JSMR Nov2022

JSMR

Contact our analyst Eka

64% potential Upside, BUY
8th November 2022
Price Rp 3300
Target price Rp5420

Traffic back to Normal

JSMR’s traffic or toll transaction volume has now fully recovered across all toll roads. JSMR transaction volumes increased +21.3% YoY in 9M2022. Subsidiary toll road transaction volumes increased +30.2% YoY while parent level transaction volumes increased +17.8% YoY.
JSMR consolidated toll revenue reached IDR 9.32 trillion, up +22.6% YoY in 9M2022. JSMR’s subsidiaries booked +35.5% YoY growth to IDR 2.57 trillion and the parent company booked +18.3% YoY growth to IDR 6.74 trillion.
Contribution from new toll roads increased to 45.5% in 9M2022 from 40% in 9M2021.
Because of tariff adjustments and volume growth, we revise up our JSMR top line growth forecasts. We expect the higher volume of transactions will continue until the end of 2022 and JSMR toll and other operating revenues will grow +25% YoY to IDR 14.7 trillion.

3Q2022: Lower net income

Despite higher sales, JSMR had a -20.1% QoQ net income decline. But this is much better than the loss in the 3Q2021.
The lower quarterly profit was due to higher salary and allowance expenses in line with salary adjustments of +384.6% to IDR 606 billion in 3Q2022. Despite this,, JSMR’s 9M2022 net profit had double digit growth of +35% YoY to IDR 1 trillion. With the higher salary costs, Operating expenses jumped +59.4% QoQ, resulting in lower operating income -9.8% QoQ to IDR 1.25 trillion. For 9M2022, operating income also decreased -9.3% YoY to IDR 4.18 trillion.
EBITDA increased +20.2% YoY to IDR 6.46 trillion while the EBITDA margin decreased to 63.3%.
JSMR recently divestment 40% of its stake in the Jakarta – Cikampek Elevated toll road with a total transaction value of IDR 4 trillion.
With the upcoming one-off gain from Jakarta – Cikampek Elevated II, we are expecting a jump in JSMR’s net income to IDR 3.14 trillion, up +95% YoY.

Valuation: TP 5,420, Maintain BUY

Our target for JSMR share price is IDR 5,420, offering investors a potential return of 64%, we maintain our recommendation to BUY. This would translate to a 2023F PE of 15x.