WIKA
Contact our analyst Revita
Big Upside, Buy
25th April 2022
Current price Rp960
Target price Rp2160
25th April 2022
Current price Rp960
Target price Rp2160
Targeting IDR 42 trillion of new contracts
In 2021 WIKA has total new contracts worth IDR 26.8 trillion, an increase of +15% yoy bringing the total order book to IDR 88.12 trillion which is a decrease from IDR 98.09 trillion in 2020. Of the new contracts in 2021, 61.1% come from private companies, the Government is 21.1%, SOEs 13.9% while own investments are 3.7%. As of 2M22, WIKA has IDR 6.29 trillion of new contracts with a total order book of IDR 63.39 trillion. The new contracts come from the Government, 21.3%, SOEs 32.6%, private companies 26.3%, and own Investments 19.8%. WIKA is targetting total new contracts in 2022 of IDR 42 trillion or a 55% increase YoY and most 2022 revenues will be from infrastructure, building, industry, and EPC projects. We believe WIKA’s focus this year will be to continue to maximize the progress of ongoing projects and accelerate the disbursement of receivables to boost cash flow.
Maintaining DER levels
WIKA's Debt to Equity (DER) ratio for 2021 is 1.51x. WIKA issued bonds and SUKUK worth IDR 2.5 trillion in Feb 2022. The new debt consisted of Sustainable Bonds II Wijaya Karya Phase II worth IDR 1.75 trillion and Sukuk Mudharabah Berkelanjutan II Wijaya Karya Phase II worth IDR 750 billion. All funds from bond issuance will be used for the payment of short-term debts. Meanwhile, the funds from the issuance of the sukuk will be used to finance infrastructure and building projects. We calculate that with the issuance of the bonds and Sukuk, DER will be maintained at the level of 1.59x in 2022. WIKA is working to improve cash flow to reduce future dependence on bank loans.
Valuation: significant upside, BUY
Using a WACC of 16%, we have a target price within one year of IDR 2,160 or trading at 11.2x PER which gives significant potential upside. We maintain our recommendation to BUY.
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In 2021 WIKA has total new contracts worth IDR 26.8 trillion, an increase of +15% yoy bringing the total order book to IDR 88.12 trillion which is a decrease from IDR 98.09 trillion in 2020. Of the new contracts in 2021, 61.1% come from private companies, the Government is 21.1%, SOEs 13.9% while own investments are 3.7%. As of 2M22, WIKA has IDR 6.29 trillion of new contracts with a total order book of IDR 63.39 trillion. The new contracts come from the Government, 21.3%, SOEs 32.6%, private companies 26.3%, and own Investments 19.8%. WIKA is targetting total new contracts in 2022 of IDR 42 trillion or a 55% increase YoY and most 2022 revenues will be from infrastructure, building, industry, and EPC projects. We believe WIKA’s focus this year will be to continue to maximize the progress of ongoing projects and accelerate the disbursement of receivables to boost cash flow.
Maintaining DER levels
WIKA's Debt to Equity (DER) ratio for 2021 is 1.51x. WIKA issued bonds and SUKUK worth IDR 2.5 trillion in Feb 2022. The new debt consisted of Sustainable Bonds II Wijaya Karya Phase II worth IDR 1.75 trillion and Sukuk Mudharabah Berkelanjutan II Wijaya Karya Phase II worth IDR 750 billion. All funds from bond issuance will be used for the payment of short-term debts. Meanwhile, the funds from the issuance of the sukuk will be used to finance infrastructure and building projects. We calculate that with the issuance of the bonds and Sukuk, DER will be maintained at the level of 1.59x in 2022. WIKA is working to improve cash flow to reduce future dependence on bank loans.
Valuation: significant upside, BUY
Using a WACC of 16%, we have a target price within one year of IDR 2,160 or trading at 11.2x PER which gives significant potential upside. We maintain our recommendation to BUY.
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