WSKT
Contact our analyst Revita
Significant upside
2nd June 2022
Current price Rp545
Target price Rp940
2nd June 2022
Current price Rp545
Target price Rp940
Targeting 25% new contract growth
In 2021, WSKT booked new contracts valued at IDR 17.7 trillion or 28.5% lower YoY with total carry over contracts of IDR 25.486 trillion. As of 4M22, New contracts were IDR 6.94 trillion up +283.05% YoY with most from infrastructure connectivity projects. In 2022F, WSKT is targeting new contracts of about IDR 30 trillion. We estimate WSKT will achieve 80% of this new contract target. 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 954.3 billion, Trans Sumatra Toll Road IDR 229.49 billion, Kamojing Irrigation West Java IDR 219.73 billion, Road & bridge Blitar East Java IDR 218.29 billion. WSKT is pursuing contracts with advanced payments and monthly progress payments so that the Account Receivables (AR) can be controlled better than they were before.
Recovery on track
WSKT is running 8 financial health projects, including 1). A capital injection from the government of IDR 7.9 trillion which was approved in the EGMS 2021. A rights issue of IDR 4 trillion is also 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 the Sumatra toll road construction. 7). Business transformation 8). Focus on GCG and risk management. The implementation of this restructuring strategy had a positive impact on the Company's 2021 performance, With better efficiency and cost management, WSKT achieved a lesser 2021FY net loss of IDR 1.1 trillion compared to IDR 7.4 trillion in 2020FY. We estimate net income in 2022-2023F will grow compared to 2021FY with debt restructuring and a leaner operating cost structure.
Valuation: significant upside
We maintain our target price of IDR 940/share or trading at 11X PER. With 66% upside, we recommend BUY.
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