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Good morning, Voksel Electric – Company Meeting Key Takeaways
Key takeaways from meeting with Voksel
(VOKS IJ, NR):
♦ Voksel is a cable
producer with a wide range of products from electric cable to fiber optic and
telecommunications cable.
♦ Voksel has
production capacity of 68,500MT/year of aluminum cable (80% utilisation
rate), 21,000MT/year of copper cable(60% utilisation rate) and 1.8m fkm/year
of fiber optic cable (60% utilisation rate). This year the company plans to
increase capacity up to 20% by replacing existing machines with new and more
efficient ones. Voksel’s capacity is bigger than its competitor, KMI Wire and
Cables (KBLI IJ, NR) with 42k tones/year capacity (16k tones aluminum and 26k
cooper). This year KMI plans to add additional 3k tones/year capacity for
high voltage cable.
♦ Voksel usually
secure raw material contract with the supplier based on volume, while its
price will be using spot price.
♦ Electric cable
contributes 75% of total revenue in FY16F, and will be increased to 80% this
year as demand from PLN will be stronger.
♦ As of 9M16, the
company recorded IDR152bn net profit, improved from 23bn loss in 9M15, backed
by lower raw material price in 4Q15 – 1H16, high demand from PLN. However, in
FY16 Voksel will only book IDR160bn net profit. 4Q16’s result was dragged
down by higher raw material price, bonus payment, and allowance of bad debt
of IDR12bn.
♦ In FY17F, Voksel
aims 20% revenue growth with flat growth in net profit, due to stabilized
gross margin to 16% -17%. Previously, its gross margin stood at 24.2% in
9M16, surging from 14.6% in 9M15.
♦ The company’s
gearing level stood at 0.5x with 30% of its debt is in foreign currency.
♦ Currently, the
company is trading at 7.8X FY17F PE, higher than KBLI’s current PE of 5.2x
FY17F. Hence, we prefer KBLI over VOKS due to its cheaper valuation, stronger
growth and more sustainable margin. (Dony
Gunawan)
Link to daily
report: Indonesia Morning Cuppa 150317
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Company
Update:
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Our
recent meeting with management revealed for potential robust 1Q17 earnings
growth, on the back of:
♦ Higher sales volume
and more favourable sales mix. UNO (higher margin product) sales contribution
has further increased to 42% in Feb 2017 (from 38% at end 2016); UNO offers
higher GPM of 28% (versus Arwana regular's 23% and Best Buy's 18%);
♦ Lower production
costs - thanks to lower fixed cost per unit, as well as lower defect
products;
♦ Palembang plant -
which accounted for 14% of Arwana total capacity - is now enjoying lower gas
tariff (declined by 8%, starting Mar-17)
♦ Arwana will raise
UNO ceramic capacity in June, by switching two production lines to UNO on its
East Java plant;
♦ To boost its
earning, Arwana will put more effort on product innovation this year,
improving its market shares, as well as lowering its costs.
We maintain BUY on
Arwana with DCF-based TP of IDR550 (36% upside) implies to 25x FY17F P/E. (Andrey Wijaya)
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Media
Highlights:
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Economics
Tax revenue realization up to 13 March 2017
at IDR176.07trn
Corporate
Kalbe announces 40-50% dividend payout ratio XL Axiata targets 9% revenue growth Bank Mandiri aims to lower NPL Semen Indonesia to optimize Semen Indonesia International ACE Hardware to open one new store in Bandung this month Sritex posts USD680m in revenue in 2016 Siantar Top targets 30% sales growth in 2017 |
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Best regards,
Helmy Kristanto
Director
Head of Indonesia
Research
PT. RHB Securities
Indonesia
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