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ADHI

Contact our analyst Revita
Significant upside, Buy
20th March 2023
Current price Rp 404
Target price Rp810
Targetting 10% growth of new contracts
In 2022, ADHI new contracts amounted to IDR 23.7 trillion, up by 56% YoY. Up to Feb 2023, new contracts are IDR 4,3 trillion or an increase of 35% YoY and consist of engineering and construction 88%, property 6% and others 6%. ADHI has 3 backbone toll projects such as the Sigli-Banda Aceh toll road which has achieved progress of 95%, Jogja-Solo toll road with 2 packages, package 1.1 has achieved progress of almost 50% and package 2.2 which consists of land acquisition. The Jogja-Bawen toll road section 1 has achieved progress of 25% and section 6 is in site review. In addition to the large toll road projects, ADHI is also completing other toll projects, Serang-Panimbang, Semarang-Demak and Probolinggo-Banyuwangi. In IKN projects, ADHI has obtained 7 IKN projects out of 30 IKN projects tendered with a total value of IDR 2.6 trillion. In addition, ADHI is also involved in railway projects, including LRT Jabodebek, where progress has reached 96.1% with a target to operate in July 2023. ADHI is also involved in a joint operation project with Shimizu for the construction of MRT phase 2A CP201 (Bundaran HI - Harmoni) and MRT phase 2A CP202 (Harmoni- Mangga Besar) where ADHI's share is 35%.  ADHI also has a collaborative railway construction contract with PTPP in the Philippines with a 51% share. Going forward, ADHI will also focus on projects related to modular construction and ESG. We estimate ADHI’s new contract growth this year will be 10%, and there will be a focus on completion of projects already  received including IKN projects . We estimate the total order book for 2023 will reach IDR 67 trillion or up by 16% yoy.

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Double digit profit growth
In 2022FY, ADHI posted revenue of IDR 13.55 trillion, up by 18% YoY, while net profit increased by 47% YoY to IDR 81 billion. In 2022, ADHI's Cost of revenue increased by 20% YoY compared to an increase of 8% YoY in 2021. This is due to the rising price of construction materials such as iron as well as the rising price of fuel.  However, with efficiency in operating expenses, we believe the influence of rising prices can be successfully offset this year.  We expect ADHI's profit within the next 2 years will grow at a CAGR of 41% compared to 2022

Valuation: significant upside
We revised our target price of IDR 810/share which is equal to a PER of 17x. With significant upside potential, our recommendation is maintained as BUY.
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Previously
ADHI Oct2022
​ADHI May2022
​ADHI Jun2021
​ADHI Jun2020
PT. Binaartha Sekuritas

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