WSKT
Contact our analyst Revita
29.6% Upside, BUY
26th August, 2022
Current price Rp540
Target price Rp700
26th August, 2022
Current price Rp540
Target price Rp700
New contract target maintained
As of 7M22, New contracts were worth IDR 9.90 trillion, up +131.13% YoY, with most of the new contracts coming from infrastructure connectivity projects with a 68.71% share followed by Subsidiaries 9.80%, Water Infrastructure 9.27%, buildings 5.55%, and others 6.67%. In 2022F, WSKT is targeting new contracts of about IDR 30 trillion. The top 5 new contracts YTD include 1,000 km Road upgrading – South Section 2 worth IDR 4,15 trillion, Road and Bridge revitalization North Sumatera IDR 947,9 billion, University of Gadjah Mada GIK Building IDR 326 billion, East Timor Oecusse, Timor Leste IDR 322,89 billion, Basic Structural Construction for PT AMMAN Mining Area, NTB IDR. 314,14 billion. We estimate revenue in 2022-2023F will have a compound average growth rate of 37% compared to 2021A.
Recovery on track
To help restructure its finances, WSKT is finding new projects that are self financing as payment is based on the progress of the project. In terms of outstanding payments, WSKT has received a partial PMN payment from the government of IDR 7.9 trillion for the completion of 6-7 toll road projects. In addition, WSKT has set up a PNM war room, to closely monitor the progress of the outstanding payments. The remaining IDR 5.07 trillion, is projected to be received in 2022. WSKT is in the process of applying for an additional PMN payment of IDR 3 trillion, and is also waiting for the proceeds of their Right issue. In terms of other funding, tranche A and KMK Penjaminan, with facilities worth around IDR 3-4 trillion, can be an additional liquidity for WSKT. WSKT is also trying to manage their receivables. WSKT has taken action to accelerate collection of cash payments, especially for problematic receivables. We believe that with financial restructuring and new funding facilities as well as good receivables governance, WSKT can gradually reduce its debt burden and increase profits in the future
Toll road divestment
This year, WSKT will divest 4 toll roads which include kanci - Pejagan (SMR), Pejagan - Pemalang (PPTR), Pemalang batang (PBTR), Cimanggis - Cibitung (CCT). CCT’s divestment has been done through a share swap. Two others SMR and PPTR are in the process of follow up with potential investors with a transaction expected in August which will be worth around IDR 5.8 trn. The other, PBTR, is still looking for potential investors.
Valuation: 29.6% upside
We have a target price of IDR 700/share which means trading at 10.3X PER. With 29.6% upside, we recommend BUY.
Previously