PTPP
Contact our analyst Revita
36% upside. BUY
5th July 2019
Price Rp2120
Target price Rp2880
5th July 2019
Price Rp2120
Target price Rp2880
Target 16% new contract growth
Maintain margin growth
Valuation: 36% upside
- As of May 2019, PTPP has booked total new contracts of IDR. 11.3 trillion which is 22% of their total annual target at IDR. 50.3 trillion.
- Major contract mostly come from EPC and toll road projects which are RDMP RU V Balikpapan phase II (Rp3 trillion) and Indrapura toll road projects (Rp3 trillion).
- PTPP also still has major carry over projects including BORR (Rp1 trillion), Patimban toll road (Rp1.7 trillion), MNP (Rp2.5 trillion), and Kulonprogo airport (Rp5.8 trillion). During the last 5 years, PTPP’s new contract has grown 21% CAGR (2014-2018).
- PTPP plans to sell part of its ownership in three concessions, the Pandaan – Malang toll road in East Java (35%), Kualatanjung port (15%) and the Kualanamu Tebing toll road (15%) in North Sumatra.
- PTPP expects to raise around IDR. 500 billion in fresh funds from the share sales. PTPP also plans to issue local bonds up to IDR. 1.5 trillion as an alternative funding for this year.
Maintain margin growth
- During the last 5 years (2014A-2018A), PTPP was able to improve the net profit margin, despite already having an average NPM better than its peers (WIKA Group) under same holding structure “Perumahan dan Pengemabangan Kawasan”.
- PTPP average NPM is 5.7% while WIKA is 5.3%.
- We estimate NPM during 2019-2020 will be 5.28%
Valuation: 36% upside
- Based on DCF, we have a target price within one year of IDR. 2880/share or trading at 8.7x PER. With 36% upside from our valuation, we recommend, BUY.
