JSMR
Contact our analyst Eka
40% potential return, BUY
8th November 2018
Price Rp 5,200
Target price Rp7,260
8th November 2018
Price Rp 5,200
Target price Rp7,260
Subsidiary level increase
- As of 9M2019, toll revenue increased 11.6% to IDR 7.96 trillion from IDR 7.130 trillion. The Parent level contributed 82% of toll revenue or IDR 6.07 trillion. Meanwhile toll revenue at the subsidiary level increased 41.4% yoy to IDR 1.29 trillion from IDR 913 billion in 9M2018.
- The contribution of the subsidiaries to toll revenue increased from 14% in 9M2018 to 18% in 9M2019. If JSMR’s deconsolidated subsidiaries (through the RDPT and DINFRA schemes) are also included, the contribution of the subsidiaries to toll revenue increased to 33% or IDR 3.04 trillion.
- Higher toll road revenue at the Subsidiary level came from new toll road operations and the connection of new toll reads to existing ones.
- As of 9M2019, toll revenue from Semarang, Surabaya – Mojokerto, Surabaya – Gempol, and Gempol – Pandaan toll roads grew +31.8%, +52.5%, +29.8% and +53.3% respectively, because of the increased connectivity of the Trans Java toll roads.
- JSMR’s EBITDA increased with the higher toll revenue.
- While operating income fell slightly-0.7% YoY to IDR 4.18 billion in 9M2019 because of the gain on divestment in 2018.
- EBITDA grew +16.9% YoY to IDR 5.00 trillion from IDR 4.28 billion in 9M2018, and the EBITDA margin improved to 62.9% from 60.1% in 1H2018.
- We are expecting a higher EBITDA margin in 2020 as direct costs continue to improve and from increasing toll revenue as Jakarta – Cikampek elevated road starts to operate in January, 2020.
- We upgrade our one year target price for JSMR to IDR. 7,260, offering investors a potential return of 40%. This would mean the stock trading at 19.7x 2020F PE. We recommend BUY
