Nusa Raya Cipta Entry Into Infrastructure To Power Growth

Company Profile
Nusa Raya Cipta engages in commercial, residential, industrial and civil construction works. It was first listed on the Indonesian Stock Exchange in June 2013. NRCA is a subsidiary of industrial property developer PT Surya Semesta Internusa Tbk (SSIA, BUY, TP IDR1,600).

Highlights
NRCA at a glance
NRCA is one Indonesia’s leading high-rise construction specialists, having built some of the most high-profile luxury projects in the country including the Bulgari Resort, Banyan Tree Hotel, Mulia Resort and The Ayana Resort & Spa (previously Ritz-Carlton) in Bali, as well as Jakarta’s Ciputra World Complex. Its repeat customers include Indonesia’s most reputable property developers, including Ciputra Group, PT Alam Sutera Realty Tbk (ASRI, BUY, TP IDR1,290), and PT Agung Podomoro Land Tbk (APLN, NEUTRAL, TP IDR7,600).

Saratoga Capital deal leads to infrastructure development debut
SSIA has sealed a deal with the influential private equity group Saratoga Capital to swap 7.0% of SSIA’s pre-IPO stake in NRCA for Saratoga’s 14% of stake in PT Bhaskara Utama Sedaya, which in turn owns 45% of PT Lintas Marga Sedaya (LMS), the concession holder of the Cikampek-Palimanan toll road. On completion of the deal, SSIA will own a 27% effective share in LMS while Saratoga and Malaysia’s Plus Expressways will own 18% and the remaining 55% respectively.

NRCA, mandated as the main contractor for Cikampek-Palimanan, will build Section 5 of the project worth IDR1trn. This project is expected to contribute ~IDR49bn to NRCA’s JO profit and boost its revenue from IDR91.9bn in FY12 to IDR151.3bn in FY13F. It also marks NRCA’s debut into infrastructure construction, after its low-profile construction of a jetty in East Kalimantan. Note that Saratoga’s PT Adaro Energy Tbk (ADRO, Not Rated) coal mines are located in South Kalimantan.

On rapid growth path
NRCA’s share price may have shot up by 50% within two days of its listing but we think there is still upside potential for the stock going into FY14. Over the past two years, NRCA has booked chalked up 30%-55% revenue and 25%-40% bottomline growth. We expect the company to post a net profit CAGR of 41.8% over the next two years owing to its entry into infrastructure construction.