Contact our analyst Eka
Another upgrade. BUY
Higher Subsidiary Contribution
- JSMR recorded toll road revenues of IDR 4.74 trillion in 1H2019, +9.2% YoY from IDR 4.34 trillion in 1H2018. Toll road revenue at the parent level was IDR 3.93 trillion up slightly +3.9% YoY. Meanwhile toll road revenue at the subsidiary level increased +45% yoy from IDR 561 billion in 1H2018 to IDR 813 billion in 1H2019. The contribution of subsidiary revenue to total revenue also increased from 12.9% in 1H2018 to 17% in 1H2019.
- Higher toll road revenue at the Subsidiary level came from additional new toll road operations.
- The connectivity of new toll read with existing ones also helped to boost toll revenues in some area.
- Toll revenue on Palimanan – Kanci, Semarang, Surabaya – Mojokerto grew +19.5%, +45.7% and +55.1% respectively, from the increased Trans Java toll road connectivity in 1H2019.
- Toll revenue from Surabaya – Gempol and Gempol Pandaan also increased +33.2% and +45.7% YoY in 1H2019.
- JSMR maintained their operation costs in 1H2019 from lower salaries and allowance costs. Together with gains on divestment of Gempol – Pandaan, and the de consolidation of 3 Toll Road Subsidiaries through the DINFRA funding scheme with a total value of IDR 301.1 billon, this helped JSMR to record a better EBITDA margin and Operating margin.
- Operating income grew +15% YoY to IDR 2.76 billion in 1H2019, with Operating margin at 53% up from 50% in 1H2018.
- EBITDA grew +15.4% YoY to IDR 3.34 billion from IDR 2.98 billion in 1H2018, and EBITDA margin improvement to 64.9% from 60.5% in 1H2018.
- We are expecting JSMR’s EBITDA margin to reach 67% in 2019F as they continue to improve direct costs. Net income will grow 11.3% YoY to IDR 2.45 trillion.
- We have a one year target price for JSMR of IDR. 6,895, offering investors a potential return of 23.1%. This would mean the stock trading at 18.7x 2020F PE. We recommend BUY.