Company Update

11 September 2017

PT Waskita Beton Precast Tbk WSBP

Time to Rise Up


Financial Performance 1H17 & August 17: Supported by Toll Road Development

PT Waskita Beton Precast Tbk (WSBP) booked revenues of Rp2.67 trillion, for an increase of 42.75%, compared to 1H17. This achievement is equivalent to 37.52% of the MNCS estimate, in line with earnings projections from MNCS. The largest contribution to revenue is precast sales, at Rp1.16 trillion, with a contribution of 43.40% to the total, readymix sales of Rp652 billion with contribution of 24.40%, the remainder contributed by construction services, amounting to Rp859 billion and 32.20%. Up until August 2017, WSBP booked new contracts of Rp7 trillion, or 56.63% from total target this year. WSBP booked net profit of Rp436.46 billion, increased by 27.98% compared to same period last year. This achievement is equivalent to 40.62% of the MNCS estimate, in line with net profit projection from MNCS.


Robust Financial Performance with Synergy & Efficiency, Undervalued Stock Price, and Corporate Action

WSBP is predicted to continue to increase financial performance and positive stock price movement, driven by: 1) Solid synergy with the parent company; 2) Potential increase in new contracts, offset by higher production capacity; 3) Growth of positive financial performance through efficiency measures; 4) Undervalued share price; 5) Corporate action: share buyback amounting to Rp1 trillion.


Focus on Developing Toll Roads & Land Acquisition Issue

With a large portion of projects derived from the parent company, we see that WSBP is still focused on toll road development. In addition, there are concerns over potential obstacles to the realization of infrastructure development ahead of the political year of 2019. The issue of land acquisition remains one of the classic challenges for WSBP that could hamper business development in the future.


Valuation & Recommendation: BUY with TP: Rp690

We maintain a positive outlook on the positive growth prospects of WSBP financial performance, along with a positive growth industry sector in the future. In addition, support from stock buyback action can also be a catalyst that can drive the stock price. We also believe that this moment is a good momentum for investors to be able to accumulate WSBP shares. We thus recommend BUY for WSBP at a target price / TP: Rp690. It implies PE17E/FY18F of 16.91x - 11.60x PBV17E / PBV18F of 2.26x - 1.99x.

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