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WIKA indicated that it booked IDR157bn worth of net profit in 1Q13, up 65% y-o-y and 28% of the company’s/our FY13 estimate – a strong signal to a robust year as the company historically booked a mere 18%-22% on its 1Q. WIKA remains our top pick for the construction sector as we maintain a strong.

We reiterate our strong BUY on WIKA at a TP of IDR2,200 It is trading at a premium to the industry at 21.2x P/E for 2013, but deservedly so. It has the most sustainable growth prospect due to its strategic ownership of WIKA Beton and its solid investments in human capital. Earnings upgrade on a.

Driven by sanguine investor sentiments, the market cap of the Indonesian construction sector has expanded by 280% since 2012, outpacing its EPS growth potential of 18%-22% for 2013F. We propose a bellwether report to consider amid potentially weaker sentiments, while we continue to have a positive outlook on construction companies. At present, defensive stock picks.

Company & industry background Rukun Raharja (RAJA) is one of Indonesia’s leading mid-to-downstream energy company which has a similar business model with Perusahaan Gas Negara (PGAS) focusing on the gas distribution and transmission business, yet in a much smaller form. It claims to be the only company besides PGAS that has such mid-downstream business chain..

Several expansions and new contracts secured made by ABM Investama, Tbk (ABMM IJ) back in 2012, however the net earnings figure for FY12 is way below what we expected. This is mainly caused by the unexciting coal mining outlook which has dragged down margins for its mining contracting and coal mining business, putting severe pressure.

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 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.

Emerging new core business. Currently, the group’s earnings are predominantly contributed by its subsidiaries, Cipta Kridatama (~43% earnings contribution – contract mining) and Sumberdaya Sewatama (~16% – power solutions). However, in the long run, we expect ABMM’s subsidiary, Reswara (currently contributing only 9% to group earnings), to be the backbone of ABMM’s consolidated business. We.

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.