Target price: Rp380
current price : Rp 255 (31 march 2011)
Mkt.Cap: Rp870bn/US$100m
10% ahead; maintain Outperform. FY10 core profit leapt 50% yoy to Rp79bn,
10% ahead of our forecast and 13% ahead of consensus. Total appeared to have
applied more direct contracting to project owners, leading to lower revenue but this
was more than offset by higher margins. Indeed, gross and net margins were the
highest since 2008, at 12.7% and 5.2% respectively. We raise our FY11-12
earnings estimates by 1-3% to reflect higher margins and a lower tax burden, while
introducing FY13 forecasts. On the other hand, we lower our target price to Rp380
from Rp425. This is still set at a 20% discount to our market P/E target, which is
now 14x instead of 16x. We continue to see stock catalysts from contributions from
its property project in Bali and better-than-expected margins.
current price : Rp 255 (31 march 2011)
Mkt.Cap: Rp870bn/US$100m
10% ahead; maintain Outperform. FY10 core profit leapt 50% yoy to Rp79bn,
10% ahead of our forecast and 13% ahead of consensus. Total appeared to have
applied more direct contracting to project owners, leading to lower revenue but this
was more than offset by higher margins. Indeed, gross and net margins were the
highest since 2008, at 12.7% and 5.2% respectively. We raise our FY11-12
earnings estimates by 1-3% to reflect higher margins and a lower tax burden, while
introducing FY13 forecasts. On the other hand, we lower our target price to Rp380
from Rp425. This is still set at a 20% discount to our market P/E target, which is
now 14x instead of 16x. We continue to see stock catalysts from contributions from
its property project in Bali and better-than-expected margins.
• Margins peaked. Revenue of Rp1.5tr was down 11% yoy, offset by higher-thanexpected
construction margins of 13.2% (1.5% above our estimate), probably
contributed by a higher portion of direct contracting. Net margins hit 5.2%, the
highest since the implementation of a 3% final tax in 2008. Tax savings (courtesy of
direct contracting) were evident from the decline in its effective tax rate from 67% in
4Q08, when the new tax rule was introduced, to 36% in 2010. Guidance is 10-15%
revenue growth to Rp1.7tr this year on Rp2.8tr order book. Order-book
replenishment in 2M11 had reached Rp200bn, mostly from repeat clients. Property
contributions should be more evident this year, boosting margins slightly.
• Cash-rich. Net cash of Rp607bn, +28% yoy, was another strong point. This
included short-term investment and was equivalent to Rp178/share, or 71% of its
market capitalisation. Some Rp50bn would be invested in a condominium-hotel
project in Bali which is expected to contribute this year.
source: CIMB research