WTON
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49% upside
6th October 2022
Current price Rp 222
Target price Rp 330
6th October 2022
Current price Rp 222
Target price Rp 330
57% of new contract target up to 8M22
WTON has booked new contracts as of August 2022 of IDR. 4.19 trillion or 57% of total target for 2022F. WTON is targetting 2022F new contracts of IDR 7.3 trillion. Based on sectors, the new contracts are still dominated by infrastructure projects at 66.49%, followed by property 15.60%, Energy 12.58%, Mining 3,10%, and Industry 2.23% . Based on customer profile (% of 2Q22 revenue), private is 44.7%, WIKA group 20.1%, SOE 23.4%, and Foreign 11.8%. Top 5 new contracts up to August 2022 include Ancol Timur-Pluit toll road worth IDR 582 billion, Manyar Smelter project worth IDR 243 billion, Coastal Are Kota Balikpapan worth IDR. 214,50 billion, Indapura – Kisaran Toll road worth IDR 131.82 billion, and Lotte line project Cilegon worth IDR. 125 billion. WTON is continuing 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 maintain our believe that WTON will achieve better results this year through these strategies.
WTON has booked new contracts as of August 2022 of IDR. 4.19 trillion or 57% of total target for 2022F. WTON is targetting 2022F new contracts of IDR 7.3 trillion. Based on sectors, the new contracts are still dominated by infrastructure projects at 66.49%, followed by property 15.60%, Energy 12.58%, Mining 3,10%, and Industry 2.23% . Based on customer profile (% of 2Q22 revenue), private is 44.7%, WIKA group 20.1%, SOE 23.4%, and Foreign 11.8%. Top 5 new contracts up to August 2022 include Ancol Timur-Pluit toll road worth IDR 582 billion, Manyar Smelter project worth IDR 243 billion, Coastal Are Kota Balikpapan worth IDR. 214,50 billion, Indapura – Kisaran Toll road worth IDR 131.82 billion, and Lotte line project Cilegon worth IDR. 125 billion. WTON is continuing 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 maintain our believe that WTON will achieve better results this year through these strategies.
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Targeting a better margins
WTON 1H22 bottom line margin decreased slightly to 1.92% compared to 2.67% in 2019. This was due to a decrease in the plant utilization rate from a normal 80-85% to just 57.6% in 2Q22, higher than 2Q22’s 37.7% This resulted in inefficiencies in production costs which eroded the GPM to 9.2% compared to 5.9% 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 rates improve in 2022-2023. We are targeting the 2022 - 2023F net profit margin to improve to 2.61% and 2.70% respectively.
Valuation: 49% upside
Based on our adjustments, we have a target price of IDR. 330/share, which is a 22x PER. With 49% potential upside, we maintain BUY.
WTON 1H22 bottom line margin decreased slightly to 1.92% compared to 2.67% in 2019. This was due to a decrease in the plant utilization rate from a normal 80-85% to just 57.6% in 2Q22, higher than 2Q22’s 37.7% This resulted in inefficiencies in production costs which eroded the GPM to 9.2% compared to 5.9% 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 rates improve in 2022-2023. We are targeting the 2022 - 2023F net profit margin to improve to 2.61% and 2.70% respectively.
Valuation: 49% upside
Based on our adjustments, we have a target price of IDR. 330/share, which is a 22x PER. With 49% potential upside, we maintain BUY.
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