Company Update

24 Maret 2023

WEGE IJ - MNC Sekuritas Equity Report March 24, 2023

Rekindling Hope

Key Takeaways :
• WEGE’s new contracts in FY22 totalled to IDR5.47tn (vs IDR2.76tn in FY21), the carry over was recorded at IDR7.55tn, and as a result WEGE’s order book has reached IDR13tn in FY22.

• Revenue tumbled by -25.31% YoY to IDR2.37tn in FY22 (vs IDR3.17tn in FY21). Net profit recorded an increase of +7.56% YoY to IDR230.05bn (vs IDR213.88bn in FY21) mainly driven by lower cost of revenue (-26.21% YoY), followed by a decreased in financial expenses (-43.24% YoY), while JV income remained stable. 

• Currently, the pipeline estimate includes more than 20 projects, amounting to IDR6.69tn. Carry over is estimated to reach IDR8.93tn, translating to an order book of IDR15.63tn.

• We project the revenue to accrue by 38.40% YoY amounting IDR3.27tn in FY23E (vs IDR2.37tn in FY22). This will be hoisted by several projects currently underway, including: 1) workers’ housing tower that has been finalized (IDR419bn); 2) DP from the Kediri Airport project (IDR1.8tn); 3) DP from the multipurpose building, hospital and ministry headquarters project in IKN. On the other hand, we estimate the net profit to reach IDR251.20bn, or grow by 9.19% YoY.

• We recommend BUY for WEGE, with a TP: of IDR160 which implies PE/PBV 4.99x/0.46x in FY23E and 3.81x/0.42x in FY24F. WEGE’s valuation has become attractive as it is currently trading at a level of –1 STD (average 3-years PE). Risks to our call would include: 1) Changes in government policy; 2) Material price volatility. 

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