JSMR Jun2020

JSMR

Contact our analyst Eka

24% potential return, BUY
23 June 2020
Price Rp 4200
Target price Rp5,200

June growth Improvement

In 1Q020, JSMR’s toll road revenues, both mature and subsidiaries, declined by about 45%, due to the covid-19 outbreak and physical distancing which is now entering a re opening period. The March - April 2020 period saw a further deterioration to -50%.
Mature toll road revenue has dropped 35% for weekends, and 25% for weekdays. While at the subsidiary level toll road revenue has declined 38% for weekends and 30% for weekdays. But there has been an improvement in June weeks 1 and 2 compared to the March – May 2020 period.
As the re opening period will allow for some economic activities, we expect the rate of decline of JSMR’s toll road revenues will reduce gradually.

1Q2020FY: Better than expected

JSMR recorded IDR 2.73 trillion from toll and other operating revenue, up +8.6% yoy in 1Q2020. The contribution of toll revenue at the subsidiary level was 31.1% or IDR 923 billion in 1Q2020 from IDR 488 in 1Q2019, an increase of 29.7% YoY. The higher toll revenue at the subsidiary level is the result of additional new toll roads.
EBITDA grew +4.8% yoy to IDR 1.90 trillion, which resulted in a decrease in the EBITDA margin from 71.8% in 1Q2019 to 69.3% in 1Q2020.
Net income grew +0.53% yoy to IDR 587.9 billion.
We are upgrading our 2020 forecasts as the 1Q2020 result was above our expectations. We now expect 2020F net income of IDR 2.21 trillion, which would mean growth of +0.2% YoY.

Valuation: TP 5,000, Maintain BUY

We update our one year target price for JSMR to IDR 5,200, offering investors a potential return of 24%. This would also translate into 2021F PE of 15.6x. We recommend BUY.