JSMR
Contact our analyst Eka
Massive toll road development gives 27% potential upside. BUY
Slight growth in 1H2018
Maintain DER with RDPT
Valuation: TP 6,330, Upside 27% BUY
- •As of 1H2018, JSMR toll and other operating revenue grew 5.8% yoy to reach IDR 4.79 trillion from 4.53 trillion. Construction revenue grew 62% yoy to IDR 13.87 trillion from IDR 8.57 trillion from massive toll road developments.
- Construction expenses also grew 62% yoy to IDR 13.77 trillion. While toll and other operating costs were lower by 5% yoy from cost efficiencies like the full automation of toll payments.
- Net Income was stable at IDR 1.04 trillion, a slight growth of 2.9% yoy.
Maintain DER with RDPT
- As of 1H2018 JSMR’s debt to equity ratio reached 3.5X, lower compared to 2017 ‘s 4X, and bellow JSMR’s policy of 5X.
- To maintained their DER, in July 2018 JSMR undertook a new financing strategy, Limited Equity Fund ( Reksa Dana Penyertaan Terbatas / RDPT).
- The value of RDPT is IDR 3 trillion and will be issued gradually, with an Internal Rate of Return (IRR) of 10.25%.
- In the RDPT scheme, JSMR divests 20% of its ownership in PT Jasamarga Batang Semarang (JSB), PT Jasamarga Solo Ngawi (JSN), and PT Jasamarga Ngawi Kertosono Kediri (JNKK). This reduces its ownership from 60% to 40%.
- We expect the RDPT issuance will help to maintain JSMR’s DER and Interest Coverage Ratio during the current high demand for capital from massive toll road expansion.
Valuation: TP 6,330, Upside 27% BUY
- We have a one year target price for JSMR of IDR. 6,330, offering investors a potential return of 27%. This would mean the stock trading at 18x 2018F PE. We recommend BUY.
