PTPP
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62% upside. Buy
15 March 2022
Price Rp1015
Target price Rp1645
15 March 2022
Price Rp1015
Target price Rp1645
Targeting 45% new contract growth
In 2021, PTPP booked total new contracts of IDR 21,34 trillion which is down 4% from 2020 new contracts of IDR 22,26 trillion. New contracts in 2021 based on business are: Construction 65%, EPC 2%, overseas 0% and subsidiaries 33%. Based on ownership, 2021 new contracts come from SOEs 55%, Government 38%, and private 7%. To maximize the acquisition of new contracts in 2022, PTPP will focus on strategic projects owned by SOEs and Government, PTPP is targeting the share of new contracts from SOEs at 49% and Government 44%. In 2022, PT PP has budgeted Capex of IDR 4.375 trillion, an increase of 37.19% from 2021. Most of the capital expenditure will be used for subsidiaries’ projects. We are conservative in PTPP’s 2022 contract target but we believe PTPP’s revenue will be higher than last year supported by carry over contracts and the increase in new contracts. We estimate CAGR revenue growth during 2020A – 2022A of 12%.
Maintaining debt to equity at 1.45x
In 2021, PTPP debt / equity ratio was at 1.20x. Most of the new debt came from short term and long term bank loans with credit facilities especially for PTPP and its subsidiaries. We estimate PTPP interest bearing debt / equity for 2022-2023 will be maintained at an average 1.45x
Valuation: 62% upside
We have upgraded our target price within one year to IDR 1645/share or trading at 23x PER. With 62% upside, we give our recommendation, BUY.
In 2021, PTPP booked total new contracts of IDR 21,34 trillion which is down 4% from 2020 new contracts of IDR 22,26 trillion. New contracts in 2021 based on business are: Construction 65%, EPC 2%, overseas 0% and subsidiaries 33%. Based on ownership, 2021 new contracts come from SOEs 55%, Government 38%, and private 7%. To maximize the acquisition of new contracts in 2022, PTPP will focus on strategic projects owned by SOEs and Government, PTPP is targeting the share of new contracts from SOEs at 49% and Government 44%. In 2022, PT PP has budgeted Capex of IDR 4.375 trillion, an increase of 37.19% from 2021. Most of the capital expenditure will be used for subsidiaries’ projects. We are conservative in PTPP’s 2022 contract target but we believe PTPP’s revenue will be higher than last year supported by carry over contracts and the increase in new contracts. We estimate CAGR revenue growth during 2020A – 2022A of 12%.
Maintaining debt to equity at 1.45x
In 2021, PTPP debt / equity ratio was at 1.20x. Most of the new debt came from short term and long term bank loans with credit facilities especially for PTPP and its subsidiaries. We estimate PTPP interest bearing debt / equity for 2022-2023 will be maintained at an average 1.45x
Valuation: 62% upside
We have upgraded our target price within one year to IDR 1645/share or trading at 23x PER. With 62% upside, we give our recommendation, BUY.
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