WIKA
Contact our analyst Revita
Significant upside. BUY
14th April 2020
Current price Rp1075
Target price Rp2170
Current price Rp1075
Target price Rp2170
Targeting Steady Growth
Based on WIKA guidance, and due to the unfavourable economic conditions this year, we estimate the 2020F total order book will be IDR 120 trn, down from an until target of IDR 145 trn. In 2019, WIKA booked total new contracts of IDR. 41,18 trn which is 67% of their initial annual target of IDR. 61.7 trn. Of the total new contracts in 2019, about 58,6% come from the infrastructure and building sector followed by Energy & Industrial Plants, 22,6%, Industry, 14% and Property & Realty, 4,7%. As of 2M20, WIKA has received total new contracts of IDR 1,45 trn which is 2,21% of their initial target of IDR 65,5 trn. Of the total new contract 8,39% come from industry (mostly their subsidiaries), 6,01% come from property, followed by 1,13% from infrastructure and building. WIKA is expecting their 2020F new contracts will come from SOEs, 37,35%, private, 24,92%, Govt, 17,82%, Investment, 12,67% and Overseas business, 7,24%. Looking beyond the current corona virus outbreak, WIKA is relying on three large infrastructure projects this year to drive growth. The three projects are the construction of the Jakarta-Bandung High Speed Railway, the construction of the Harbor Road II toll road (Wiyoto Wiyono toll road section) and the Padang-Pekanbaru toll road which is a part of the Trans Sumatra. This year growth will be slow but steady. We believe this current condition if it lasts longer than expected will affect WIKA’s new contracts but the company will still have the carry over contracts in the order book for 2020.
Toll road progress
Based on 3M20, the progress of WIKA’s large toll road projects is as follows: Cengkareng – Kunciran toll road worth IDR 2,48 trn has reached 80,22% completion.Serang – Panimbang toll rozd worth IDR. 3,31 trn has reached 59,30% completion. High Speed Railway Jakarta –Bandung with 4 stations and 1 depot worth IDR 15,68 trn has reached 47,46% completion.
Valuation: significant upside, BUY
Using a WACC of 9,1%, we have a target price within one year of IDR. 2170 or trading at 6,9x PER which gives significant potential upside, BUY.
Based on WIKA guidance, and due to the unfavourable economic conditions this year, we estimate the 2020F total order book will be IDR 120 trn, down from an until target of IDR 145 trn. In 2019, WIKA booked total new contracts of IDR. 41,18 trn which is 67% of their initial annual target of IDR. 61.7 trn. Of the total new contracts in 2019, about 58,6% come from the infrastructure and building sector followed by Energy & Industrial Plants, 22,6%, Industry, 14% and Property & Realty, 4,7%. As of 2M20, WIKA has received total new contracts of IDR 1,45 trn which is 2,21% of their initial target of IDR 65,5 trn. Of the total new contract 8,39% come from industry (mostly their subsidiaries), 6,01% come from property, followed by 1,13% from infrastructure and building. WIKA is expecting their 2020F new contracts will come from SOEs, 37,35%, private, 24,92%, Govt, 17,82%, Investment, 12,67% and Overseas business, 7,24%. Looking beyond the current corona virus outbreak, WIKA is relying on three large infrastructure projects this year to drive growth. The three projects are the construction of the Jakarta-Bandung High Speed Railway, the construction of the Harbor Road II toll road (Wiyoto Wiyono toll road section) and the Padang-Pekanbaru toll road which is a part of the Trans Sumatra. This year growth will be slow but steady. We believe this current condition if it lasts longer than expected will affect WIKA’s new contracts but the company will still have the carry over contracts in the order book for 2020.
Toll road progress
Based on 3M20, the progress of WIKA’s large toll road projects is as follows: Cengkareng – Kunciran toll road worth IDR 2,48 trn has reached 80,22% completion.Serang – Panimbang toll rozd worth IDR. 3,31 trn has reached 59,30% completion. High Speed Railway Jakarta –Bandung with 4 stations and 1 depot worth IDR 15,68 trn has reached 47,46% completion.
Valuation: significant upside, BUY
Using a WACC of 9,1%, we have a target price within one year of IDR. 2170 or trading at 6,9x PER which gives significant potential upside, BUY.
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