JSMR Jan2024

JSMR

Contact our analyst Eka

32% potential Upside, BUY
8th January 2024
Price Rp 4690
Target price Rp6200

Foreseeing robust growth in toll road revenue

JSMR experienced a +5.8% increase in toll road revenue during 9M2023 due to tariff adjustments for eight additional toll roads in the second half. Subsidiary toll road transaction volumes rose by +15.0% YoY, while parent-level transaction volumes grew by +4.3% YoY.
As of 9M2023, JSMR's consolidated toll and operating revenue reached IDR 11 trillion, reflecting a YoY growth of +7.7%. In 3Q2023, revenue growth continued with a YoY increase of +13% or +12.0% quarter-on-quarter (QoQ), reaching IDR 4.02 trillion.
Concerning capital expenditure (capex), JSMR has allocated IDR 8 trillion – 10 trillion for 2023. For 9M2023, capex expenditure stood at IDR 3.9 trillion.
JSMR's new projects, including Jakarta – Cikampek II South, Jogja – Bawen, Jogja – Solo, Probolinggo – Banyuwangi (I-III), and Akses Patimban, will enhance connectivity to JSMR's existing portfolio, expected to positively impact revenue in the future.
Based on sustained volume increases and tariff adjustments, our target for JSMR's toll and operating revenues is IDR 17.2 trillion in 2024F.

Unexpected performance in 3Q2023

During 3Q2023, JSMR achieved an unexpected bottom-line profit growth of +1678% YoY or +641% QoQ, totaling IDR 4.8 billion due to an asset revaluation to comply with Financial Accounting Standard (PSAK) 22 concerning Business Combinations. This was in connection with the re-consolidation of PT JSB (Semarang – Batang), PT JSN (Solo – Ngawi), and PT JNK (Ngawi Kertosono) through the acquisition of PT Lintas Marga Jawa (LMJ) shares by PT Jasamarga Transjawa Tol (JTT) in July 2023. JSMR booked IDR 4.1 trillion as a gain on asset revaluation.
Core profit (excluding asset revaluation) grew +167% YoY to IDR 725.8 billion in 3Q2023 and IDR 1.87 trillion or 86% YoY in 9M2023. As a result, the NPM grew to 17% in 9M2023 from last year’s 9.9%.
For 2024, JSMR targets revenue and EBITDA growth of 15% - 17%, driven by higher traffic in line with new interconnections and tariff adjustments.
The divestment of JTT continues in 2024 after JSMR has fulfilled the requirement to re-consolidate the three toll roads. The divestment will be completed in 1H2024.

Valuation: TP 6,200, Maintain BUY

Our target share price for JSMR stands at IDR 6,200, resulting in a projected 2024F price-to-earnings (PE) ratio of 6.7x. This offers investors a potential return of 32%. Considering these factors, we maintain our recommendation to BUY JSMR shares.