Jasa Marga
Hints of an improving outlook
■ JSMR booked core NP of Rp534bn (+4% yoy) in 1Q18 with the help of an improved
EBIT margin on lower salaries and allowances.
■ Its first RDPT issuance should offer 9-9.3% cost of funds which is lower than its
current weighted average cost of debt of 9.4%.
■ It is considering divesting its minority stake in JORR W1. If it does, this should be at a
decent valuation, in our view. This could offer further upside to JSMR.
■ Progressive tariff implementation may help to improve long-term earnings outlook.
■ We upgrade to Add with intact TP of Rp4,800 as valuation has turned more attractive.
A better than expected RDPT cost of fund proposition
JSMR aims to issue its first closed-end fund (RDPT) by Jun 2018 (initially in Apr 2018).
Based on our latest channel check, the targeted proceeds of Rp3tr should come from
selling its 20% stake in three toll roads (target valuation of 1.8x-2x BV) and a rights issue.
We estimate total cost of funds for the RDPT issuance (inclusive of rights issue) at 9-
9.3%. This is better than our previously estimated 11.2% cost of fund without any rights
issue. It is also lower than its current weighted average cost of debt of 9.4%.
Minority stake divestment plan could offer upside
JSMR is considering divesting its minority stake in Jakarta Lingkar Barat Satu (JLB). JLB
is the concession holder of JORR W1 toll road, i.e. airport toll road that connects Kebon
Jeruk to Penjaringan for a total distance of 8.7km. It started to operate in 2010. According
JSMR’s 1Q18 financial statements, its 19% stake in the concession has a total value of
Rp180.6bn. The stake should fetch a decent valuation as the concession has decent
traffic volume, in our view.
Talks about progressive tariff implementation could be positive
Local media reported that Greater Jakarta Transportation Authority (BPTJ) proposed
progressive toll road tariff implementation in 2019. The toll road tariff would be higher
during peak hours and normalise during regular hours. BPTJ is proposing the scheme to
Indonesia Toll Road Authority (BPJT) and JSMR. JSMR mentioned that this remains
under discussion and might take place in the long term.
Strong 1Q18 results; improved margin
1Q18’s total operating revenue (ex-construction) was in line with our expectation, helped
by robust other operating revenue. Toll road revenue climbed 13% yoy but was slightly
behind our estimate. 1Q18’s EBIT (ex-construction) of Rp1.2tr (+24% yoy) was ahead of
our expectation. EBIT margin improved to 51%, the highest since 2Q10. This was due to
e-toll road implementation, in our view. 1Q18’s core NP (ex-construction) of Rp534bn
(+4% yoy) also beat our expectation at 28% of our FY18 forecast.
Valuation has turned more attractive
Its share price fell 38% from its peak in Jan 18, underperforming JCI index by 27% YTD.
At current price, the risks of lower net profit in FY18 and government’s proposal to lower
toll road tariffs in ex-Jakarta areas have been priced in. Its valuation has turned more
attractive, trading at 9.2x FY18 EV/EBITDA (close to -2 s.d. below 5-year mean) and 14%
discount relative to JCI’s P/E (close to -1 s.d. from its 10-year relative discount to JCI).
Upgrade from Hold to Add with unchanged TP Rp4,800
Hence, we raise our FY18-20F core EPS forecasts by 0.03-6.3%. We also upgrade our
call from Hold to Add with an intact TP of Rp4,800, based on 10.3x FY18F EV/EBITDA
(0.5 s.d. below its 5-year mean). Potential downside risks include more unexpected
government intervention, higher cost of funds, weaker-than-expected toll road revenue.
Analyst
Aurelia BARUS
T (62) 21 3006 1721
E aurelia.barus@cgs-cimb.com
Namira LAHUDDIN
T (62) 21 3006 1728
E namira.lahuddin@cgs-cimb.com
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