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Tuesday, April 26, 2011

PT Jasa Marga Tbk (JSMR)

by Lautandhana Sec

Highlight Events

Jasa Marga’s FY10 net profit surged by 20.2% YoY attaining Rp 1.19 trillion vs Rp 993 billion in FY09, while its revenue also climbed by 18.6% YoY from Rp 3.69 trillion to Rp 4.38 trillion.

On quarterly basis, Jasa Marga posted a 5.5% QoQ revenue’s growth in 4Q10 reaching Rp 1.17 trillion compare to Rp 1.11 trillion in 3Q10. Meanwhile, the company’s bottom line has slipped by 25.6% QoQ (Rp 313 billion in 3Q10 vs Rp 233 billion in 4Q10) due to higher than expected maintenance cost during the period.

Comments

In all, the company’s FY10 results have came in line with our projection, where we estimated FY10F revenue and net profit figures reached Rp 4.22 trillion and Rp 1.12 trillion, respectively.

In FY10 period, despite the higher than expected routine maintenance cost in 4Q10, Jasa Marga managed to record highest profitability in its history, which was backed by traffic volume growth (+4.4% YoY), increased in toll road tariff section Sedyatmo and Jakarta-Cikampek, Bogor Outer Ring Road’s section I operation, as well as efficiency cost through e-Toll Card usage. FY10 operating and EBITDA margins were registered at 45.4% and 55.1%, respectively, while net margin was at 27.3% (vs 26.9% in FY09).

This year, Jasa Marga will increase their toll road tariff for the remaining of 9 toll road sections, which we estimate to increase by an average of 10% YoY. On the other hand, the Government involvement through revolving fund and land capping schemes, the upcoming more stringent land acquisition law (is expected to be inaugurated within the next three months this year), as well as its strong position as the largest toll road operator are the key catalyst for the company.

Recommendation

We maintain our toll tariff and traffic volume assumptions which drive FY11 revenue growth by 11.7% YoY to Rp 4.89 trillion, while net profit is projected to reach Rp 1.31 trillion (+9.5% YoY).

Based on 9.4% WACC assumption and a higher capex assumption in FY12-FY13, our DCF calculation resulted in a new fair value of Rp 4,250 per share (previously Rp 4,350 per share). The fair value represents PER of 22.1x FY11F and EV/EBITDA of 13.2x FY11F. At yesterday’s closing price, Jasa Marga is trading at PE of 18.1x FY11 and EV/EBITDA of 11.2 FY11 and our fair value offers a 22% upside. We maintain our BUY recommendation

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