Good morning,
Wika Beton: NDR Key Takeaways
We brought Wika Beton (WTON IJ, BUY, TP: IDR1,070) management
for one day NDR to Hong Kong. Most of the clients we met still positive on the
overall Indonesia infrastructure story. The current currency volatility as well
as the recent escalation in political tension appear to become the main
concerns.
The key highlights:
¨ WTON management is still positive
on infra development on infrastructure development in Indonesia as the progress
and execution capabilities have been considerably improved under the current
government.
¨ WTON is confident to exceed this
year new contract target of IDR4.3trn. As of 10M16, the company has secured
IDR3.3trn worth of new contract and estimates to obtain around IDR5trn by year
end, mainly due to Balikpapan - Samarinda toll road project
¨ WTON expects to have 13%-15% GM
vs 9M16 GM of 13.6%, while the management remain positive on the new contract
outlook next year and expect an increase of 25%YoY.
¨ High speed train project will
benefit WTON next year. The company will likely to receive IDR1.5trn precast
& ready-mix order from its parents Wijaya Karya (WIKA IJ, BUY, TP IDR3,370)
and to pursue another IDR1.5trn order from China party.
¨ They are confident to compete
with other precast players as they have more variety of products and well known
reputation in term of precast quality. However, we do acknowledge the current
stiffer competitive landscape especially from SOEs such as Waskita Beton
Precast (WSBP, NR).
We maintain our BUY call on the company as we anticipate more
new projects will be signed by year-end and will likely be recognized as
revenue next year. We expect stronger year for WTON in FY17 underpin by
the start of the HST project next year and government’s bigger infrastructure
budget in FY17F.
As one of the biggest suppliers of railway sleepers in
Indonesia, Wijaya Karya Beton (Wika Beton) will also benefit from the
Government’s plan to build 3,258km of railway tracks across the country in five
years.
Our TP of IDR1,070 is based on a DCF valuation assuming the
following: RF of 7.5%, WACC of 12.7% and TG of 5%. It also implies 28.5x FY17F
P/E. (Dony
Gunawan)
Link to WTON latest report: Wijaya Karya Beton : A Stellar Year
Link to daily report: Indonesia Morning Cuppa - 291116
Link to daily report: Indonesia Morning Cuppa - 291116
Media Highlights:
Corporates
Government to allow securitization for infrastructure
financing
Indonesia state owned companies will be able to opt for asset
securitization next year to reduce their dependencies on the capital injection
from government. The securitization will support the government focus on
infrastructure projects that currently relying on the government’s cash
strapped budget. Securitization will allow the infrastructure projects to keep
running with the boost in SOEs’ funding for new projects.
The government is currently aiming for 1,000km of new toll
roads, 46 dams, 2,650 km of national roads and 13 airports by 2019 that will
require IDR5.5 quadrillion in funding. The government estimates that it will
only able to fund a maximum 41% of the total fund needed.
Jasa Marga will be among the first to proceed with
securitization and may start as early as January 2017. The company is aiming to
generate IDR5trn from the securitization. Jasa Marga will prepare its mature
assets with steady cash flow for the securitization.
Previously, the government has prepared a regulation under the
Presidential Decree no 1/2008, defining securitization as a transformation of
illiquid assets to become liquid by way of purchase of financial assets from
originator and the issuance of Asset Backed Securities (ABS).
Concurrently, the Indonesia Financial Services Authority (OJK)
has recently released a regulation revision (POJK) for non-bank industries
which regulates the inclusion of infrastructure SOEs’ bonds as part of minimum
government bonds ownership regulation.
The three main points of the POJK include:
1. Non-bank industries to be able to
invest in State and Provincial owned infrastructure enterprises’ bonds, which
the proceeds will be used for infrastructure financing
2. The maximum investment in the SOEs
bonds is at
a. Maximum of 40% until December 31st
2016
b. Maximum 50% after December 31st
2016
3. The bonds have to be registered in
the Jakarta Stock Exchange or in electronic trading platform with a minimum
of investment grade rating
Ace Hardware to open another new store this month
Bank Tabungan Negara targets its third-party funds to
grow by 21-23% YoY next year
BCA Syariah is ready to expand to East Indonesia
Lippo Cikarang generates USD29m from selling apartment
units at Newport Park
Pembangunan Perumahan set right issue price at
IDR3,250
United Tractors target IDR11trn revenue for 4Q16
Bakrie and Brothers to start the development of its power plant
Our Recent Publication:
Our Recent Publication:
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Company Update: Adhi Karya Persero
: The Train is Not Here Yet
Link to report: Adhi Karya Persero : The Train is Not Here Yet |
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Company Update: Bank Tabungan
Pensiunan Nasional : Profitable Bank With Appealing Valuation
Link to report: Bank Tabungan Pensiunan Nasional : Profitable Bank With Appealing Valuation |
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Sector Update: Banks: New PRR
Means More Flexibility For Banks
Link to report: New PRR Means More Flexibility For Banks |
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Company Update: United Tractors :
Weakening IDR And Coal Price Recovery Play
Link to report: United Tractors : Weakening IDR And Coal Price Recovery Play |
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Sector Update: Property: Stay The
Course
Link to report: Stay The Course |
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Non Rated Note: Ultrajaya Milk
Industry & Trading Co : Key Beneficiary Of Growing Milk Consumption
Link to report: Ultrajaya Milk Industry & Trading Co : Key Beneficiary Of Growing Milk Consumption |
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Company Update: Indocement Tunggal
Prakarsa: May Face Headwinds From Higher Coal Prices
Link to report: Indocement Tunggal Prakarsa: May Face Headwinds From Higher Coal Prices |
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Economic Highlights: BI Maintains
The Key Rate at 4.75%
Link to report: BI Maintains The Key Rate at 4.75% |
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Results Review: Indosat:
Taking The Lead In Data Monetisation
Link to report: Indosat: Taking The Lead In Data Monetisation |
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Company Update: Bank
Negara Indonesia: Attractive Valuations With Strong Fundamentals
Link to report: Bank Negara Indonesia: Attractive Valuations With Strong Fundamentals |
Helmy Kristanto,
RHB Securities
Indonesia
