Company Report | Oct 4, 2018
3Q18
’
s Expectancy of Solid Core Business
Performance
We estimate AKRA to post the net profit of IDR905 billion (+446% q-q) and the
net profit margin of 14.6% in 3Q18 (vs. the net profit margin of 4.4% in 2Q18). Its buoyant net profit was underpinned by the proceeds from the remaining payment
of its subsidiary’ assets sold for IDR787 billion on August 31st, 2018. The
divestment in its underperforming subsidiary is a positive strategy for business efficiencies and development of Java Integrated Industrial and Port Estate (JIIPE).
Petroleum, AKRA’s Backbone in 3Q18
We are optimistic that AKRA was capable of posting the growth of 15% q-q and
47% y-y to IDR6,19 trillion in 3Q18. The growth was driven by factors as follows :
1) The increment of 12% y-y in petroleum sales volumes, stemming from the
increment in demands by mining and coal shipping companies; 2) The
surge of 44% y-y to IDR8,800 in ASP, underlined by the trend of higher WTI
crude price of USD73.25 per barrel; 3) The government policy on the hike of IDR400-IDR600 per liter in AKRA’s refined petroleum products prices.
Expecting JIIPE’s to Advance
We estimate JIIPE’s performance to remain flat until 9M18 and its sales to advance to reach 50 hectares in 2019F (vs. 18 hectares in 2018F). Freeport’s smelter project as the occupant of JIIPE is expected to allure other companies to invest in JIIPE.
Buy Recommendation, Target Price of IDR4,650
An estimate forward P/E of 13.1x (1.5 SD higher than the last one year average). The target price implies a 2018E P/E of 15.2x. Now, AKRA is traded at a 2018E P/E of 12.9x. Investment’s risks: 1) JIIPE’s below estimate sales ; 2) Unaccomplished target of launching new petrol stations (SPBU).
Firman Hidayat
+62 21 797 6202, ext:170Source: Company Data, NHKS Research
Dividend per Share & Payout Ratio | 2008 - 6M18
Source: Company Data, NHKS Research Net Profit & NPM | 2012- 2020F
Regional Distribusi Bahan Bakar Minyak | 2Q18
Source: Company Data, NHKS Research
Java Integrated Industrial and Port Estate (JIIPE) | 2018
Source: Company Data, NHKS Research
Performance Highlights
Harga Batu Bara & Minyak Mentah Dunia | 2013 - 2018
Source: Company Data, NHKS Research
Pelanggan Berdasarkan Segmen | 2Q18
2Q18 review (IDR bn)
Source: Bloomberg, NHKS research
2Q17 3Q17 4Q17 1Q18 Actual Estimate 2Q18 y 3Q18E
Global Chemical & Fuel Distributor
AKR Corporindo (AKRA) is the first private company running its business on petroleum distribution by importing its first cargo of petroleum products from Singapore on October 1st, 2005 when the Indonesian government deregulated the downstream crude sector. It expands its business networks and now has storage tanks and terminals in 15 major sea ports and river ports across Indonesia. The Downstream Oil and Gas Regulatory Agency (BPH Migas) appoints AKRA as the sole distributor of subsidized petroleum since 2018.
AKR distributes refined petroleum products from international refineries to mining industries, state-owned electricity firm (PLN),
industrial and commercial constructions, and retail sector through its SPBU. It has a long-term vision and strategy for developing
infrastructures integrating major ports in Java Island.
AKRA’s Competitiveness in Global Market
Indonesia as an archipelago nation requires a broadened coverage of refined petroleum products distribution. We are optimistic that the Indonesia-based refined petroleum products distribution industry is capable of making an advanced development in
ahead years, in light of less intense competition and high demand for refined petroleum products distributed to mining industry, power plants, industrial estates, providers of integrated one-stop sea logistics and transportation solutions, and retail sectors
through its distribution networks across Java, Sumatra, and Kalimantan.
AKRA as the biggest chemicals, particularly petroleum, distributor in Indonesia has a lower market cap. than its peers’ market cap. It has fewer peers in the global market, considering the nature of its business is unique. PT Brenntag AG, a German-based
chemicals distributor, is the market leader with the market cap. of USD9.5 billion a steep larger than AKRA’s market cap. of USD1.0 billion. However, its net profit margin of 8.6% is more efficient than Benntag AG’s net profit margin of 3.2%. Another to a more efficient net profit margin, its ROE of 22.2% is the highest among its peers.
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
10/04/2018 Buy 4,650 (Dec 2019) 3,970 5,403 +17.1% -13%
Source: Bloomberg, NHKS research
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
Summary of Financials
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