Waskita Beton (WSBP IJ)

bl

14 September 2018

Waskita Beton(WSBP IJ)

Company Update

BUY(Unchanged)
Lower order book due to project delays

Target price (Rp)

Rp440

Prior TP (Rp)

Rp620

Shareprice (Rp)


Rp358

Upside/downside (%)

+22.9

Sharesoutstanding (m)

Increased production capacity by 15% by the end of 2018.
We lower our earnings forecast by 10/14% in FY18F/19F.
Improved cash flow from several project payment of Rp6.5tn.
Maintain Buy with lower TP of Rp440 (target P/E of 9.8x).

26,361

Marketcap. (US$ m)

636

Free float (%)


Production capacity hike to 3.75tn ton (+15% yoy) by end 2018. As of
8M18, WSBP has production capacity at 3.5mn ton/year (+7.7% yoy) from the
expansion at its existing plants in Gasing and Bojonegoro of 100k and 150k ton,
respectively. WSBP targets to increase production capacity to 3.75mn ton/year by
the end of 2018. The additional capacity might come from either existing plant or
a new plant, based on project needs and locations.

40.0

Avg. 6m dailyT/O (US$ m)

1.8

Price Performance
3M

6M

12M


-12.3

-11.8

-6.3

Relative to JCI (%) -10.0

-5.0

-5.5

WSBP-Rebase

WSKT

60.0%

Public


40.0%

Estimate Change; Vs. Consensus
2018

Vs. Prior EPS (%)
Vs. Consensus (%)

Revised down our earnings forecast due to guidance downward revision.
Due to several project tender delay and WSKT’s decision to postponed the
attainment of several toll road project, WSBP decided to reduce its FY18F new
contract guidance to Rp8.3tn (from Rp11.5tn). As of 8M18, WSBP has achieved
new contract of Rp4tn, forming 49% of company’s FY18F new guidance of
Rp8.3tn. WSBP’s low new contract achievement was resulted from several toll
road project delays such as Krian-Legundi-Bunder-Manyar, Cibitung-Cillincing,
Pasuruan-Probolinggo and Cimanggis-Cibitung part 2. Given lower FY18F new
contract guidance, we reduce our earnings forecast for FY18F/19F by 10/15% as
we implement lower new contract assumption to Rp8tn and Rp8.5tn for FY18F and
FY19F (from Rp11tn and Rp11.5tn).


JCI Index-Rebase

Major Shareholders

Latest EPS (Rp)

Sep-18

Jul-18

Aug-18

Jul-18

May-18

Apr-18

May-18


Mar-18

494 - 338

Feb-18

Jan-18

Feb-18

Dec-17

Dec-17

Oct-17

Nov-17

130

125
120
115
110
105
100
95
90
85
80

Oct-17

52w high/low (Rp)

Jun-18

Absolute (%)

Sep-17


Equity | Indonesia | Construction

Stock Data

2019

45.1

49.8

(10.1)

(14.1)

(5.1)

(10.6)

Received payment of Rp6.5tn for major turnkey projects. As of 8M18,

WSBP has received terminal payment of Rp6.5tn from several major project such
as Becakayu, Pemalang-Batang, Batang Semarang toll roads. In the remaining
2H18, WSBP is scheduled to receive another payment of Rp1tn from Becakayu
section 1A. In addition, company also expecting additional payment of ±Rp3tn
from two projects, namely, Legundi-Bunder, and Cimanggis-Cibitung Toll Ways
(CCTW) I & II. WSBP is currently negotiating the payment term for those projects
in order to change it to working progress payment instead of the initial agreement
of turnkey payment. Note: WSBP has previously succeeded to change the
payment term for Becakayu project section 1B and C in 1H18 worth Rp1.8tn from
turnkey to working progress.

Source: Bloomberg

Maintain Buy with lower TP of Rp440 (from 620). Despite slower than
expected new contract attainment in 8M18, we continue to like WSBP given its
robust production capacity growth and its low DER at 0.78x. However, downward
revision on our FY18F/19F earnings forecast have led our DCF-based TP to
decrease to Rp440 (from Rp620), representing target FY18F PE of 9.8x. Key risk
to our call might come from further projects tender delay from governments.


Joey Faustian
PT Indo Premier Securities
[email protected]
+62 21 5793 1168

Year To 31 Dec
Revenue(RpBn)
EBITDA(RpBn)
EBITDA Growth (%)
Net Profit(RpBn)
EPS (Rp)
EPS Growth (%)
Net Gearing (%)
PER (x)
PBV (x)
Dividend Yield (%)
EV/EBITDA (x)
Source: WSBP, IndoPremier

Refer to Important disclosures on the last of this report


2016A
4,717
1,230
172.9
635
24
89.9
(11.5)
14.9
1.3
4.0
7.0

2017A
7,104
1,909
55.2
1,000
38
57.6
54.1
9.4
1.3
3.4
7.0

2018F
8,451
2,160
13.2
1,189
45
18.8
35.1
7.9
1.1
3.2
5.8

2019F
9,684
2,404
11.3
1,312
50
10.4
45.0
7.2
0.9
3.8
5.8

2020F
9,563
2,245
(6.6)
1,095
42
(16.5)
27.8
8.6
0.9
4.2
5.5

Share Price Closing as of : 14-Sept-2018

WSBP

Fig. 1: Production capacity to increase to 4mn to/year ton

Installed capacity

Used capacity

Utilization rate

Fig. 2: Order book has peaked in 2017

%

k ton/year
4,500
4,000

71%
64%

80%

71%

70%

70%
59%

3,500

50%

2,500

40%

2,000
1,000

20%

500

10%

-

0%
2015A

2016A

2017A

2018F

10,000

Net Profit (LHS)

growth (RHS)

124%

Precast

1,527
120%
1,322

1,400

100%

90%
1,000

1,000

600

32%

334

15%

200
-

2016A

2017A

2019F

2017A

2018F

Ready mix

Construction

growth (%)
180%

158%

160%

10,000
140%

60%

6,000

40%

4,000

20%

2,000

120%
100%

78%

80%
51%

60%
40%

19%

15%

20%
0%

2015A

2019F

Source: Company, IndoPremier

2016A

2017A

2018F

2019F

Source: Company, IndoPremier

Fig. 5: Gross margin to slightly decrease due to increase debt

Fig. 6: Contract contribution from parent is still at 60%
2017

Gross margin

2018F

12,000

8,000

0%
2016A

2015A

(Rp bn)

80%

57%
635

2015A

-

Fig. 4: Revenue to grow by 17% CAGR in FY17-FY19F

140%

800

4,408

Source: Company, IndoPremier

1,800

1,200

5,871
5,000

2014A

Fig. 3: Earnings to grow by 24% CAGR in FY17F-FY19F

(Rp bn)

17,442

15,000

2019F

Source: Company, IndoPremier

18,727

15,051

30%

1,500

400

19,208

20,000

60%

3,000

1,600

Order book

(Rp bn)
25,000

Operating margin

2018

Net margin

30.0%
25.0%
20.0%

Other
parties
40%

Other
parties
40%

15.0%

WSKT
and
subsidia
ries
60%

10.0%
5.0%

WSKT
and
subsidia
ries
60%

0.0%
2014A

2015A

2016A

2017A

2018F

2019F

Source: Company, IndoPremier

Refer to Important disclosures on the last of this report

Source: Company, IndoPremier

2

WSBP
Fig. 7: Earnings change
Old

New

2018

2019

Differences

2018

2019

2018

2019

Revenue

9,150.7

10,912.5

8,450.8

9,683.8

-7.6%

-11.3%

Gross profit
Operating profit

2,472.2
1,940.0

2,823.7
2,189.0

2,256.4
1,764.2

2,482.5
1,918.0

-8.7%
-9.1%

-12.1%
-12.4%

Net profit

1,322.1

1,526.8

1,188.8

1,311.9

-10.1%

-14.1%

Gross margin
Operating margin

27.0%
21.2%

25.9%
20.1%

26.7%
20.9%

25.6%
19.8%

Net margin
Source: Company, IndoPremier

14.4%

14.0%

14.1%

13.5%

Year To 31 Dec (RpBn)

2016A

2017A

2018F

2019F

2020F

Income Statement
Net Revenue

4,717

7,104

8,451

9,684

9,563

Cost of Sales

(3,498)

(5,156)

(6,194)

(7,201)

(7,301)

1,219

1,948

2,256

2,482

2,262

Gross Profit
SG&A Expenses

(106)

(414)

(492)

(564)

(559)

Operating Profit

1,113

1,534

1,764

1,918

1,703

Net Interest

(156)

(374)

(386)

(390)

(395)

0

0

0

0

0

11

(3)

(4)

(4)

(2)

Forex Gain (Loss)
Others-Net
Pre-Tax Income

967

1,156

1,374

1,524

1,305

(333)

(156)

(185)

(213)

(210)

0

0

0

0

0

635

1,000

1,189

1,312

1,095

Cash & Equivalent

4,206

1,028

3,472

2,332

3,859

Receivable

3,052

6,631

6,069

6,168

5,563

232

859

899

1,122

1,099

Income Tax
Minorities
Net Income
Balance Sheet

Inventory
Other Current Assets
Total Current Assets
Fixed Assets - Net

643

3,057

3,644

4,189

4,161

8,133

11,575

14,085

13,812

14,682

1,933

3,149

3,271

3,269

3,286

0

0

0

0

0

3,648

139

1,999

2,807

2,781

13,734

14,920

19,417

19,955

20,813

ST Loans

1,907

3,539

4,225

2,905

1,913

Payable

1,542

2,318

0

1,998

2,038

Other Payables

1,317

287

1,112

1,146

1,228

0

1,449

0

0

491

4,766

7,593

7,926

6,049

5,669

1,449

0

2,400

3,900

4,409

114

9

110

70

97

6,329

7,603

10,436

10,018

10,175

6,675

5,902

6,678

6,678

6,678

730

1,414

2,302

3,257

3,959

0

0

0

0

0

7,405

7,317

8,980

9,935

10,637

13,734

14,920

19,416

19,954

20,812

Goodwill
Non Current Assets
Total Assets

Current Portion of LT Loans
Total Current Liab.
Long Term Loans
Other LT Liab.
Total Liabilities
Equity
Retained Earnings
Minority Interest
Total SHE + Minority Int.
Total Liabilities & Equity
Source: WSBP, IndoPremier

Refer to Important disclosures on the last of this report

3

WSBP

Refer to Important disclosures on the last of this report

4

WSBP

Year to 31 Dec

2016A

2017A

2018F

2019F

2020F

635

1,000

1,189

1,312

1,095

Cash Flow
Net Income (Excl.Extraordinary&Min.Int)
Depr. & Amortization
Changes in Working Capital
Others
Cash Flow From Operating
Capital Expenditure

117

375

396

486

542

(2,188)

(4,376)

1,543

(947)

749

2

(2,184)

(61)

(93)

425

(1,434)

(5,184)

3,066

758

2,812

(2,369)

1,918

(2,378)

(1,292)

(533)

40

91

113

123

117

(2,329)

2,009

(2,265)

(1,169)

(416)

Loans

2,595

1,632

1,637

180

7

Equity

5,819

0

0

0

0

Dividends

(380)

(317)

(300)

(357)

(394)
(483)

Others
Cash Flow From Investing

(212)

(1,347)

379

(553)

7,822

(32)

1,716

(730)

(870)

4,060

(3,207)

2,518

(1,141)

1,527

Gross Margin (%)

25.8

27.4

26.7

25.6

23.6

Operating Margin (%)

23.6

21.6

20.9

19.8

17.8

Pre-Tax Margin (%)

20.5

16.3

16.3

15.7

13.6

Net Margin (%)

13.5

14.1

14.1

13.5

11.5

ROA (%)

7.0

7.0

6.9

6.7

5.4

ROE (%)

14.5

13.6

14.6

13.9

10.6

ROIC (%)

10.8

8.9

8.6

8.9

7.0

137.7

248.5

274.0

230.4

223.6

0.4

0.2

0.2

0.2

0.3

24.4

9.5

7.0

7.1

6.6

118.5

136.6

144.6

116.2

100.9

0.0

0.0

0.0

0.0

0.0

45.3

68.2

73.8

68.5

64.0

Others
Cash Flow From Financing
Changes in Cash
Financial Ratios

Acct. Receivables TO (days)
Acct. Receivables - Other TO (days)
Inventory TO (days)
Payable TO (days)
Acct. Payables - Other TO (days)
Debt to Equity (%)
Interest Coverage Ratio (x)
Net Gearing (%)

0.2

0.3

0.3

0.3

0.3

(11.5)

54.1

35.1

45.0

27.8

Source: WSBP, IndoPremier

Refer to Important disclosures on the last of this report

5

Head Office
PT INDO PREMIER SECURITIES
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 Securities or its affiliates may seek or will seek investment banking or other business relationships with the companies in this
report.