WTON
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55% upside
22nd March 2022
Current price Rp 214
Target price Rp 330
22nd March 2022
Current price Rp 214
Target price Rp 330
Higher New contract target
WTON is targeting 2022F new contracts of IDR 7.3 trillion compared to IDR. 5.21 trillion in 2021A. The new contracts target is still dominated by infrastructure projects. Based on customer profile (% of 2021 revenue), private is 60.45%, WIKA group 18.82%, SOE 18.04%, and Government 2.69%. WTON continues to do monitoring of production and distribution schedules to control inventory, disbursement of receivables, securing contracts, and securing payments. WTON also continues to grow and develop by launching new products including, CLC (Concrete Level Crossing), precast for road-level railroad crossings, precast that collects and absorbs rainwater in the ground to prevent flooding. and SHMS (Structural health monitoring systems) for detecting the structural health of a bridge. In 2022, WTON will also look to enter new markets such as a railway project in the Philippines, sell new products, and increase WIKA group projects which are targeted to reach 30% based on customer profile. We believe WTON will achieve better results this year through these strategies and efficiencies.
WTON is targeting 2022F new contracts of IDR 7.3 trillion compared to IDR. 5.21 trillion in 2021A. The new contracts target is still dominated by infrastructure projects. Based on customer profile (% of 2021 revenue), private is 60.45%, WIKA group 18.82%, SOE 18.04%, and Government 2.69%. WTON continues to do monitoring of production and distribution schedules to control inventory, disbursement of receivables, securing contracts, and securing payments. WTON also continues to grow and develop by launching new products including, CLC (Concrete Level Crossing), precast for road-level railroad crossings, precast that collects and absorbs rainwater in the ground to prevent flooding. and SHMS (Structural health monitoring systems) for detecting the structural health of a bridge. In 2022, WTON will also look to enter new markets such as a railway project in the Philippines, sell new products, and increase WIKA group projects which are targeted to reach 30% based on customer profile. We believe WTON will achieve better results this year through these strategies and efficiencies.
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Targeting a better net margin
WTON 2021 bottom line margin decreased significantly to 1.92% compared to 2.67% in 2020. This was due to a decrease in the plant utilization rate from a normal 80-85% to just 42.9% in 2021, lower than 2020’s 51.3%. This resulted in inefficiencies in production costs which eroded the GPM. Inefficiencies occur when plant utilization is below normal. As a result, the NPM was down too. We expect that margins will improve as production and utilization improve in 2022. We are targeting the 2022F net profit margin to improve to 4.16%.
Valuation: 55% upside
Based on our adjustments, we have a target price of IDR. 330/share, which is a 6x PER. With 55% potential upside, we maintain BUY.
WTON 2021 bottom line margin decreased significantly to 1.92% compared to 2.67% in 2020. This was due to a decrease in the plant utilization rate from a normal 80-85% to just 42.9% in 2021, lower than 2020’s 51.3%. This resulted in inefficiencies in production costs which eroded the GPM. Inefficiencies occur when plant utilization is below normal. As a result, the NPM was down too. We expect that margins will improve as production and utilization improve in 2022. We are targeting the 2022F net profit margin to improve to 4.16%.
Valuation: 55% upside
Based on our adjustments, we have a target price of IDR. 330/share, which is a 6x PER. With 55% potential upside, we maintain BUY.
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