Equity Research

Equity Detail

Wednesday, 21 Feb 2018 11:37

PT WIJAYA KARYA (PERSERO) Tbk

Roadmap to 2018

 

In 2018, WIKA has released 2018F guidance with total new contract target of Rp57.2 trillion or a 35% YoY increase.In 2017, the company managed to secure Rp42.4 trillion worth of new contract (accounting for98.2% of its target). The management is confident to achieve 2018F target from the government’s sustainable infrastructure project in dam irrigation, toll road& bridge projects located in outside Java and East Indonesia.We maintain our BUY call to the stock with target price at Rp2,450/share. 

 

2018F game plan

The management has released 2018 guidance with total order book of Rp130.9 trillion, grew by 22.7 % YoY and new contract targets to reach Rp57.2 trillion.Based on its business division, the company estimates that the majority contract will come from Infra and building (64% of total new contract target), followed by Energy & Industrial Plant (15.7%), Industry division to contribute 12.6% and property division accounted for 7.4%.  In 2017, 58% of the projects came from private sector, and the rest came from SOE and government (24% and 18%, respectively).

 

An Aggressive revenues and net profit target

The target order book translate into revenue target of Rp39.4 trillion or a strong 53% increase (vs 2017 target: Rp25.7 trillion).  We think this revenue target looks aggressive as its account for 123.8% above our revenue forecast. However, the company is optimistic that it is achievable backed by government’s continuing infrastructure project in dam irrigation, toll road & bridge projects located in outside Java and East Indonesia. At the bottom line, the management announced the total net profit of Rp1.96 trillion or grew by 26% YoY from its 2017 target and as the result, the company’s 2018 NPM target is 4.9%.

 

2018 capex target to reach Rp12 trillion

 

The management has allocated Rp12 trillion which will be spent for capital injection of Rp7 trillion (58.7%), business development of Rp4.4 trillion (36.3%) and acquiring new fixed asset of Rp608 million (5%). In January 2018, WIKA has successfully issued global bonds called Komodo Bonds with total proceed of Rp5.4 trillion which will be used for refinancing (Rp1.7 trillion), working capital (Rp1.6trillion), capex (Rp1.2 trillion) and HSR funding (Rp900 billion).

 

MaintainBUY rating with adjustment ofTP toRp2,450 per share

We fully attribute the company’s strong performance of 2017 order book to reflect in 2018F projections. WIKA will continue to benefit from the government's continuing infrastructure project in 2018 such as toll road (mainly in outside Java), dam irrigation and EPC of power plant & mill. Therefore, we adjust our forecast to reflect the company's revised guidance and maintain our BUY call to the stock withnew adjustment of TP at Rp2,450/sharerepresents a FY18F PER target of 9.24x and FY18F EV/EBITDA target of 3.99x and offers24.3% potential upside.  Based on yesterday’s closing price, WIKA was trading at a valuation of9.35x PER 2018F and 6.04x EV/EBITDA 2018F. 

 

 

 

Financial Summary

 

 

 

 

 

(Rp billion)

2015A

2016A

2017F

2018F

2019F

Revenue

13,620

15,669

24,596

39,229

42,350

EBITDA

1,786

2,311

3,130

4,521

4,733

Net profit

625

1,012

1,200

1,855

1,893

EPS(Rp)

102

142

135

209

213

PER(x)

23.41

16.79

14.45

9.35

9.16

BVPS(Rp)

711

1,590

1,387

1,562

1,723

PBV(x)

3.35

1.50

1.41

1.25

1.13

EV/EBITDA(x)

8.73

6.26

7.92

6.04

5.32

Dividend yield(%)

1.07

1.49

1.73

2.67

2.73

RoAE%)

15.13

12.87

10.14

14.19

13.00

Source:CompanydataandLotusAndalanResearch