whichabove its 5-years average PBV +2 stdev of 0.95x, however the company’s valuation remains attractive compared to the industry of 1.27x2018F PBV post Kideco’s full year consolidation effect in 2018F. Meanwhile, we obtain INDY’s fair value at Rp 4,910/share (vs previously at Rp 4,050/share) on the back of 1) higher expected valuation of Tripatra and PTRO backed by its solid backlog contract; 2) using lower net debt and non-controlling interest ended as of 31 December 2017 and 3) the changes in Rupiah assumption of Rp 13,800 (vs previously at Rp 13,500) following the recent Rupiah depreciation against US$. Hence, we keep BUY rating on the counter with a 39% potential upside.

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