IND: United Tractor: Sturdy Operations In 2Q18
Analyst: Hariyanto Wijaya, CFA, CPA, CMT
Click here for full report: https://research.rhbtradesmart.com/attachments/68/rhb-report-ind_united-tractors_corporate-news-flash_20180725_rhb-478084313538000705b57a6c2408de.pdf
Reiterate BUY, with DCF-derived TP of IDR43,100 offering 31% upside. United Tractors, as a USD earner with strong earnings growth, is currently valued at an undemanding 12x FY18 P/E (-0.9SD from 7-year mean).
It should book another set of strong earnings (c.IDR2.5trn) in 2Q, due to a strong operational performance. This may trigger an upgrade in the consensus earnings estimate.
The company booked strong 2Q Komatsu sales of 1,229 units (+36% YoY, +5% QoQ). June sales units were lower than May’s, purely due to Lebaran (only 12 working days in June). Also, mining contracting GPM should recover on a higher utilisation rate, which in turn stemmed from strong 2Q mining contracting volume.
United Tractors is our top sector pick, as highlighted in our 20 Jul sector report Heavy Equipment & Mining Contractors: Still In Upcycle https://research.rhbtradesmart.com/attachments/76/rhb-report-ind_heavy-equpiment-mining-contractors_sector-update_20180720_rhb-24283346311781085b510e25c44ad.pdf
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