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Thursday , 22 Nov 2018 01:21

PT WIJAYA KARYA BETONTBK 

Site Visit to the Balikpapan-Samarinda Toll Project

 

We visited to Balikpapan – Samarinda toll road project, East Kalimantan with a total length of 62.8 km which was owned by PT Jasamarga Balikpapan Samarinda as a consortium of JSMR, WIKA, PTPP and PT Bangun Tjipta Sarana. WIKA is acted as main contractor while WTON will supply the needs of ready-mix and precast product for the project. This toll road is targeted to commence operation in 2019 which aims to reduce travel time of Balikpapan - Samarindaand to encourage the further development of CPO, coal, oil & gas and agriculture industrial areas. Currently, the share price has rebounded significantly by 19% which was still traded below its 5 years average PER – 1 std dev of 10.12x. Hence, we kept our BUY rating since our fair value offer a significant upside potential of 98%.

 

Balikpapan – Samarinda toll road project, a pioneer of Trans Kalimantan toll road

On 14-15 November 2018, we visited to Balikpapan – Samarinda toll road project, East Kalimantanwith a total length of 62.8 km which is divided into section 2 Samboja-MuaraJawa (30.1 km), section 3 MuaraJawa-Palaran (17.2 km) and  section 4 Palaran-Samarinda (16.6 km).This toll road project was owned by PT Jasamarga Balikpapan Samarinda as a consortium of JasaMarga (JSMR IJ; 55% ownership), WijayaKarya (WIKA IJ; 15%), Pembangunan Perumahan (PTPP IJ; 15%) and PT Bangun Tjipta Sarana (15%). The total investment value is Rp 10 trillion, including land acquisition cost of Rp 4 trillion and the construction work value of Rp 6 trillion. WIKA is acted as main contractor while WTON will supply the needs of ready-mix and precast product with total investment value of Rp 1.3 trillion. Recently, the progress of the construction work and land acquisition reached 77% and 96%, respectively. We note that this toll road is targeted to commence operation in 2019 which aims to reduce travel time of Balikpapan - Samarinda from 3 hours – 3.5 hours to only 1 hour – 1.5 hours and also to encourage the further development of CPO, coal, oil & gas and agriculture industrial areas as well as to reduce logistic cost. We also note that the Balikpapan – Samarindatoll road is one of the national strategic projects (ProyekStrategisNasionalatau “PSN”) and a pioneer in the further development of the Trans Kalimantan toll road.

 

Secure more potential projects in 2019

Based on the discussion with the management, we foresee that WTON will secureseveral potential projects in 2019F-2020F, i.e.: MRT phase II (Bundaran HI – KampungBandan), additional precast contract for HSR project (Jakarta – Bandung), additional package of Pettarani toll road (Maros – Makassar with total length of 12 km), BORR phase II, RDMP oil refinery project and potential package of Rp 1 trillion for Trans Sumatera toll road (total length of 75 km). Hence, we foresee that those potential projects will boost WTON’s financial performance in 2019F. Hence, we forecast that the company’s 2019F revenue and net profit will grow by 18% YoYand 13% YoY to reach Rp 7.7 trillion and Rp 435 billion, respectively.

 

Keep BUY rating with TP Rp700/share

Currently, the share price has rebounded significantly by 19% from its lowest closing price of Rp 298/share (as of 1 November 2018) and traded at 7.09x PER 2019F which is still translated into a very attractive valuation, below its 5 years average PER – 1 std dev of 10.12x). Hence, we kept our BUY rating since our fair value at Rp 700/share offer a significant upside potential of 98%.

 

The Risk:1) delays in infrastructure projects; 2) rising raw material prices; 3) weakening Rupiah currency; 3) delays in production capacity expansions; 4) contingencies from being labour¿intensive; and5) increasing competition.

 

 

Financial Summary

 (Rp billion)

2016A

2017A

2018F

2019F

2020F

 Revenue

3,482

5,362

6,514

7,718

8,459

 EBITDA

544

709

826

924

1,040

 Net profit

273

337

387

435

546

 EPS (Rp)

31

39

44

50

63

 PER (x)

11.30

9.15

7.98

7.09

5.65

 BVPS (Rp)

278

307

340

376

424

 PBV (x)

1.27

1.15

1.04

0.94

0.83

 EV/EBITDA (x)

5.91

5.49

4.60

4.05

3.51

 Dividend yield (%)

2.77

3.28

3.76

4.23

5.31

RoE (%)

11.80

13.22

13.72

13.94

15.65

Source: Company data and Lotus Andalan  Research