JAKARTA (TheInsiderStories) - PT Wijaya Karya Tbk (WIKA, Rp3.270, BUY, TP Rp3.000) and PT Pembangunan Perumahan Tbk (PTPP, Rp4.560, BUY, TP Rp4,300) already started to have a new project, and position the approaching PT Waskita Tbk (WSKT, Rp2.770, BUY, TP Rp2,700), which already meet the target 2016FY them.
Total new order book throughout the 7M16 reached Rp91 trillion (+ 107% YoY), but several giant projects (such as the LRT and High Speed Railways) has not been signed. Meanwhile, the Lebaran holiday period has held ministerial budget disbursement.
Jaw-dropping numbers from WSKT. Aggressiveness WSKT take over the highway project has reaped results and is able to boost new contracts in the period 7M16 WSKT to Rp46 trillion (+ 330% YoY), beating forecasts 2016FY Rp40 trillion.
The main contract will be obtained in the near future LRT Palembang (Rp11 trillion) and several highway projects (~ Rp18 trillion to Rp19 trillion). Completion of highway projects faster also reflected in the achievement of a solid 1H16 earnings Rp8 trillion (108% YoY) and net profit of Rp578 billion (+ 237% YoY).
“We predict a continued positive catalysts will come from the IPO Waskita Precast Concrete Ltd (WSBP) and the divestment of PT Waskita Toll Road,” Mandiri Sekuritas said in its note.
Rising contract signings by WIKA and PTPP. Signing the contract several toll road projects (eg Balikpapan-Samarinda and Pandaan-Malang) also have a positive impact for WIKA and PTPP (both companies have a minority portion of the project).
WIKA also gets a contract ferronickel plant in East Halmahera worth around Rp3 trillion, and make the achievement of a new contract 7M16 be 22.7 trillion (+ 100% YoY). With the signing of the contract in the near future, namely High Speed Railway Project Phase I worth Rp17 trillion, we believe WIKA will be able to achieve the target 2016FY Rp46 trillion (+ 82% YoY).
On the other hand, PT Adhi Karya Tbk (ADHI, Rp2.780, NEUTRAL, TP Rp2.800) still show weak numbers of new contracts in 7M16 with the realization of Rp6.6 trillion (26% of the target 2016FY) due to delays in the signing of the Light Rail project transit (LRT) Jabodetabek.
By Bob Setiadi, Research Mandiri Sekuritas
PT Wijaya Karya Tbk: Below-than-expected 1H16 result (WIKA, Rp3.270, Buy, TP Rp3.000)
WIKA posted a net profit improvement in 2Q16 become Rp184 billion (+ 33% YoY, + 157% QoQ). Nonetheless, the performance reflects the 1H16 net profit of Rp256 billion (+ 28% YoY), or 35% reflecting our year forecast and 33% of the consensus forecast.
Because WIKA had a mean portion 1H net profit by 42% in the last 3 years, so that the performance of listed companies is now under our prediction that we believe is the impact of lower revenue growth than prediski (1H16: Rp 6 trillion, + 26% YoY).
While we remain on the view that the HSR project may provide additional impetus for WIKA revenue, we are still reviewing the company’s performance predictions and recommendations for performance below forecast (underperforming) in 1H16.
Currently, the share price in the market WIKA already above our TP Rp2.600 while currently the issuer’s shares are traded on the valuation ratio of share price as net income (PE ratio) of 27x FY16F and FY17F by 22x. (Bob Setiadi / Research Mandiri Sekuritas)
Continued gov’t infra commitment in development.
Starting in 2017, the government plans to allocate at least 15% of the General Fund Transfer (DTU), worth Rp72,5 trillion in the draft budget 2017. We assess that the new policy is the government’s effort to provide more flexibility for local governments to disburse its budget.
On the other hand, we consider the huge decline in the state capital participation (PMN) caused by the SOE Ministry believes capital structure is sufficient to sustain capital spending in the future. We also saw a slight increase in the budget of the Ministry of Public Works be Rp102,9 trillion (+ 8.7% YoY).
Meanwhile, the Ministry of Transport has increased a larger budget that becomes Rp44,9 trillion (+ 12.5% YoY), which we believe to provider payment two projects Light Rail Transit (LRT) in Jakarta and Palembang. Overall, the total budget of the infrastructure can be increased to Rp346,6 trillion (+ 9% YoY)
By Hadiyansyah/Analis Teknikal-Riset Ritel Mandiri Sekuritas
WIKA Bullish 3,000 - 3,300
PTPP Bullish 4,200 - 4,650
WSKT Bearish 2,700 - 2,800
ADHI Bullish 2,700 - 2,800 *) Short term period
(*)