Summary of PTPP IJ Construction Project Updates
PT PP (Persero) Tbk (PTPP IJ), a state owned construction company (51% stake owned by GoI) has obtained 3 contracts from government : 1) Benoa Cruise Port Development; 2) Pura Besakih Revitalization Project and 3) KEK Sanur Development Project located in Bali with the total value of IDR1,219bn. Our takes from site visit activities are summed up as follows :
• PTPP IJ received package B design and dredging work for Benoa port. This project is valued at IDR552bn in FY21 and is estimated to be completed in 3Q23F, by the time we visited the site, the progress had been 43.7% of the completion target.
• PTPP IJ obtained Pura Besakih Revitalization Project worth of IDR378bn with progress reaching 66.15% of the target completion on Dec-22.
• PTPP IJ obtained a SEZ Sanur Development Project. SEZ Sanur is the first health and tourism area in Indonesia. This project has a total investment value of around ~IDR10tn, of which PTPP IJ received a project value of IDR289bn. The progress of the work has been running at 84.4% of the completion target on November-22.
PTPP IJ has obtained IDR17,583tn of marketing contracts (~8.4% IKN & ~91.6% Non-IKN) as of October 21, 2022, implying a run rate of ~56.7% FY22E target. CAPEX realization hit IDR2,341bn (+53.5% YoY/53.5% FY22E run rate) in 8M22. In addition, as of Jun-22, company has IDR 5,390bn, equivalent to 45.7% of ST Debt coverage. Expecting a more conservative for FY23F CAPEX allocation as liquidity tighten and there will be a maturing bond of IDR460bn on July 6, 2023 (SR Bond II Phase I Series B).
Our valuation for PTPPI IJ deriving from P/E 40.9x/33.4x and P/B 0.49x/0.45x in FY22E/FY23F implying a Price Target of IDR1,100/share. Valuation risk : 1) deteriorating economic performance in FY23F due to monetary tightening; 2) switching budget priority to support consumers purchasing power rather than infra project; 3) valuation de-rating due to rising risk free rate and risk premium.
Summary of Electrum 2-Wheel EV Project Updates
Electrum, a JV between PT GoTo Gojek Tokopedia Tbk (GOTO IJ/Not Rated) and PT TBS Energi Utama Tbk (TOBA IJ/Not Rated) is a pioneer in 2-wheel EV in Indonesia. Electrum commits to support energy transition by providing zero emission EV. Albeit still in pilot project, Electrum has rolled out the adoption of EV through : 1) deployment of Gogoro & Gesits EV-brand for driver partner operational in South Jakarta & 2) providing an eco-friendly mode of transportation for G20 Summit in Bali. Our takes from site visit activities are summed up as follows :
South Jakarta EV Adoption Roll Out :
• >500 units of Gogoro & Gesits were deployed to driver partners operational in South Jakarta through a lease scheme. Since its launch in earlier this year through Sep-22 (~8 months), both 2- wheel EV hit the milestone of >4mn km through GoRide Electric service.
• The adoption of 2-wheel EV has gained traction from customers of GoRide Electric. Management said that from each of 1mn Km milestone, carbon emission (CO2) reduction is equivalent to 85 ton (~340 ton equivalent to 4mn Km).
G20 Summit Project:
• In the Nov-22 G20 Summit, Electrum will provide 50 electric motorcycles (Gogoro and Gesits brands) with 6 drop off points integrated with electric vehicle stops from the Ministry of Transportation and 5 shuttle points that can be used by G20 summit delegates as a mode of transportation around conference location. Electrum will also provide 10 electric motors to assist the operations and mobility of representatives of the Ministry of Transportation.
Electrum aspires to support government in driving forward 2-wheel EV ecosystem by covering end- to-end solutions through : 1) vehicle design and manufacturing; 2) distribution, after-sales as well as financing and 3) battery infrastructure network. Hence, unlike the other existing players started with pilot project rollout and collaborate with supporting players from manufacturers to infra providers.
Albeit that the industry is still small and facing challenges from : 1) infrastructure readiness and 2) appropriate business model and still need government support. Players enthusiasm is rising reflected by more than 40 EV-brands available in Indonesia and expecting more players to come. However, Electrum has superiority compared to other players as it has a more complete key elements to establish a more integrated ecosystem : 1) inside GoTo’s ecocystem with Gojek has >2mn drivers partners that could be the captive market and Bank Jago that may be the financing partner in the future; 2) partnership with Pertamina to provide infrastructure; 3) better strategy to penetrate the market starting from the pilot project project to gain deeper insight of customers need and better strategize in the Indonesia’s dynamics market.
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