WEGE
Contact our analyst Revita
39% upside. BUY
31st August, 2023
Current price Rp97
Target price Rp129
Current price Rp97
Target price Rp129
Optimism in new targets
As of 8M23, WEGE's new contracts have reached IDR 2.7 trillion, hitting 54-68% of the 2023FY goal of IDR 4-5 trillion. Notably, total new contracts for 1H23 showed a significant increase compared to 1Q23, amounting to IDR 516.65 billion. This growth was fueled by a substantial contract from the IKN project, specifically the ASN residential contract worth IDR 1.63 trillion. As of 8M23, the new contracts were sourced from: government projects (85.6%), state-owned enterprises (SOEs) (5.32%), and private entities (9.09%). Noteworthy among the private contracts is the Sky House Alam Sutera IDR project, valued at IDR 237.1 billion. Building on the 1H23 results, we're targeting a new 27% CAGR revenue growth in 2024F compared to 2022A, with a new burn rate target of 18%.
Margin rise in 2024F
In 2023, WEGE anticipates a growth rebound, driven by a strategic focus on securing contracts from well-funded government, SOE, and private projects, aimed at reducing receivables. The integration of new technologies, such as Building Information Modeling (BIM), is expected to enhance performance. Despite a 1H23 slowdown, we project WEGE's net profit margin to average 2.69% in 2023, improving to 5.76% in 2024F. The current year's margin reduction can be attributed to increased costs and a decrease in burn rate.
Valuation: 39% upside
After adjustments from the 1H23 results, our new target price is set at IDR 129 per share, equivalent to a trading multiple of 5x PER. With a promising 39% upside, we maintain our BUY recommendation.
As of 8M23, WEGE's new contracts have reached IDR 2.7 trillion, hitting 54-68% of the 2023FY goal of IDR 4-5 trillion. Notably, total new contracts for 1H23 showed a significant increase compared to 1Q23, amounting to IDR 516.65 billion. This growth was fueled by a substantial contract from the IKN project, specifically the ASN residential contract worth IDR 1.63 trillion. As of 8M23, the new contracts were sourced from: government projects (85.6%), state-owned enterprises (SOEs) (5.32%), and private entities (9.09%). Noteworthy among the private contracts is the Sky House Alam Sutera IDR project, valued at IDR 237.1 billion. Building on the 1H23 results, we're targeting a new 27% CAGR revenue growth in 2024F compared to 2022A, with a new burn rate target of 18%.
Margin rise in 2024F
In 2023, WEGE anticipates a growth rebound, driven by a strategic focus on securing contracts from well-funded government, SOE, and private projects, aimed at reducing receivables. The integration of new technologies, such as Building Information Modeling (BIM), is expected to enhance performance. Despite a 1H23 slowdown, we project WEGE's net profit margin to average 2.69% in 2023, improving to 5.76% in 2024F. The current year's margin reduction can be attributed to increased costs and a decrease in burn rate.
Valuation: 39% upside
After adjustments from the 1H23 results, our new target price is set at IDR 129 per share, equivalent to a trading multiple of 5x PER. With a promising 39% upside, we maintain our BUY recommendation.
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