Waskita Beton Precast (WSBP IJ)
Higher earnings on the back of strong revenues
WSBP booked 1Q18 earnings of IDR511bn, up 163%yoy on the back of 88.5%yoy growth in revenues and margins expansion. The 1Q earnings are 39% of our full year forecast and 46% of consensus estimates, higher than the past two-year’s average of 17.7%. Operating cash flow in Mar 18 was a positive IDR860bn as the company received payment for the Becakayu toll road project of IDR1.55tn in Jan 18. Maintain BUY.
Revenues in 1Q18 reached IDR2.3tn… up 88.5%yoy from IDR1.2tn in 1Q17. The strong revenues growth came on the back of a solid order book. The 1Q revenues are 25% of our full year target of IDR9.0tn and 28% of consensus estimates of IDR8.2tn. The 1Q revenues are historically 16% of the full year figure.
Order book. The strong revenues growth was supported by a solid order book which reached IDR16.2tn as of Mar18. The order book included IDR14.1tn of carry over contracts. New contracts secured in 3M18 reached IDR2.1tn, or 18.4% of the management’s full year target of IDR11.5tn (+4.2%yoy, FY17: IDR11.0tn). The new contracts booked in 3M18 are 52.0%yoy lower than the previous year’s IDR4.4tn. Last year, the 1Q17 new contracts were 40.0% of the full year figure.
Margins, debt, and cash flow. The GPM in 3M18 expanded to 32.6% from 28.0% in the previous year. Hence, the NPM reached 22.2% in 1Q18 vs. 15.9% in 1Q17. Total interest bearing debts as of Mar18 reached IDR4.7tn, lower than IDR5.0tn as of Dec17. Consequently, the DER as of Mar18 stood at 0.60x (Dec17: 0.68x). Operating cash flow (OCF) was positive at IDR860bn - the first time since Dec 15. The positive OCF reflects payment for the Becakayu toll road (sections 1B and 1C) amounting to IDR1.55tn which was received in Jan 18.
Adding more capacity. WSBP plans to increase its production capacity to 3.75mn tons by the end of 2018, up by 500,000 tons from 3.25mn tons at the end of 2017. The capex allocation in 2018 is IDR1.1tn, lower than the capex spent in 2017 of IDR1.3tn. WSBP added 600,000 tons of production capacity in 2017.
Maintain BUY. We maintain our forecast and recommendation on WSBP. Our 2018 earnings target of IDR1.3tn is 11% lower than the management’s target. The management expects the 2018 earnings to reach IDR1.5tn (+47.0%yoy).
Maria Renata
(62-21) 2955 5888 ext.3513
maria.renata@danareksa.com
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