WSBP
Contact our analyst Revita
Significant upside
28 April, 2020
Current price Rp141
Target price Rp300
28 April, 2020
Current price Rp141
Target price Rp300
Continued external expansion
WSBP is targeting contracts of IDR 11.9 tn in 2020, up 70% yoy. The significant increase mainly comes from large projects which should be executed in 2019 but were postponed. New contracts for 2020 are targeted to include several toll roads, buildings, and LRT projects such as in the Philippines.
Starting 2019, WSBP has been expanding the use of their latest innovative products to cooperate with companies including SOEs, SOE subsidiaries, private companies, governments, and overseas companies. The new product innovation includes a 1.2-m in diameter and 50-m long spun pile which is the first kind of such precast product in Indonesia and even Southeast Asia. Other new products include concrete railway, concrete poles and sprig WP.
This year, WSBP is continuing its target to increase new contracts from external parties. In early 2020, WSBP has signed an MOU of Cooperation with PT Pertamina Trans Continental for repair and construction of ports, and with PT Angkasa Pura Properti for the construction and maintenance of the airport area. In both partnerships, WSBP has a role in providing precast concrete products. In addition, the company also signed a Contract for Concrete Bearing Procurement for the Ministry of Transportation of the Republic of Indonesia-Directorate General of Railways. Later, WSBP will supply railroad-related products for railroad development projects from 2020 to 2022.
As of 1Q20, WSBP has new contracts worth IDR 576 bn comprising Padang – Sicincin toll road (IDR 170 bn), Indralaya – Prabumulih (IDR 62bn), Jakarta Garden City complex (IDR 24bn), Manggarai – Jatinegara Railway facilities (IDR 25bn), Lampung Bay projects (IDR 60bn). Based on project owner, new contracts in 1Q20 came from private companies (74.02%) and SOE (25.98%). We estimate there will be a decrease in the number of new contracts this year due to the Covid-19 outbreak. But we remain optimistic as WSBP has carry-over contracts of IDR 8.9 trillion, most of which are toll roads in Java and Sumatera.
Strengthening market share
To strengthen their position in the precast market, WSBP is trying to boost capacity by upgrading most of the existing plants’ capacity to 3.7 mn tons. In 2020 WSBP is targeting to add capacity again to reach 4mn tons. The capacity improvements will be made to existing plants such as in Gasing (South Sumatera) and Bojonegara (Banten) that have direct dock access. In addition, WSBP plans to build a new plant in Penajam (East Kalimantan) which is planned to be completed this year as a preparation for the construction of the new capital.
Valuation: significant upside
Using the assumption an adjusted WACC of 8.3%, we have a one-year target price of IDR 300/share, which represents a significant upside and a 6.6x PER. We recommend BUY.
WSBP is targeting contracts of IDR 11.9 tn in 2020, up 70% yoy. The significant increase mainly comes from large projects which should be executed in 2019 but were postponed. New contracts for 2020 are targeted to include several toll roads, buildings, and LRT projects such as in the Philippines.
Starting 2019, WSBP has been expanding the use of their latest innovative products to cooperate with companies including SOEs, SOE subsidiaries, private companies, governments, and overseas companies. The new product innovation includes a 1.2-m in diameter and 50-m long spun pile which is the first kind of such precast product in Indonesia and even Southeast Asia. Other new products include concrete railway, concrete poles and sprig WP.
This year, WSBP is continuing its target to increase new contracts from external parties. In early 2020, WSBP has signed an MOU of Cooperation with PT Pertamina Trans Continental for repair and construction of ports, and with PT Angkasa Pura Properti for the construction and maintenance of the airport area. In both partnerships, WSBP has a role in providing precast concrete products. In addition, the company also signed a Contract for Concrete Bearing Procurement for the Ministry of Transportation of the Republic of Indonesia-Directorate General of Railways. Later, WSBP will supply railroad-related products for railroad development projects from 2020 to 2022.
As of 1Q20, WSBP has new contracts worth IDR 576 bn comprising Padang – Sicincin toll road (IDR 170 bn), Indralaya – Prabumulih (IDR 62bn), Jakarta Garden City complex (IDR 24bn), Manggarai – Jatinegara Railway facilities (IDR 25bn), Lampung Bay projects (IDR 60bn). Based on project owner, new contracts in 1Q20 came from private companies (74.02%) and SOE (25.98%). We estimate there will be a decrease in the number of new contracts this year due to the Covid-19 outbreak. But we remain optimistic as WSBP has carry-over contracts of IDR 8.9 trillion, most of which are toll roads in Java and Sumatera.
Strengthening market share
To strengthen their position in the precast market, WSBP is trying to boost capacity by upgrading most of the existing plants’ capacity to 3.7 mn tons. In 2020 WSBP is targeting to add capacity again to reach 4mn tons. The capacity improvements will be made to existing plants such as in Gasing (South Sumatera) and Bojonegara (Banten) that have direct dock access. In addition, WSBP plans to build a new plant in Penajam (East Kalimantan) which is planned to be completed this year as a preparation for the construction of the new capital.
Valuation: significant upside
Using the assumption an adjusted WACC of 8.3%, we have a one-year target price of IDR 300/share, which represents a significant upside and a 6.6x PER. We recommend BUY.
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