WSKT
Contact our analyst Revita
22% Upside, BUY
2nd December, 2021
Current price Rp765
Target price Rp940
2nd December, 2021
Current price Rp765
Target price Rp940
Targeting lower new contracts
As of 9M21, WSKT has booked new contracts valued at IDR. 11.8 trillion or 57% of their total revised target or 79.44% of new contracts pre Covid 19. Total new contracts during 9M21 are 65,94% from internal business development with toll roads still dominant, Government 26,95%, SOE 4,56%, Private 2,56%. The top 5 new contracts during 9M21 include Kayu Agung –Palembang – Betung toll road Phase II IDR 5,01 trillion, Musi Kramasan Bridge IDR 1,01 trillion, Provider of Pasar Baru Infrastructure IDR 533 billion, Mbay 1 Dam IDR 445 billion, Rukoh steering building IDR 415 billion. In order to achieve at least close to Pre Covid 19 new contracts, WSKT continue to pursue contracts especially those with advanced payments and monthly progress payments so that Account Receivables (AR) can be controlled better than before. We estimate WSKT will achieve 70-80% of the new contracts target this year.
WSKT’s recovery is on track
WSKT is running 8 financial health projects, including 1). A capital injection from the government called PMN (State Capital Participation) of IDR 7.9 trillion was approved in EGMS 2021. A rights issue of IDR 4 trillion is planned for the end of November. 2). A Government guaranteed working capital facility of IDR 8.08 trillion. 3). A Master Restructuring Agreement (MRA) with 21 banks to restructure credit facilities amounting to IDR 29.2 Trillion. 4). Financial restructuring for subsidiaries with IDR 16.62 trillun of restructuring done out of the target IDR 20.42 trillun. 5). Toll road divestment. Up to 10M21 4 toll road divestments have been completed out of 5 including Medan-Kualanamu-Tebing Tinggi (JMKT), Semarang – Batang (JSB), Cinere – Serpong (CSI), and Cibitung – Cilincing (CTP). For 2022, WSKT is targeting a further 4-5 toll road divestments. 6). Completing Sumatra toll road construction. 7). Business transformation 8). Focus on GCG and risk management. The implementation of the restructuring and lean strategy had a positive impact on the Company's 3Q 2021 performance, as the cost of revenue decreased by 42.30% YoY, financial expense decreased by 39.80% and other expenses - net decreased 44.50% YoY. With better efficiency and cost effectiveness in the 3Q quarter of 2021, WSKT managed to achieve a 9M21 net profit of IDR 145.02 billion or an increase of 104.29% YoY compared to 9M20. We estimate net income 2021-2023 will grow compared to 2020FY with debt restructuring and a leaner operating cost structure.
Valuation: 22% upside
We have a Target price of IDR.940/share or trading at 22,6X PER. With 22% upside, we recommend BUY.
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