Adhi Karya
NDR takeaways: performance and outlook on track
■ ADHI’s new CFO, Mr. Entus Asnawi, met investors in Singapore earlier this month.
Jabodebek LRT and TOD’s progress and outlook are on track.
■ Jabodebek LRT phase I’s progress reached 37.4% in 4M18, and is on track for
completion in Sep 19. It expects to receive Rp8.8tr payment for the project in FY18F.
■ It no longer expects to invest in LRT depot, but only to prepay the development cost.
Moving forward, it targets to develop more LRT and urban train projects.
■ 4M18’s TOD presales of Rp76bn remained behind estimates; we expect improvement
in 2H18. It received approval to spin off ACP, and is planning an IPO in 2019.
■ Maintain Add with an unchanged TP of Rp2,500, still based on 11x FY19F P/E.
Jabodebek LRT phase I: progress and payments on track
Jabodebek LRT phase I’s cumulative physical progress reached 37.4% in 4M18, and it is
on track for completion in Sep 19. It expects to receive a total payment of Rp8.8tr for the
project from Indonesian Railways Company (KAI) in FY18F. The payments are expected
in tranches in Jun, Sep, and Dec 2018. We expect the company to book positive
operating cashflow as at end-FY18-20F.
No longer plans to invest in Jabodebek LRT depot
The company no longer plans to invest in Jabodebek LRT depot, but only to prepay the
project development. It previously planned to invest in the depot as it received Rp1.4tr in
state capital injection money. This money was supposed to be injected into the
Jabodebek LRT project, which was then taken over by PT KAI. The LRT depot’s
development cost may be repaid through the availability payment scheme after the
project is operational and in tranches (may take 7-10 years until it is fully paid off).
Aiming for more LRT and urban train projects
It said that the commencement of Jabodebek LRT phase II (total 38.5km) is expected to
take place in 2019/2020. On top of that, it said it has been invited by the regional
governments of Bandung, Surabaya and Makassar to build LRT projects. Local news
outlets have also reported that ADHI along with Wijaya Karya (WIKA IJ) and Jaya
Konstruksi (JKON IJ) have proposed to develop the elevated Jakarta loop line railway
project, which will replace the existing inner Jakarta at-grade commuter lines.
Unchanged TOD presales target in FY18F
TOD presales in 4M18 were Rp106bn (vs. our/company forecasts of Rp1.2tr/Rp1.9tr in
FY18F). Despite the shortfall, we maintain our presales forecasts as we expect more
projects to be launched in the rest of FY18F. Additionally, its Urban Signature (in Ciracas,
East Jakarta) project has been fully booked and we expect it will be able to convert the
bookings into presales after receiving the development permit in Jul/Aug 2018, with an
estimated presales value of c.Rp231bn.
Received approval to spin off ACP
On 11 May 2018, it received shareholder approval to spin off its transit-oriented
developments (TOD) division, Adhi Commuter Properti (ACP). The spin-off should be
completed within 3-6 months, after it receives approval from the Tax Directorate General
office. It plans to have an IPO for ACP within 12 months after the spin-off. As such, it may
not need to pay the asset transfer tax. It will transfer its assets in ACP using book value.
Maintain Add with unchanged TP
We maintain our Add call with an unchanged TP of Rp2,500, still based on 11x FY19F
P/E (1 s.d. below its 3-year mean). Downside risks to our Add call: slower-than-expected
Jabodebek LRT revenue realisation, new contracts and property presales, listing of
subsidiaries at lower valuation compared to ADHI’s and higher-than-expected impairment
of receivables.
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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