JSMR
Contact our analyst Eka
44% potential Upside, BUY
30th May 2024
Price Rp 4860
Target price Rp7000
30th May 2024
Price Rp 4860
Target price Rp7000
More Tariff Adjustment
Maintained growth in profit
Valuation: TP 7,000, Maintain BUY
- JSMR's toll road revenue maintained double-digit growth of 29.9% during Q1 2024, reaching IDR 3.92 trillion. This growth was driven by tariff adjustments for four additional toll roads, higher traffic volume transactions, and the reconsolidation of three Trans Java toll roads (Semarang–Batang toll road, Solo–Ngawi toll road, and Ngawi–Kertosono–Kediri toll road) in Q1 2024.
- In terms of traffic volume transactions, subsidiary toll road transaction volumes rose by 5.7% YoY, while parent-level transaction volumes declined by -0.5% YoY.
- After adjusting tariffs for four toll roads in Q1 2024, JSMR also adjusted tariffs on the Bali Mandara toll road and the Gempol–Pandaan toll road in April 2024. JSMR also plans further tariff adjustments for the Surabaya–Mojokerto toll road, Jakarta–Tangerang toll road, and Cawang–Pluit toll road in Q2 2024.
- We expect traffic volume transactions in Q2 2024 to grow higher due to the long weekend and the Eid holiday. Based on sustained volume increases and more tariff adjustments, our target for JSMR's toll and operating revenues is IDR 18.26 trillion in 2024F.
Maintained growth in profit
- JSMR’s net profit grew by 17.8% YoY to IDR 585.9 billion in Q1 2024, in line with the implementation of tariff adjustments and the re-consolidation of the Semarang–Batang, Solo–Ngawi, and Ngawi–Kertosono toll roads.
- Meanwhile the net profit margin (NPM) declined to 13.9% in Q1 2024 due to higher financial costs, which increased by 27.3% to IDR 1.02 trillion, and higher general and administrative (GA) expenses, which increased by 27.6%.
- In light of the higher BI 7-Day Reverse Repo Rate in April 2024, JSMR will manage the weighted average cost of debt (WACD) to stay below 7.5%. As of March 2024, JSMR's WACD was 6.67%. JSMR's fixed-rate and floating-rate composition was 45% and 55%, respectively, and has remained stable over the last three years, with the floating rate gradually decreasing year by year.
Valuation: TP 7,000, Maintain BUY
- Our target share price for JSMR stands at IDR 7,000, resulting in a projected 2024F price-to-earnings (PE) ratio of 7.5x. This offers investors a potential return of 44%. Considering these factors, we maintain our recommendation to BUY JSMR shares.
