TOTL
Contact our analyst Revita
25% Upside, BUY
16th June 2023
Current price Rp328
Target price Rp410
16th June 2023
Current price Rp328
Target price Rp410
104% growth in new contracts
As of 1Q23, TOTL secured new contracts amounting to IDR 592 billion, marking a significant increase of 104% compared to the new contracts worth IDR 290 billion in 1Q22. The majority of these contracts include high-rise residential projects (26%), utilities (25%), industrial developments (20%), shopping centers (16%), office buildings (7%), and educational facilities (6%). The majority of the new contracts are concentrated in Java-Bali (85%), with the remaining 6% and 5% in other regions and Sumatra, respectively. As of May 2023, the total value of TOTL's new contracts has reached IDR 619 billion. Given the company's active participation in various project tenders, we expect it to achieve its new contract target for 2023.
Flat Growth in Construction Revenue in 1Q23
During 1Q23, TOTL reported total revenue of IDR 618.9 billion, reflecting a 4% year-on-year increase. The construction revenue stood at IDR 612.5 billion, indicating a flat growth rate of +3.4% compared to IDR 512 billion in 1Q22. Through efficient cost management, direct contracts, and lean construction techniques, TOTL has been able to maintain its profit margins and even improve year-on-year performance during 1Q23. The net profit margin (NPM) slightly increased to 4.8% in 1Q23, surpassing the 4.58% recorded in 1Q22 and even exceeding 2022FY’s 4.03%. We anticipate that the company's bottom line profit margins for 2023-2024F will average 4.9%, a slight improvement from 2022, in line with the slight increase in construction expenses, which rose by 2.3% YoY in 1Q23 primarily due to lower commodity prices compared to the previous year.
Valuation: 25% upside
We maintain our target price of IDR 410 per share, equivalent to a 10.7x PER. With a potential upside of 25%, we continue to recommend a BUY for TOTL.
As of 1Q23, TOTL secured new contracts amounting to IDR 592 billion, marking a significant increase of 104% compared to the new contracts worth IDR 290 billion in 1Q22. The majority of these contracts include high-rise residential projects (26%), utilities (25%), industrial developments (20%), shopping centers (16%), office buildings (7%), and educational facilities (6%). The majority of the new contracts are concentrated in Java-Bali (85%), with the remaining 6% and 5% in other regions and Sumatra, respectively. As of May 2023, the total value of TOTL's new contracts has reached IDR 619 billion. Given the company's active participation in various project tenders, we expect it to achieve its new contract target for 2023.
Flat Growth in Construction Revenue in 1Q23
During 1Q23, TOTL reported total revenue of IDR 618.9 billion, reflecting a 4% year-on-year increase. The construction revenue stood at IDR 612.5 billion, indicating a flat growth rate of +3.4% compared to IDR 512 billion in 1Q22. Through efficient cost management, direct contracts, and lean construction techniques, TOTL has been able to maintain its profit margins and even improve year-on-year performance during 1Q23. The net profit margin (NPM) slightly increased to 4.8% in 1Q23, surpassing the 4.58% recorded in 1Q22 and even exceeding 2022FY’s 4.03%. We anticipate that the company's bottom line profit margins for 2023-2024F will average 4.9%, a slight improvement from 2022, in line with the slight increase in construction expenses, which rose by 2.3% YoY in 1Q23 primarily due to lower commodity prices compared to the previous year.
Valuation: 25% upside
We maintain our target price of IDR 410 per share, equivalent to a 10.7x PER. With a potential upside of 25%, we continue to recommend a BUY for TOTL.
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