Wika Beton Site Visit Note

We just visited Wijaya Karya Beton’s (WTON IJ, BUY, TP: IDR1,260) recently acquired precast company in Batam, PT Citra Lautan Teduh (CLT). WTON acquired 90% of the company in 10 September 2014 while Wijaya Karya had the remaining 10% for a total of USD23.5m. CLT currently has a design capacity of 100k tons of spun pile precast with used capacity of ~50k tons. CLT has a scope of sales for Batam, Riau, and will target Johor as the new potential market post-acquisition. The CLT factory has its own jetty that enabled a 8,000 DWT tons ship for loading/unloading, this will give a more competitive advantage for the company.

CLT plans to build another production plant in 2015 with capacity of ~45k tons and will keep building a total of 4 new plants by 2018 to reach a target capacity of 300k tons. According to the management on site, the cost of building a production plant is ~IDR23bn/plant. We view that CLT acquisition was a very good decision by WTON because CLT is the sole precast producer in Batam island and its surrounding. With the plan of additional capacity, CLT will be able to penetrate Malaysian market starting from Johor. We maintain our call and TP for WTON.