Company Update

23 November 2021

Construction Sector Update - November 23, 2021

Many Obstacles, but Trying to Find a Way


ADHI IJ: Penetrating on Bottom-line
• The new contract worth up to IDR11.3 trillion, rose 82.3% YoY in 9M21, which equals 47% of the target worth up to IDR24.1 trillion in FY21E. Aside from that, ADHI has currently received Financial Close with a value of IDR420 billion for Jalintim Riau Preservation that soon will be reflected in 4Q21 financial reports.
• On the other hand, the 9M21 revenue decreased by -13.1% YoY to IDR7.35 trillion (vs IDR8.46 trillion on 9M20) due to several project completions and delayed payments. The gross profit weakened for 5.25% YoY worth IDR1.09 trillion (vs IDR1.15 trillion on 9M20), while the net profit rose 10.64% YoY worth IDR17.02 billion (vs IDR185.54 billion on 9M20) due to the increased profit of the capital joint ventures to IDR184.54 billion (vs IDR82.16 billion on 9M20).

PTPP IJ: Maintain Management Year-end Target
• The new contract worth up to IDR13.49 trillion rose 14.62% YoY on 9M21, which equals 48% of the company target worth up to IDR27.88 trillion on FY21E. Several successful major projects that have been signed by the company are: 1) Junction Dawuan toll worth up to IDR825 billion; 2) Pegadaian Tower (IDR594 billion); and 3) Dredging Benoa worth up to IDR583 billion. Most of the new contract that has been signed by the company are from a strategic project that is owned by the government with the contribution of the new contract from state-owned enterprises (BUMN) and the government reaching 91%.
• Meanwhile, the 9M21 revenue rose 10.75% YoY to IDR11.21 trillion (vs IDR10.12 trillion on 9M20) that was caused by several project completions and delayed payments. Gross profit increased by 24.65% YoY worth up to IDR1.42 trillion (vs IDR1.14 trillion on 9M20), while the net profit increased 207% YoY worth up to IDR129.42 billion (vs IDR42.09 billion on 9M20), which was caused by the rising profit of joint capital ventures to IDR341.67 billion (vs IDR219.12 billion on 9M20) and by divestment with worth up to IDR199.14 billion from the 15% market shares of Kualanamu toll road for Kings Ring Limited.

WIKA IJ: Revised the New Contract Target in FY21E
• The new contract with worth up to IDR13.2 trillion, rose 92.5% YoY on 9M21, equals to 37.71% of the target worth IDR35 trillion on FY21E. The delayed new contract was due to the new project tender that relied on capex from the project owner, where during the pandemic, the project owner business was impacted, which caused many of the companies to do evaluations on their capex liquidity. Responding to the delayed new contract, the company has revised its new contract on FY21E to be IDR35 trillion (before: IDR40.1 trillion).

WSKT IJ: Tidy Up
• The new contract worth up to IDR12 trillion, equals to 54.80% of the target worth IDR20.5 trillion on FY21E.
• WSKT received government support combination package for running 8 financial recovery streams. The company received syndicated loan facility worth up to IDR8.07 trillion and the PMN that was given by the government with value up to IDR3 trillion on FY22F. WSKT also has received corporate action right issue approval with funding target of IDR4 trillion that is aimed on Dec-21. On FY22F, WSKT will focus on project completion and the rise of the value of the new contract, as well as, issuing bonds with value of IDR3.8 trillion on FY22F. On the other hand, WSKT booked new contract with worth up to IDR 11.8 trillion, which came from KAPAL-Betung toll road phase 2 worth IDR5 trillion and Musi - Kramasan Bridge (IDR1 trillion) on 3Q21.

OVERWEIGHT Recommendation for the Construction Sector
We change the recommendation from OVERWEIGHT to NEUTRAL outlook for Construction sector in FY21F. We believe SWF sentiment could be a turn around story in the futures to overcome the balance sheet construction players. We see opportunities in the long run in line with the government's priorities, although Covid-19 still become a main risk. However, player construction can take advantage of the momentum, due to the current average trading below 1.0x PBV supported by window dressing on Dec-21.



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