WSKT
Contact our analyst Revita
Cashflow cashflow cashflow, 49% upside
6 February, 2020
Current price Rp1190
Target price Rp1780
6 February, 2020
Current price Rp1190
Target price Rp1780
Lower contracts, better outlook
WSKT booked new contracts in 2019 lower than our estimate at IDR 26 trillion due to the unfavourable political situation during 2019 which delayed some investment projects such as toll roads. WSKT is optimistic their 2020 target is achievable with contributions from toll roads 26%, Building 16%, civil works 13%, transmission 11%, dams and irrigation, 10%, port 6%, and others 17%. WSKT is also in the middle of developing 18 toll roads in Sumatera and Java. We therefore believe 2020 new contracts will be bigger than 2019.
Huge cash inflows, more coming
WSKT is expecting a cash inflow in 2020 of Rp10 trillion which includes IDR 4.5 trillion from the Jakarta-Cikampek II elevated road and IDR 2.7 trillion from the Palembang LRT. By the end of 2019, WSKT has received payments from turnkey project amounting to IDR 22 trillion. WSKT received their biggest cash inflow of around IDR 10.3 trillion from Tebanggi Besar – Pematang panggang – kayu Agung toll roads. WSKT also received IDR 3.4 trillion from Batang –Semarang and Cinere – Serpong toll roads. WSKT received a further IDR 5.3 trillion from several toll roads projects in Java and Sumatera. In addition to payments from turnkey projects, in 2019, WSKT has received more than IDR 15.9 trillion of progress payments from other projects. WSKT has also received reimbursement for land clearing from LMAN amounting to IDR 5.8 trillion.
Targeting net gearing 2.4x
We estimate WSKT 2019-2020 net gearing will be around 2.4x after receiving this cash flow. Management aims to strengthen financing in the future and WSKT will also participate in contractor Pre-Financing for projects to better manage their margin.
Valuation: 49% upside
We estimate one year target price of WSKT will be IDR 1780 or trading at 8x PER, with 49% upside, we recommend to BUY.
WSKT booked new contracts in 2019 lower than our estimate at IDR 26 trillion due to the unfavourable political situation during 2019 which delayed some investment projects such as toll roads. WSKT is optimistic their 2020 target is achievable with contributions from toll roads 26%, Building 16%, civil works 13%, transmission 11%, dams and irrigation, 10%, port 6%, and others 17%. WSKT is also in the middle of developing 18 toll roads in Sumatera and Java. We therefore believe 2020 new contracts will be bigger than 2019.
Huge cash inflows, more coming
WSKT is expecting a cash inflow in 2020 of Rp10 trillion which includes IDR 4.5 trillion from the Jakarta-Cikampek II elevated road and IDR 2.7 trillion from the Palembang LRT. By the end of 2019, WSKT has received payments from turnkey project amounting to IDR 22 trillion. WSKT received their biggest cash inflow of around IDR 10.3 trillion from Tebanggi Besar – Pematang panggang – kayu Agung toll roads. WSKT also received IDR 3.4 trillion from Batang –Semarang and Cinere – Serpong toll roads. WSKT received a further IDR 5.3 trillion from several toll roads projects in Java and Sumatera. In addition to payments from turnkey projects, in 2019, WSKT has received more than IDR 15.9 trillion of progress payments from other projects. WSKT has also received reimbursement for land clearing from LMAN amounting to IDR 5.8 trillion.
Targeting net gearing 2.4x
We estimate WSKT 2019-2020 net gearing will be around 2.4x after receiving this cash flow. Management aims to strengthen financing in the future and WSKT will also participate in contractor Pre-Financing for projects to better manage their margin.
Valuation: 49% upside
We estimate one year target price of WSKT will be IDR 1780 or trading at 8x PER, with 49% upside, we recommend to BUY.
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