WSKT
Contact our analyst Revita
-10.2% downside, SELL
15th April, 2021
Current price Rp1030
Target price Rp925
15th April, 2021
Current price Rp1030
Target price Rp925
Targeting lower new contract
In 2020, WSKT revenue decreased by -48% YoY to IDR 16.19 trillion as a result of construction progress disruptions due to the longer-than-expected impact of the covid-19 pandemic. WSKT recorded a net loss of IDR 7,3 trillion mainly due to increased interest expenses from toll road investment funding, decreased project productivity, and considerable operating expenses due to the Covid-19 pandemic. The cost of interest increased due to more toll roads owned by Waskita that have started operating in 2020 such as Krian – Legundi – Bunder – Manyar toll road, Kayu Agung – Palembang – Betung toll road and Cimanggis – Cibitung toll road. In addition, the divestment process planned by Waskita was delayed due to the Covid-19 pandemic. Of the 5 segments for divestment, only 1 deal has be realized. Total new contracts booked in 2020 was IDR 27 trillion, of which 46% came from internal, business development with toll roads still dominant. The tender winning rate was slightly higher than 2019 at 35,2% which reflects the trust of project owners despite the lackluster construction sector performance. For 2021, WSKT targets New contracts of IDR 26 trillion mainly from government projects, especially those with advanced payments and monthly progress payments so that Account Receivables (AR) can be controlled this year better than last year.
WSKT strategies in 2021
There are two strategies for WSKT to improve performance in 2021. The first is an organizational transformation, where WSKT continues to strive to be a market leader in infrastructure, digitization of business processes, implementing risk management and GCG and increasing existing capacity and capabilities. The second is a financial restructuring, improving financial performance by improving opex efficiency, focusing on projects that have monthly progress payments, debt restructuring both for parent and subsidiaries. WSKT is also focusing on improving the capital ratio, and a balance sheet recovery by divesting toll roads (as many as 9 sections with IDR 11 trillion). WSKT is also looking at getting government financial support in the form of a capital injection that is in the discussion process with the ministries of finance and state-owned enterprises.
Valuation: -10.2% downside
We have a Target price of IDR.925/share or trading at 17,96X PER. With -10.2% downside, we recommend SELL.
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