Kategori: Infrastructure Transportation

We are re-initiating coverage on the construction sector with an OVERWEIGHT for the following reasons: i) valuations are reasonable compared to regional players, ii) the government’s infrastructure projects are expected to accelerate earnings growth, iii) there are lower risks in executing projects, as laws will be enforced, iv) the property market’s outlook is solid for.

We are confident that TOTL will achieve its growth target this year, but a 350% appreciation in its share price since last year has pushed its valuation to 15.2x 2013 P/E – on par with our target P/E and reflecting its earnings expectation for FY13. Macro headwinds and the company’s apparent lack of an expansion.

We are re-instating coverage on TOTL with a BUY and IDR1,060TP The company is currently trading at 17.7x and 13.4x 2012E & 2013E PER compared to the industry at 18.8x and 14.3x. We like TOTL’s operations for the following reasons: 1) robust order book growth on the back of loyal customer base, 2) direct contracting.

WHAT’S BREWING? UNTR has been reported to submit two proposals to the state power company PLN for a 2x600MW and a 600MW power plant in South Sumatera (dubbed as PLTU Sumsel IX & X). The plants to be developed are the so-called “mine-mode”s, where the power generator itself is located at the coal mining site.

Wintermar Offshore Marine, Tbk (WINS IJ) 9M12 net profit reached USD14m (+29.4% y-o-y) mainly derived from higher owned-vessel revenue proportion of 56% in 9M12 which is higher compared to 44% contribution in 9M11. We have not translated our financial model into USD currency yet, however we believe the 9M12 results is relatively in line with.

MBSS reported a 1H12 net profit of USD18m, good for a 34% y-o-y increase in spite of a 18% q-o-q drop. On a yearly basis, barging and floating crane volume saw robust growth while margins stayed stable. However, the company’s quarterly numbers suggest that revenue was stable but earnings were pulled down by higher costs..

We see several infrastructure developments that will bring a positive impact on the domestic container vessel industry such as Tempuran Emas (TMAS) (please refer to our recent Maritime/Shipping Industry report).  The Indonesian Port Corporation (IPC) is proposing a presidential decree, expected to be issued in 1Q13, to speed up the construction of the upcoming Sorong.

Pelayaran Tempuran Emas (TMAS) provide several upside risk that may boost further its earnings as: 1.) Demand in domestic cargo transportation is correlated to GDP growth, 2.) Potential improved port infrastructure which may enhance cost efficiencies, 3.) Rejuvenating fleets and scrapping old vessels which enhance vessel productivity and cost efficiencies. Since 2011, TMAS earnings have.

We re-instate coverage on Wijaya Karya (WIKA) with a strong BUY and IDR1,600 TP, reflecting a potential 16% upside from its current price. As we roll over our valuation to FY13, we base this TP on a 14.6x target PER over its FY14 EPS. The company’s long-standing relationship with state oil & gas company Pertamina.

We are re-initiating coverage on the construction sector with an OVERWEIGHT for the following reasons: i) valuations are reasonable compared to regional players, ii) the government’s infrastructure projects are expected to accelerate earnings growth, iii) there are lower risks in executing projects, as laws will be enforced, iv) the property market’s outlook is solid for.