JSMR Jul2023

JSMR

Contact our analyst Eka

42% potential Upside, BUY
5th July 2023
Price Rp 3830
Target price Rp5440

Transaction volume continue to grow

JSMR's traffic or toll transaction volume has shown strong growth, increasing by +8.3% YoY in 1Q2023. Subsidiary toll road transaction volumes have increased by +12.3% YoY, primarily driven by the Nusa Dua – Benoa toll road's remarkable growth of +121.3%. Additionally, the parent-level transaction volumes have grown by +7.7% YoY, with significant growth from the Cawang – Cengkareng toll road at +16.2%.
JSMR's consolidated toll and other operating revenue reached IDR 3.38 trillion, a +6% YoY growth in 1Q2023. JSMR's subsidiaries contributed to this growth with a +20% YoY increase to IDR 706.2 billion, while the parent company achieved +14.4% YoY growth to IDR 2.31 trillion.
Revenue from new toll roads has also increased from IDR 1.76 trillion in 1Q2022 to IDR 1.91 trillion in 1Q2023, representing an +8.4% YoY growth.
During the Lebaran period, JSMR achieved another record with transaction volume growth of +1.4% and record revenue of IDR 907.6 billion. With this accomplishment, we expect higher revenue for 2Q2023.
Given the continued volume increase and expected tariff adjustments, our target is for JSMR toll and other operating revenues to grow by +8.7% YoY to IDR 14.98 trillion.

1Q2023: Margin improvement

After a strong performance in 4Q2022 due to a one-off gain from the divestment of the MBZ toll road, JSMR has shown a margin improvement YoY, primarily driven by a tariff adjustment in early 2023.
JSMR's net profit for 1Q2023 grew by +26.7% YoY to IDR 497 billion, resulting in a higher net profit margin (NPM) of 14.7%.
The company's operating income increased by +2.5% YoY to IDR 1.58 trillion, aligning with higher general and administration expenses (+37% YoY), particularly in salaries and allowances, which increased by +44% YoY, leading to a slightly lower operating profit margin (OPM) of +46.8%.
JSMR's finance costs decreased by -16% YoY, positively impacting the higher NPM of 14.7% in 1Q2023.
Moreover, JSMR achieved an EBITDA of IDR 2.18 trillion in 1Q2023, which is +0.1% YoY growth. The management is targeting EBITDA growth of >10% in 2023, with an EBITDA margin range of 60%-65%.

Valuation: TP 5,440, Maintain BUY

Our target share price for JSMR is IDR 5,440, which would mean a 2024F PE of 16x, and offers investors a potential return of 42%. We maintain our recommendation to BUY.