WSKT
Contact our analyst Revita
42% Upside, Buy
9th September, 2020
Current price Rp630
Target price Rp890
9th September, 2020
Current price Rp630
Target price Rp890
Lower new contract target
WSKT booked new contracts in 1H20 of IDR 8,13 trillion, 31% of the 2020F target. Most of the new contracts, 74,18%, are from business development, 23,95% from Government, and 1,87% from private projects. WSKT is currently aiming for a more balanced payment structure by focusing on projects that use progress payment schemes and reducing exposures to pre-financing/turnkey projects. We revise our target new contracts in 2020F, to 15% of WSKT‘s target and the balance we shift to 2021. WSKT will achieve their revenue target this year by accelerating the progress of infrastructure projects temporarily halted during PSBB. They will also look to get more conventional projects from SOE, government as well as private customers, while eyeing new markets such as transportation, connectivity, water resources and land development projects ..
Lower revenue in 1H20
As of 1H20, WSKT booked revenue of IDR. 8 trn, down -46% yoy. This is caused by WSKT being very selective on land acquisition, especially for toll road projects, in order to better manage their balance sheet and leverage. Slow progress of only 40% - 50% in several on-going projects is because of the large scale social distancing (“PSBB”) measures during the period of April – May 2020, and also negatively affected revenue. The bottom line was a net loss of IDR. -1,1 trn, caused by high interest expense from operating toll roads. The company is negotiating several debt reprofiling scheme such as payment rescheduling and interest rate adjustment at the WSKT level as well as the toll road level
Huge cash inflows
This year, WSKT is targeting to receive Rp 30 – 35 Tn of project payments as well as a disbursement for land acquisition from LMAN amounting to Rp 3,8 Tn. As of 1H20, WSKT has received Rp 7,1 Tn of turnkey project payments and Rp 5,3 Tn of conventional project payments and will receive additional turnkey payments from several toll roads and LRT projects in 2H20. This year, WSKT plans to divest 5 toll roads with estimated gains of around Rp 1,2 – 1,3 Trn. This includes Bekasi – Cawang – Kampung Melayu toll road (16,05 Km), Cibitung-Cilincing toll road (35 Km), and other 3 toll roads (175km)
Valuation: 42% upside
We revise our WSKT target price based on adjustments after the 1H20 to IDR.890/share or trading at 14X PER. With 42% upside, we recommend BUY.
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