WSKT
Contact our analyst Revita
Keep buying, significant upside
13 July, 2020
Current price Rp720
Target price Rp1300
13 July, 2020
Current price Rp720
Target price Rp1300
A better outlook
WSKT booked new contracts in 1Q20 of IDR 3,16 trillion, 6,3% of the 2020F target. The new contracts are from toll and building projects. Most of the new contracts, 76%, are from private businesses and the rest are government projects. Large new contracts in 1Q20 include the Pasuruan – Probolinggo section 4 toll road and UIN Jambi projects. The total order book up to 1Q20 is IDR. 54 trillion, 50% from WSKT’s internal business development projects. Going forward, WSKT aims to broaden their business portfolio by penetrating into new markets overseas and non-toll road infrastructure projects. We revise our target new contracts in 2020F, using a worse case scenario, to 70% of the initial target of IDR. 50 trillion, and the balance is shifted to 2021
Covid 19 mitigation
To mitigate the Covid-19 impact, WSKT has executed several action plans such as an OPEX efficiency program and re-evaluation of 2020 capex. WSKT has proposed several action plans to the ministry of SOE to prevent key ratio breaches such as tenor relaxation for supply chain and rescheduling tenor and interest payments for bank loans and bonds. WSKT will also ensure projects outside red zone areas will operate normally and will speed up progress of those projects.
Huge cash inflows
WSKT is expecting a cash inflow in 2020 of IDR.10-11 trillion from several turnkey project payments. As of 1Q20, WSKT recorded positive operating cashflow of IDR. 2,8 trillion due to receipt of IDR. 7,1 trillion cash from turnkey project payments (Japek elevated and several toll roads projects) and IDR. 1,1 trillion of land reimbursement payments from LMAN 1Q20. WSKT’s Divestment of 3 minority-owned and 1 majority –owned toll roads are in the due diligence process and are targeted to be finalized in 2H20. In addition, WSKT is planning to divest its shares in the Cibitung-Cilincing Toll road and has received a Letter of Intent from potential investors who are in the due diligence process.
Valuation: remain significant upside
Based on adjustments after 1Q20, we estimate a one year target price of WSKT of IDR 1300 or trading at 7x PER, with significant upside, we maintain our recommend to BUY.
Previously