Shining performance through dedicated car terminal services
IPCC
Shinhan Sekuritas Indonesia
Helmi Therik
Background. IPCC focuses in the vehicle terminal services such as stevedoring, cargodoring, receiving and delivery. Besides that the company has also cater other services such as vehicle processing center (VPC), equipment processing center (EPC), port stock and transshipment roro services. IPCC is a subsidiary of PT Pelabuhan Indonesia II (Persero) or Indonesia Port Corporation (IPC). The strong support from its parent company provides the protection on its business sustainability through 2,806ha of total concession area in Java, Sumatra & Kalimantan in the port terminal area. About 627ha of land concession is located in Tanjung Periok Jakarta-the busiest port in Indonesia that handled 30% of non-oil and gas cargo and around 50% of the entire flows of goods into and out of Indonesia. IPCC managed 31ha of the total area. This makes the IPCC as the third largest port operator in Asean behind PSA Singapore and Namyong Terminal Thailand. The improving export-import and interregional trading especially for vehicle would benefit the company’s performance ahead.
Car terminal services as the main business. IPCC, drives its revenue mainly from car cargo which contributed 62% of the total revenue in 1H this year at IDR155bn, followed by 34% or IDR84.8bn of heavy equipment and the rest was spare parts and miscellaneous. The company expects the revenue this year to reach IDR585bn or 38%yoy on the back of the car trading and heavy equipment movement which triggered by the infrastructure development. It seen attainable due to its 1H revenue at IDR250bn was 43% of the target. The higher revenue in the second half is expected to come from the transfer of the throughput business from its affiliates business for the zoning and specialization strategy under its parents-Pelindo II. The throughput business previously was managed by Port of Tanjung Priok (IPCC’s affiliates). The company also expects to record the net profit growth by 69%yoy to IDR220bn.
Solid profit margin. The company recorded a solid profitability with the EBITDA margin at 37.4% in 2015, 42.4% in 2016 and 41.5 in 2017. The cost of revenue is mainly consisting of 28.5% from salary, 25% from rental, 26.6% from rental. The margin stability is determined by the rate tariff through the agreement with the association. With its geographical position (secured land concession) and thus monopoly by its nature, the company would have a strong position to negotiate the tariff. However, the tariff adjustment would be linked to the cost escalation or the inflation in general.
Expansion plan by increasing the yard area. The company plans to expand its yard from 31ha to 89,5ha or almost triple with the total 2,1mn vehicle from the current capacity at 700k vehicle. This would make the IPCC 5 largest car terminal operator in the world that would be realized gradually until 2022. The company is also eying to capture the transshipment opportunity from PSA Singapore on the back of the geographical advantage that would facilitate the penetration of the Japan’s car that located at Indonesia and Thailand as the production bases to Australia as the market destination.
Valuation. Before IPO the company distributed around 80% for dividend while the dividend policy ahead is estimated at above 30%. The company is traded at 13.4x of 2018 PE based on the expected net profit growth. This was lower compares to the Namyong Terminal as the closed peer that trades at 14.8x.
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