ELSA

Contact our analyst Revita

Back on track, BUY
​5th December 2017
Current price Rp362
Target price Rp570

Back on Track

• As of 9M17, ELSA was able to grow its revenue by 32% yoy mostly supported by the downstream segment.
• Since 2H17, ELSA‘s work volume has increased due to some significant projects in seismic and drilling.
• ELSA's Regent is fully utilized this year,
• In addition ELSA has a 3D land seismic project in Klamosossa, West​ Papua in 2017 - 2018 which is 60% completes up to November 2017.
• Going forward, ELSA is expecting contracts for activities in Block Mahakam will be reactivated, helping to generate more revenue that gives a higher margin in 2018.

Improving margin

• With significant contract volume from seismic, drilling, and operation maintenance projects, margins have improved QoQ. With the transfer of expired blocks in 2018 to Pertamina and more seismic contract volume in future, we estimate net profit margin 2017-2018F will rise to 4.5% and 8.3% respectively.

Valuation: 57% upside

• Based on DCF, with WACC 9.3%, we have a one year target price​ for ELSA of IDR. 570/shares or trading at 10.7x PER.
• ​With 57% upside, Our recommendation is BUY

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