Embracing the Industrial Recovery
Key Takeaways:
• AKRA reported a +7.9% YoY growth in net profit to IDR1.0 tn in 1H23, driven by the expanding gross profit margin to 9.1% (vs 7.3% in 1H22) as the industrial estate segment recorded a strong +217.6% YoY gross profit growth in 1H23. Yet, revenue fell to IDR19.9 tn (-12.5% YoY) due to lower petroleum and basic chemicals ASP.
• With the government’s target for 53 fully functioning smelters by FY24F, we anticipate for higher sales volume and revenue in both the petroleum and chemicals despite predicted drop in ASP.
• The industrial estate segment recorded a CAGR of 76.7% from FY19-FY22, becoming the growth engine for AKRA’s gross profit going forward.
• AKRA is benefitted by having a strong balance sheet and healthier leverage ratio, allowing the company to take out loan or issue bond to fund its project.
• We recommend BUY with TP of IDR1,500/share (+15.4% upside), implying 6.3x FY23E EV/EBITDA. Downside risks: 1) lower commodity price; 2) USD/IDR Currency.
MNCS Research
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