PTPP
Contact our analyst Revita
Significant upside. BUY
28th April 2020
Price Rp605
Target price Rp1530
28th April 2020
Price Rp605
Target price Rp1530
Steady contract growth
PTPP had an new contract target of IDR. 40,3 trillion but because of the impact of the covid 19 outbreak, PTPP has reduced this by 20%. As of March 2020, PTPP has booked total new contracts of IDR.5,48 trillion which is 13,6% of their total initial annual target. Major contracts come from the EPC business, with the new contracts consisting of engineering, procurement and construction (EPC) projects of IDR. 2.5 trillion, infrastructure and building of of IDR. 2,25 trillion, and the rest from subsidiaries IDR. 730 bn. Some projects that have been temporarily put on hold including the UGM campus project and the Serang - Panimbang Toll Road Project. Based on project owner in 1Q20, PTPP new contracts come from SOE 60%, Private 23%, and Government 17%. PTPP will continue to operate construction in accordance with the PUPR health and safety standards. We are optimistic PTPP’s 2020 target is achievable since the company has historically been able to deliver on targets. The EPC business has proven to be able to quickly provide new contracts, and so we estimate that PTPP will be able to maintain their gross profit margin at 14%.
Divestment on track
PTPP plans to sell part of its ownership in three concessions, are still on target for this year. The concessions are the Multi Purpose Terminal consortium project and the supporting facilities of Kuala Tanjung Port, in Batu Bara Regency, North Sumatra (45%), Medan Kualanamu Tebing Tinggi Toll Road ( MKTT). This toll road is part of the Trans Sumatra toll road, in which PTPP has a 15% stake, and the Pandaan Malang Toll Road in East Java in which PTPP has a 35% share.
Valuation: significant upside
Based on our DCF valuation, we have a target price within one year of IDR.1530/share or trading at 7,36x PER. With significant upside from our valuation, we recommend, BUY.
PTPP had an new contract target of IDR. 40,3 trillion but because of the impact of the covid 19 outbreak, PTPP has reduced this by 20%. As of March 2020, PTPP has booked total new contracts of IDR.5,48 trillion which is 13,6% of their total initial annual target. Major contracts come from the EPC business, with the new contracts consisting of engineering, procurement and construction (EPC) projects of IDR. 2.5 trillion, infrastructure and building of of IDR. 2,25 trillion, and the rest from subsidiaries IDR. 730 bn. Some projects that have been temporarily put on hold including the UGM campus project and the Serang - Panimbang Toll Road Project. Based on project owner in 1Q20, PTPP new contracts come from SOE 60%, Private 23%, and Government 17%. PTPP will continue to operate construction in accordance with the PUPR health and safety standards. We are optimistic PTPP’s 2020 target is achievable since the company has historically been able to deliver on targets. The EPC business has proven to be able to quickly provide new contracts, and so we estimate that PTPP will be able to maintain their gross profit margin at 14%.
Divestment on track
PTPP plans to sell part of its ownership in three concessions, are still on target for this year. The concessions are the Multi Purpose Terminal consortium project and the supporting facilities of Kuala Tanjung Port, in Batu Bara Regency, North Sumatra (45%), Medan Kualanamu Tebing Tinggi Toll Road ( MKTT). This toll road is part of the Trans Sumatra toll road, in which PTPP has a 15% stake, and the Pandaan Malang Toll Road in East Java in which PTPP has a 35% share.
Valuation: significant upside
Based on our DCF valuation, we have a target price within one year of IDR.1530/share or trading at 7,36x PER. With significant upside from our valuation, we recommend, BUY.
Previously
