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WTON

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59% upside
23rd November 2022
Current price Rp 208
Target price Rp 330
73% of new contract target up to 10M22
WTON has booked new contracts as of Oct 2022 worth IDR. 5.41 trillion or 73% of the total target for 2022F. Based on sectors, the new contracts are dominated by infrastructure projects at 61.54%, followed by property 19.95%, Energy 12.84%, Mining 2.78%, and Industry 2.89% . Based on customer profile (% of 3Q22 revenue), private is 46.9%, WIKA group 20.6%, SOE 24.2%, and Foreign 8.3%. Top 5 new contracts up to Oct 2022 include Ancol Timur-Pluit toll road worth IDR 776.17 billion, Manyar Smelter project worth IDR 243 billion, Electricity distribution network IDR 322.60 billion, Manyar Smelter project IDR.257.60 billion, FRC IK Karawang Pindo 4 miles IDR.182.75 billion and Semarang Demak toll road IDR. 172.55 billion. WTON continues to grow and develop by launching new products. 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% of revenue. 

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Targeting better margins
WTON 9M22 bottom line margin increased slightly to 2.43% compared to 2.18% in 2021. This was due to an increase in the plant utilization rate from 40.7% in 3Q21 to 60.1% in 3Q22, higher than 3Q20’s 52% This resulted in a better production cost ratio which increased the GPM to 8% during 9M22 compared to 4.8% in 9M21. With better utilization, we expect better margins again in 2023 as WTON is targeted a utilization rate at 70-80% for 2023F. In the past, Inefficiencies occur when plant utilization is below normal, reducing the NPM.  We expect that margins will improve as production and utilization rates improve in 2022-2023. We are targeting the 2022 - 2023F net profit margin to reach 2.61% and 2.70% respectively. 
 
Valuation: 59% upside
Based on the 9M22 result, we maintain our target price of IDR. 330/share within 1 year, which is a 22x PER. With 59% potential upside, we maintain BUY.



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Previously
​WTON Oct2022
​WTON March 2022
​WTON Apr2021
​WTON Sep2020
​WTON Jun2020
​WTON Mar2020
​WTON Dec2019
​WTON Aug2019
WTON Dec2018
WTON July2018
​WTON Dec2017
PT. Binaartha Sekuritas

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