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ADHI

Contact our analyst Revita
Significat upside, Buy
3rd June 2021
Current price Rp 1025
Target price Rp1930
Targetting IDR 25 Trillion New Contracts
ADHI is targeting new contracts in 2021 of IDR. 25 trillion which is an increase from 2020 new contracts of IDR. 19,7 trillion. As of April 2021, New contracts have reached IDR. 3,6 trillion, up IDR. 1,4 trillion from March. As of 1Q21, ADHI's new contracts come from construction & energy (88%), property (11%), and other businesses (1%). The types of work are building projects (46%), roads and bridges (15%), and other infrastructure projects such as dam construction, airports, and EPC projects (39%).
We maintain our believe that this year will see moderate growth just like in 2020. We estimate the total order book for 2021 will reach IDR. 58,5 trillion or up 20% yoy.

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Ensuring profitability
As of 1Q21, the new contract’s are still dominated by projects from the government and SOEs that are lower risk. The breakdown is Government (60%), state-owned enterprises (25%), and private  (14 %). ADHI will implement operational efficiencies and financial strategies to improve performance in 2021. ADHI will also continue several investment projects in 2021 and strengthen the marketing of property products. From their investment projects, some can be recurring income for ADHI such as SPAM projects, water management, and waste management. For this year, ADHI continues to make cost efficiencies internally including seeking to accelerate the payment of projects such as Jabotabek LRT and Banda Aceh -  Sigli Toll Road. As of 1Q21, ADHI posted revenue of IDR. 2.1 trillion, down -31% YoY and net profit of IDR. 6.74 trillion or down -54% YoY. With an improved construction cycle in 2H21 and efficiencies, we expect net profit this year will grow if the new contract target is realized.

Valuation: Significant upside
We have a Target price of IDR.1930/share which is equal to a PER of 10x, an upgrade from previous target of IDR.1230/share. With significant upside potential, our recommendation is BUY.
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Previously
​ADHI Jun2020
PT. Binaartha Sekuritas

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