WIKA
Contact our analyst Revita
27% upside.
22th August 2019
Current price Rp2360
Target price Rp3000
Current price Rp2360
Target price Rp3000
Double digit growth in order book continues
WIKA is targeting a total order book for 2019 of IDR. 145 trillion or 17% YoY growth. As of 1H19, WIKA has booked total new contracts of IDR. 15.23 trillion which is 24.67% of their annual target IDR. 61.7 trn. Total new contracts for infrastructure and buildings in 1H19 were lower compared to 1H18 due to the political situation. This led WIKA to focus on speeding up work on the HSR project (High Speed Railway) Jakarta to Bandung during 1H19. HSR current construction progress reached 23.76% by July 2019 and land clearance has reached 96.20%. Of the total new contracts in 1H19, about 39.24% come from the infrastructure and building sector followed by Energy & Industrial Plant, 39%, Industry, 17.6% and Property & Realty, 4.11%. WIKA is optimistic they can achieve the new contract target as WIKA seeks to get contracts in 2H19 from Mass Rapit Transit (MRT) and Light Rail Transit phase 2 projects, several toll road projects, harbour road phase 1, smelter, building projects, and power plant projects. We believe WIKA’s YoY double digit order book growth will support future revenue growth as seen in the historical trend. We estimate 2019-2020F order book growth at 21% CAGR.
Harvesting payments
WIKA will receive payments from some of their turnkey or contractor pre financing (CPF) projects in 2H19 such as Balikpapan – Samarinda toll road. WIKA will receive payments of around 5.6 trillion in 3Q19 and 4Q19 that will improve their operating cash flow. WIKA will also receive other payments from other projects during 2H19.
Investment portfolio restructure
WIKA has received fresh funds of IDR. 715 billion from the divestment of a 20,34% ownership in Surabaya – Mojokerto toll road to ASTRA Infra. The divestment is part of their transformation to an investment business which focuses on optimizing recurring income. WIKA has set aside capex for 2019 of IDR. 18,19 trillion which will be focused on investments in energy and industrial plants, building and property, and infrastructure. Several projects are already in process.
Valution: 27% upside, BUY
Based on a DCF, we have a target price within one year of IDR. 3000 or trading at 15.6x PER which gives 27% potential upside, BUY.
WIKA is targeting a total order book for 2019 of IDR. 145 trillion or 17% YoY growth. As of 1H19, WIKA has booked total new contracts of IDR. 15.23 trillion which is 24.67% of their annual target IDR. 61.7 trn. Total new contracts for infrastructure and buildings in 1H19 were lower compared to 1H18 due to the political situation. This led WIKA to focus on speeding up work on the HSR project (High Speed Railway) Jakarta to Bandung during 1H19. HSR current construction progress reached 23.76% by July 2019 and land clearance has reached 96.20%. Of the total new contracts in 1H19, about 39.24% come from the infrastructure and building sector followed by Energy & Industrial Plant, 39%, Industry, 17.6% and Property & Realty, 4.11%. WIKA is optimistic they can achieve the new contract target as WIKA seeks to get contracts in 2H19 from Mass Rapit Transit (MRT) and Light Rail Transit phase 2 projects, several toll road projects, harbour road phase 1, smelter, building projects, and power plant projects. We believe WIKA’s YoY double digit order book growth will support future revenue growth as seen in the historical trend. We estimate 2019-2020F order book growth at 21% CAGR.
Harvesting payments
WIKA will receive payments from some of their turnkey or contractor pre financing (CPF) projects in 2H19 such as Balikpapan – Samarinda toll road. WIKA will receive payments of around 5.6 trillion in 3Q19 and 4Q19 that will improve their operating cash flow. WIKA will also receive other payments from other projects during 2H19.
Investment portfolio restructure
WIKA has received fresh funds of IDR. 715 billion from the divestment of a 20,34% ownership in Surabaya – Mojokerto toll road to ASTRA Infra. The divestment is part of their transformation to an investment business which focuses on optimizing recurring income. WIKA has set aside capex for 2019 of IDR. 18,19 trillion which will be focused on investments in energy and industrial plants, building and property, and infrastructure. Several projects are already in process.
Valution: 27% upside, BUY
Based on a DCF, we have a target price within one year of IDR. 3000 or trading at 15.6x PER which gives 27% potential upside, BUY.
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