WEGE
Contact our analyst Revita
30% upside.
4th March 2021
Current price Rp238
Target price Rp310
Current price Rp238
Target price Rp310
Targetting 39% new contract growth
WEGE is targetting new contracts for 2021 of IDR 4,2 trillion, up 39% from its actual contract of IDR 3,07 trillion last year. 2020 was revised from an initial target of IDR 14,9 trillion due to some large projects experiencing slowdowns or holdups due to the pandemic. Most of the new contract targets are SOE and Gov projects, with Government representing 44%; SOEs 19%; and Private projects 37%. The composition shows that WEGE is focusing on projects which have strong funding. As of 2M21, new contracts amount to IDR 501,95 billion, from private 44.07%, SOE 0.20% and Government 55.73%. Most of the new contracts are residential developments. With Carry Over contracts of IDR 11.30 trillion from last year, and new contracts ahead, we expect improving cashflow, We are optimistic WEGE will secure a revenue increase compared to last year and we target CAGR revenue growth in the next 2 years of 32%.
WEGE 2021 strategy
WEGE's 2021 strategy makes us optimistic that the company's target can be achieved. WEGE has a specialized market which is well served by the company’s expertise in operations, marketing, development and financing. Examples of expertise include; a world class standard in the field of QSHE implementation, a focus on Quality & Safety, Digital transformation in all areas of business and entering into the premium market. We expect WEGE to be careful in customer and partner selection and to continue to develop their supplier integration business model.
Valuation: 30% upside
We adjust and revise our target price to IDR. 310/share or trading at 7,7x PER. With 30% upside, we retain our recommendation to BUY.
WEGE is targetting new contracts for 2021 of IDR 4,2 trillion, up 39% from its actual contract of IDR 3,07 trillion last year. 2020 was revised from an initial target of IDR 14,9 trillion due to some large projects experiencing slowdowns or holdups due to the pandemic. Most of the new contract targets are SOE and Gov projects, with Government representing 44%; SOEs 19%; and Private projects 37%. The composition shows that WEGE is focusing on projects which have strong funding. As of 2M21, new contracts amount to IDR 501,95 billion, from private 44.07%, SOE 0.20% and Government 55.73%. Most of the new contracts are residential developments. With Carry Over contracts of IDR 11.30 trillion from last year, and new contracts ahead, we expect improving cashflow, We are optimistic WEGE will secure a revenue increase compared to last year and we target CAGR revenue growth in the next 2 years of 32%.
WEGE 2021 strategy
WEGE's 2021 strategy makes us optimistic that the company's target can be achieved. WEGE has a specialized market which is well served by the company’s expertise in operations, marketing, development and financing. Examples of expertise include; a world class standard in the field of QSHE implementation, a focus on Quality & Safety, Digital transformation in all areas of business and entering into the premium market. We expect WEGE to be careful in customer and partner selection and to continue to develop their supplier integration business model.
Valuation: 30% upside
We adjust and revise our target price to IDR. 310/share or trading at 7,7x PER. With 30% upside, we retain our recommendation to BUY.
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