Please consider the rating criteria & important disclaimer
highest revenue figures as of 1Q14
. 2Q17 and 3Q17 soaring new contracts
of IDR13.5 trillion and IDR11.7 trillion were the potent drivers for 4Q17. In
contrast to the soaring figures of 4Q17 revenue, 4Q17 net profit moved
little by IDR463 billion (+2.2%) attributable to
escalating interest expense
of IDR415 billion.
Secured Growth of New Contracts
PTPP enjoyed 2017 new contracts accomplishment worth IDR40.9 trillion
(+25.5%)
higher than the growth of 20.4% in 2016 new contracts
accomplishment
. It sets the target of 2018 new contracts worth IDR49
trillion (+19.8%). We oversee that its determined growth of around 20% is
realistic in light of
its success in securing 1Q18 new contracts worth IDR9.5
trillion surging 42.4% y
-
y.
Setting A Way More Effective Strategy
PTPP sets strategies
to receive no turnkey projects and eye only at
contracts worth higher than IDR300 billion
. We analyze that the strategies
are effectively solves the cash flow issue: common project headwind
looming stated
-
owned constructors. In fact, these strategies are key
takeaways for
taking hold higher rhythm of margin growth
.
Target Price IDR3,850
A Glance at PTPP
PTPP is one of state
-
owned enterprises (BUMN) whose expertise is in a construction
service sector. Based on contracts value it receives, PTPP is the second
-
biggest stated
-owned constructor after WSKT. Virtually 55.5% contracts it handles are projects -owned
by BUMN, the remaining 37.5% are private projects, and 7.0% is the Indonesian’s
government projects.
PTPP is well
-
acknowledged for its expertise in building and residential constructions.
Along with the massive infrastructure construction in Indonesia, it furthers to diversifies
its construction contracts into toll roads, power plants, airports, and other
infrastructures. It categorizes its revenues segments as follows: construction, EPC
(engineering, procurement
-
construction), property & realty, energy, precast, and
equipment rental.
Indonesia–based Construction Sector in ASEAN
Paradoxical backdrop of vast economic development yet lack of infrastructure progress
in ASEAN is logical takeaway for the flourishing growth of construction sector in ASEAN.
Indonesia–based construction companies are notable for having larger a vast amount of
asset than its ASEAN’s peers have. Of note, Indonesia and Vietnam–based construction
companies averagely are higher
-
profit growth makers than are its peers.
ASEAN Constructor
Source: Bloomberg, NHKS research
Company
Market Cap
(USD mn)
Total Asset
(USD mn)
Net Profit
Growth
Net Profit
Margin
Debt to
Equity
ROE
P/E
P/BV
PTPP
1,265
3,075
42%
6.8%
62%
11.6%
9.7x
1.1x
WSKT
2,465
7,205
127%
8.6%
188%
31.0%
6.0x
2.4x
WIKA
1,111
3,362
14%
4.6%
62%
8.2%
12.8x
1.0x
ADHI
553
2,085
64%
3.4%
142%
9.1%
14.8x
1.3x
Thailand
CH. KARNCHANG PUBLIC
1,309
2,434
-
9.6%
5.0%
164.6%
8.1%
22.6x
1.7x
UNIQUE ENGINEERING
444
846
0.8%
7.1%
107.8%
12.7%
15.5x
1.9x
Philippine
MEGAWIDE CONSTRUCTION
884
1,030
12.7%
8.8%
158.9%
8.7%
40.0x
3.1x
HOUSE OF INVESTMENTS
81
679
-
18.9%
1.6%
49.7%
6.2%
6.9x
0.4x
Vietnam
COTECCONS CONSTR.
543
699
16.2%
6.1%
0.0%
23.2%
7.7x
1.7x
HOA BINH CONSTRUCTION
270
616
51.5%
5.4%
187.0%
44.5%
7.1x
2.7x
Malaysia
GAMUDA BHD
3,268
3,683
8.6%
18.7%
66.8%
9.3%
18.3x
1.7x
IJM CORP BHD
2,583
4,721
24.4%
10.8%
55.2%
6.2%
17.4x
1.1x
New Contracts (IDR bn)
Source: Company, NHKS Research
Revenue (IDR bn)
Source: Company, NHKS Research
Revenue Breakdown
Source: Company, NHKS Research
Net Profit (IDR bn)
Source: Company, NHKS Research
Margin Ratios
Source: Company, NHKS Research
Total Debt (IDR bn)
Multiple Valuation
Forward P/E band
| Last 1 year
Source: NHKS research
Dynamic Forward P/E band
| Last 1 year
Source: NHKS research
Rating and target price update
Target Price Revision
Date
Rating
Target Price
Last Price
Consensus
vs Last Price
vs Consensus
04/13/2017
Buy
4,960 (Dec 2017)
3,380
4,846
+46.7%
+2.4%
09/01/2017
Buy
4,060 (Dec 2018)
2,770
4,374
+46.6%
-
7.2%
11/15/2017
Buy
4,770 (Dec 2018)
2,750
4,131
+73.5%
+15.5%
1/23/2018
Buy
4,770 (Dec 2018)
2,960
4,002
+61.1%
+19.2%
4/12/2018
Buy
3,850 (Dec 2018)
2,770
3,971
+39.0%
-
3.1%
Source: NHKS research, Bloomberg
Closing and Target Price
Source: NHKS research
Analyst Coverage Rating
Source: Bloomberg
NH Korindo Sekuritas Indonesia (NHKS) stock ratings
1.
Period: End of year target price
2.
Rating system based on a stock’s absolute return from the date of publication
Buy
: Greater than +15%
Hold
:
-
15% to +15%
Summary of Financials
DISCLAIMER
This report and any electronic access hereto are restricted and intended only for the clients and related entity of PT NH Korindo Sekuritas Indonesia. This report is only for information and recipient use. It is not reproduced, copied, or made available for others. Under no circumstances is it considered as a selling offer or solicitation of securities buying. Any recommendation contained herein may not suitable for all investors. Although the information here is obtained from reliable sources, it accuracy and completeness cannot be guaranteed. PT NH Korindo Sekuritas Indonesia, its affiliated companies, respective employees, and agents disclaim any responsibility and liability for claims, proceedings, action, losses, expenses, damages, or costs filed against or suffered by any person as a result of acting pursuant to the contents hereof. Neither is PT NH Korindo Sekuritas Indonesia, its affiliated companies, employees, nor agents liable for errors, omissions, misstatements, negligence, inaccuracy arising herefrom.
In IDR bn 2016/12A 2017/12A 2018/12E 2019/12E EBITDA/As s ets 7.9% 7.1% 8.5% 8.6%
Revenue 16,459 21,502 25,526 30,785 Ca s h Di vi dend (IDR bn) 307 437 530 681
Growth (% y/y) 15.8% 30.6% 18.7% 20.6% Di vi dend Yi el d (%) 1.3% 2.7% 3.1% 4.0% Cos t of Revenue (14,002) (18,251) (21,632) (25,934) Pa yout Ra ti o (%) 30% 30% 30% 30%
Gross Profit 2,457 3,251 3,894 4,851 DER 58% 62% 61% 60%
Gross Margin 14.9% 15.1% 15.3% 15.8% Net Gea ri ng 176% 188% 160% 138%
Opera ti ng Expens es (571) (903) (1,072) (1,405) LT Debt to Equi ty 29% 38% 37% 37%
EBIT 1,886 2,348 2,822 3,446 Ca pi ta l i za ti on Ra ti o 37% 38% 38% 37%
EBIT Margin 11.5% 10.9% 11.1% 11.2% Equi ty Ra ti o 35% 34% 35% 33%
Depreci a ti on 96 238 880 844 Debt Ra ti o 20% 21% 21% 20%
EBITDA 1,983 2,587 3,701 4,289 Fi na nci a l Levera ge 316% 292% 290% 297%
