Tuesday, March 29, 2011

PT Adhi Karya Tbk (ADHI)

by Samuel Sekuritas

Marvelous 4Q10 Result

PT Adhi Karya (ADHI) reported FY10 net profit of Rp189.5bn, grew by 14.5% YoY despite its revenue was dropped by 26.4% YoY to only Rp5,67tn vs Rp7.71tn in FY09. On quarterly basis, both revenue and net profit surged by around 116% QoQ to reached Rp2.60tn and Rp113.8bn, respectively.

ADHI’s FY10 net profit beaten our estimate by 38% while the company’s top line came slightly below our numbers (93% estimates). The stronger than expected bottom line was mainly due to lower applied tax rate of just 2.3% vs our assumption of 3%. The company demonstrated a very strong performance in 4Q10 thanks to swift disbursement on government infrastructure projects in Nov-Dec ’10 which boost ADHI’s top line and contract realization.
Operating level margins also shown some improvement with gross and EBIT margins grew by 270-380bps due to general and marketing cost efficiencies in FY10.

Action & Recommendation:
We raised our ‘11F-‘13F earnings estimate by 9.6-22.6% as we lowered our tax rate assumption and revised the contract realization during the years. The company is targeting Rp12.5tn new contract this year which is achievable in our take as we expect some improvement on the government project realization and further increase on the amount of the government infrastructure budget in the future. As a result, our DCF-derived target price inched higher by 11% to Rp1,150, implying ‘11F PE and EV/EBITDA of 11.4x and 3.3x which offers 39% upside. Upgrade to BUY.

1 comment:

  1. Hello my friend, thank you very much for your visit, happy Wednesday with peace & happiness. Hugs Valter.