Refer to Important disclosures in the last page of this report
O c t- 1 7 N o v -1 7 D e c -1 7 D e c -1 7 J a n -1 8 F e b -1 8 M a r- 1 8 M a r- 1 8 A p r- 1 8 M a y -1 8 M a y -1 8 J u n -1 8 J u l- 1 8 J u l- 1 8 A u g -1 8 S e p -1 8 S e p -1 8 O c t- 1 8 UNTR-Rebase JCI Index-Rebase
2.3
12.6
11.5 Net Profit (RpBn) 5,002 7,403 11,663 12,887 14,217 EPS (Rp) 1,341 1,985 3,127 3,455 3,811 EPS Growth (%)
29.8
48.0
57.5
10.5
10.3 Net Gearing (%) (43.0) (34.0) (38.5) (39.7) (40.5) PER (x)
24.2
16.4
10.4
9.4
8.5 PBV (x)
2.8
2.6
2.1
78.9
1.9 Dividend Yield (%)
1.8
2.1
3.7
6.7
7.4 EV/EBITDA (x)
31.8
17.5
10.8
9.7
8.9 Source: UNTR, IndoPremier Share Price Closing as of : 29 October 2018
E q u it y | I n d o n e s ia | C o m m o d it ie s
90
95 100 105 110 115 120 125
67.8
Revenue (RpBn) 45,539 64,559 80,010 89,773 99,985 EBITDA (RpBn) 4,387 7,849 13,169 14,832 16,542 EBITDA Growth (%) (18.6)
Stock Data
Latest EPS (Rp) 3,127 3,455 Vs. Prior EPS (%)
Target price (Rp) Rp47,500
Prior TP (Rp) Rp42,000
Shareprice (Rp) Rp32,500
Upside/downside (%) +46.2
Sharesoutstanding (m) 3,730 Marketcap. (US$ m) 7,967 Free float (%)
40.5 Avg. 6m dailyT/O (US$ m)
9.0 Price Performance
3M
6M
12M
Absolute (%) -9.5 -4.7 -8.5 Relative to JCI (%) -5.5 -1.2 -4.4 52w high/low (Rp) 40,425 - 31,125
Major Shareholders
Astra International 59.5%
Estimate Change; Vs. Consensus 2018F 2019F
16.1
Year To 31 Dec 2016A 2017A 2018F 2019F 2020F
9M18, up 32% yoy, came in above consensus (77%) and our (81%) forecast for FY18F. Good weather had helped PAMA to record the highest OB removal volumes of 272mn bcm (Fig. 2).
29 October 2018 Results Note BUY (Unchanged)
United Tractors (UNTR IJ)
Maintain Buy with 46% upside to new TP of Rp47,500. We raise our earnings forecast by 16% and 14% for FY18F-19F, respectively (Fig. 8), given these better than expected set of results. Thus, we raise our target price (DCF- Based, WACC: 13.1%, TG: 3%) to Rp47,500 (prev. Rp42,000). We also rolled over our base valuation year to 2019, revise up USD/IDR exchange rate and risk free rate assumptions. With 46% potential upside to our new TP, we reiterate our
Buy recommendation for UNTR.
9M18 performance came above our expectation, we raise our OB removal estimate to 969mn bcm (fprev. 887mn bcm – Fig. 8) for FY18F. PAMA recorded the highest OB removal volumes of 272mn bcm in 3Q18, up 14% qoq and 20% yoy, bringing 9M18 OB removal to 717mn bcm, up 22% yoy on the back of dry weather in 3Q18. We expect PAMA to book strong volumes in 4Q18 as we believe rainfall to remain relatively low in the period.
Mining contracting division recorded strong results. PAMA remained the largest revenues contributor with revenues of Rp28.9tn in 9M18, up 36% yoy mainly helped by higher volumes owing to better weather condition. As PAMA’s
Strong heavy equipment performance. We raise our Komatsu sales forecast to 4,800-5,000 units for FY18F-19F, respectively (from 4,400-4,800 units) as 9M18 performance came above our expectation. Heavy equipment division recorded strong revenues growth of 22% yoy to Rp21.3tn in 9M18 owing to strong growth in parts and services revenues (+34% yoy) and Komatsu sales (+23%). Komatsu sales recorded at 1,281 units in 3Q18, up 4.2% qoq and 24% yoy, bringing 9M18 Komatsu sales to 3,681 units, up 34% yoy on the back of higher demand from the mining industry.
Robust growth in 3Q18. UNTR recorded strong earnings of Rp3.6tn in 3Q18, up 22% qoq and 62% yoy, allowing 9M18 net profit to reach Rp9.1tn, jumped 61% yoy on the back of higher revenues, margin expansion (mainly from PAMA), manageable opex and forex gain of Rp630bn. Revenues reached Rp61.1tn in
14.1 Vs. Consensus (%)
Heavy equipment division posted another strong performance. PAMA recorded robust growth on the back of dryer weather. Maintain BUY with 46% upside to new TP of 47,500 (prev. 42,000).
Robust results
Strong growth with manageable costs recorded in 9M18.PT Indo Premier Sekuritas frederick.daniel@ipc.co.id
Frederick Daniel Tanggela
11.4 Source: Bloomberg
12.7
- 62 21 5793 1170
Revenues PAMA operational performance Fig. 1:
Fig. 2:
Construction Machinery Mining Contracting Coal Mining Coal production (LHS) OB removal (RHS)
60 80 400
48.5
50
43.6 60 271.7 300
39.8
37.7
40
) 237.9 )
35.3
s
33.5
m n
32.0
31.6 207 c
)
30.5 o
29.6
tr t b p
30
n
40 200 n
24.7
33.7
o o
24.0 li
li (R
30.1
il il
15.6
26.5
13.6
20
(m (m
15.0
14.6 20 100
7.7
7.2
6.9
7.2
10
5.1
4.7
3.8
3.8 2013 2014 2015 2016 2017 2018F 2019F 2020F
1Q18
2Q18
3Q18
Source: UNTR, IndoPremier Source: UNTR
Fig. 3: Heavy equipment sales volumes Fig. 4: Heavy equipment revenues Heavy equipm ent sales Spare part and service revenues Heavy equipment sales (industry - LHS)
35 UNTR's heavy equipment sales (LHS) Market share (RHS)
30
24 50%
41% 40%
25
38%
20
) 36% 36% 36%
35% 40%
s
32%
it )
20 n
16
n t u
30%
p d n
(R
15
12
a s u
20%
o
8
10 h (t
10%
4
5
0%
- 2013 2014 2015 2016 2017 2018F 2019F 2020F
2013 2014 2015 2016 2017 2018F 2019F 2020F Source: UNTR, IndoPremier
Source: UNTR, IndoPremier Mining contracting volumes Coal sales volumes and ASP Fig. 5:
Fig. 6: Coal sales volumes (LHS) ASP (RHS) m ining volum es (m n tons - LHS) OB rem oval (m n Bcm - LHS) UNTR clients' SR (RHS)
16 150
1,400
10.0
13
87.4
84.7
86.3
8.2
8.2
8.2
8.0
81.2 81.2 100
69.2
7.1
7.0
7.1 1,200
8.0
61.6
6.4 1,069
55.4
1,018
10
969
n s
1,000
6.0
50 n to
845
o 6.9 r
806 801
6.3
6.3
6.3
6.3
767
e t
7
800
4.0
5.7
702
p ) m
$ x
4.6 (
4.2 S
600
2.0 U
4
1
130 118 124 200 105 114 109 109 113 (2.0)
2013 2014 2015 2016 2017 2018F 2019F 2020F
(4.0) -2
- 100
2013 2014 2015 2016 2017F 2018F 2019F 2020F
Source: UNTR, IndoPremier Source: UNTR, IndoPremier
Fig. 7: 3Q18 results summary (RpBn)
9M18
9M17 % Y-Y 3Q18 % Q-Q % Y-Y vs. cons. vs. ours. Revenues 61,125 46,258 32.1 22,181
11.3
31.8
76.9
81.4 COGS 46,046 35,819
28.6 16,363
8.2
29.5 Gross profit 15,079 10,439
44.4 5,818
21.0
38.9
79.8
81.6 G&A expenses 2,200 1,871
17.6 733 (0.1)
12.1 Selling expenses 536 599 (10.4) 195 21.2 (21.6)
Operating profit 12,342 7,970 54.9 4,890
24.9
48.8
87.0
89.8 Net interest inc. (exp) (335)
94 nm (207) nm nm Forex gain (loss) 630 (13) nm 368 60.9 495.7 Other 34 (180) nm (58) (157.6) (47.3) Pretax profit 12,670 7,871 61.0 4,992
20.5
54.3
88.1
93.5 Tax 3,246 1,973
64.6 1,312
21.9
43.6 Minority Interest 352 260
35.6 87 (24.8) (18.3)
Net profit 9,072 5,638 60.9 3,593
21.9
62.2
87.7
90.3 GPM (%)
24.7
22.6
26.2 OPM (%)
20.2
17.2
22.0 Pretax mgn (%)
20.7
17.0
22.5 NPM (%)
14.8
12.2
16.2 Source: UNTR, IndoPremier
Fig 8. Earnings revisions FY18F FY19F (RpBn) old new (%) change old new (%) change
Machinery sales (units) 4,400 4,800 9.1 4,800 5,000
4.2 OB removal (m bcm) 887 969 9.3 1,006 1,018
1.2
- Coal production (m tons) - PAMA 118 118 124 124 - Revenues (Rp bn) 75,125 80,010
6.5 85,517 89,773
5.0 Gross profit 18,477 19,725 6.8 20,628 21,881
6.1 Operating profit 13,749 15,929 15.9 15,417 17,622
14.3 Pretax profit 13,553 15,737 16.1 15,243 17,390
14.1 Net profit 10,044 11,663 16.1 11,296 12,887
14.1 Margins (%) GPM
24.6
24.7
0.1
24.1
24.4
0.3 OPM
18.3
19.9
1.6
18.0
19.6
1.6 Pretax mgn
18.0
19.7
1.6
17.8
19.4
1.5 NPM
13.4
14.6
1.2
13.2
14.4
1.1 Source: IndoPremier
Year To 31 Dec (RpBn) 2016A 2017A 2018F 2019F 2020F Income Statement
Net Revenue 45,539 64,559 80,010 89,773 99,985 Cost of Sales (35,878) (50,075) (60,285) (67,892) (75,759) Gross Profit 9,661 14,484 19,725 21,881 24,226 SG&A Expenses (2,955) (3,727) (3,795) (4,259) (4,743) Operating Profit 6,706 10,756 15,929 17,622 19,483 Net Interest 191 142 (87) (4)
34 Forex Gain (Loss) (149) (4) 10 (103) Others-Net (19) (372) (116) (125) (132) Pre-Tax Income 6,730 10,523 15,737 17,390 19,384 Income Tax (1,626) (2,849) (3,714) (4,104) (4,575) Minorities (102) (270) (361) (399) (592) Net Income 5,002 7,403 11,663 12,887 14,217
Balance Sheet
19,461 20,831 25,612 28,609 31,728 Cash & Equivalent
12,115 18,188 21,284 23,882 26,598 Receivable
7,108 7,855 12,488 14,012 15,606 Inventory
3,514 4,328 6,174 6,927 7,715 Other Current Assets
42,197 51,202 65,558 73,430 81,648 Total Current Assets
16,685 22,251 22,491 23,701 25,261 Fixed Assets - Net Goodwill
3,804 7,699 3,810 4,275 4,762 Non Current Assets
63,991 82,262 93,025 102,630 112,955 Total Assets
1,028 1,916 2,012 2,112 2,218 ST Loans
14,119 20,239 26,932 29,995 Payable
3,208 6,221 5,601 6,284 6,999 Other Payables Current Portion of LT Loans
18,356 28,377 31,615 35,328 39,212 Total Current Liab.
85 2,763 3,039 3,343 3,678 Long Term Loans
2,732 3,584 4,975 5,582 6,216 Other LT Liab. 21,173 34,724 39,629 44,253 49,107
Total Liabilities 12,658 12,389 11,195 11,246 11,299
Equity 28,202 32,974 40,195 44,918 50,114
Retained Earnings 1,762 2,175 2,006 2,213 2,435
Minority Interest 42,622 47,538 53,396 58,377 63,848 Total SHE + Minority Int.
Total Liabilities & Equity 63,795 82,262 93,025 102,630 112,955
Source: UNTR, IndoPremier
Year to 31 Dec 2016A 2017A 2018F 2019F 2020F Cash Flow
Net Income (Excl.Extraordinary&Min.Int) 5,002 7,403 11,663 12,887 14,217 Depr. & Amortization 3,467 3,722 3,761 3,801 4,006 Changes in Working Capital (2,862) 1,016 (11,117) (4,159) (4,334) Others 4,398 (190) 6,325 4,685 4,997
Cash Flow From Operating 10,005 11,951 10,632 17,215 18,887 Capital Expenditure (2,817) (8,280) (3,000) (4,000) (4,500) Others 331 (2,671) 473 534 599
Cash Flow From Investing (2,485) (10,951) (2,527) (3,466) (3,901) Loans (1,509) 3,566 372 405 440 Equity Dividends (2,195) (2,543) (4,442) (8,164) (9,021) Others 676 (722) 1,528 (2,116) (2,309)
Cash Flow From Financing (3,028) 300 (2,542) (9,875) (10,890) Changes in Cash 4,048 1,371 4,780 2,997 3,119
Financial Ratios
21.2
22.4
24.7
24.4
24.2 Gross Margin (%)
14.7
16.7
19.9
19.6
19.5 Operating Margin (%)
14.8
16.3
19.7
19.4
19.4 Pre-Tax Margin (%)
11.0
11.5
14.6
14.4
14.2 Net Margin (%)
8.0
10.1
13.3
13.2
13.2 ROA (%)
12.2
16.4
23.1
23.1
23.3 ROE (%)
13.8
18.3
23.8
23.9
24.1 ROIC (%)
90.3
78.0
82.0
83.7
84.0 Acct. Receivables TO (days)
7.1
7.6
8.0
8.1
8.2 Acct. Receivables - Other TO (days)
4.6
6.7
5.9
5.1
5.1 Inventory TO (days) 140.0 125.2 133.9 136.9 137.1
Payable TO (days)
4.9
4.9
5.1
4.6
4.6 Acct. Payables - Other TO (days)
2.6
9.8
9.5
9.3
9.2 Debt to Equity (%)
0.1
0.1
0.1
0.1
0.1 Interest Coverage Ratio (x) (43.0) (34.0) (38.5) (39.7) (40.5)
Net Gearing (%)
Source: UNTR, IndoPremier
Head Office PT INDO PREMIER SEKURITAS Wisma GKBI 7/F Suite 718 Jl. Jend. Sudirman No.28 Jakarta 10210 - Indonesia p +62.21.5793.1168 f +62.21.5793.1167
INVESTMENT RATINGS
BUY : Expected total return of 10% or more within a 12-month period HOLD : Expected total return between -10% and 10% within a 12-month period SELL : Expected total return of -10% or worse within a 12-month period ANALYSTS CERTIFICATION.
The views expressed in this research report accurately reflect the analysts personal views about any and all of the subject securities or issuers; and no part of the research analyst's compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed in the report.
DISCLAIMERS
This research is based on information obtained from sources believed to be reliable, but we do not make any representation or warranty nor accept any responsibility or liability as to its accuracy, completeness or correctness. Opinions expressed are subject to change without notice. This document is prepared for general circulation. Any recommendations contained in this document does not have regard to the specific investment objectives, financial situation and the particular needs of any specific addressee. This document is not and should not be construed as an offer or a solicitation of an offer to purchase or subscribe or sell any securities. PT. Indo Premier Sekuritas or its affiliates may seek or will seek investment banking or other business relationships with the companies in this