WSKT Oct2019

WSKT

Contact our analyst Revita

Cashflow coming, 62% upside
3 Oct, 2019
Current price Rp1540
Target price Rp2500

Lower target on New contract

WSKT is lowering the target for new contracts in 2019 to Rp45 trillion from Rp55 trillion. Up until August 2019, WSKT has booked Rp9.7 trillion of new contracts or 21.5% of their target.
Like its peers, WSKT has been affected by the unfavourable political situation during 1H19 which delayed some investment projects such as toll roads.
WSKT is optimistic the new target is achievable with contributions from toll roads 20%, civil works 21%, precast 17%, LRT and railway 13%, & others.
WSKT is currently in the process of completing some national strategic projects (PSN) with turnkey schemes which include the Trans Sumatera toll road, Electric Transmission in Sumatera and the LRT in South Sumatera.
WSKT is also in the middle of developing 18 toll roads in Sumatera and Java. We believe 2020’s new contracts will be bigger than 2019’s.

Expected 40 trillion cash inflow

WSKT is expecting a cash inflow by the end of 2019 amounting to Rp40 trillion which consist of Rp26 trillion from turnkey projects as the majority of turnkey projects will be completed in 2019 and Rp14 trillion from conventional projects which have a progress payment scheme.
Income will also come from conventional projects in the form of monthly payments. WSKT will also receive additional payments of Rp7 trillion from LMAN.
WSKT will also be focusing on improving the company’s balance sheet by selling toll roads. As of 1H19, the gearing ratio was at 2.68x, below their covenants of 3.00x

JV project progress

In their realty business, WSKT’s 60:40 JV with MDLN (Modernland Realty) is currently accumulating land bank located in Cibitung, West Java.
As of 1H19, this JV has acquired 130 ha out of a target 350 ha of land, which will be later integrated with WSKT’s Cibitung-Cilincing toll road.

Valuation: 62%

We are targeting WSKT share price (TP) within one year to reach Rp2,500 or 62% upside potential which is a 15.33x PE.

Previously

WSKT Aug 2018