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Sunday, September 11, 2011

Citra Marga Nusaphala Persada Tbk - Project is The Key

by Etrading Securities

CMNP own two toll roads concession, namely JIUT (Jakarta Inner Urban Toll Road) and Waru‐Juanda toll road. Currently, JIUT is the main engine of CMNP revenue but the traffic volume growth has already stagnated, meanwhile Waru‐Juanda Toll Road hasn’t yet given a significant contribution to the company revenue. Realizing it, CMNP have several expansion plans to boost their revenue growth while focusing Depok‐Antasari toll road project that targeted to be fully operated on 2014. We made a valuation for CMNP using DCF with the assumption of a contribution from the Depok‐Antasari project and give a result of IDR 2,200 per share which is hide 37% potential upside and reflect 13xPE12F.

Current Concessions

Depok‐Antasari Progress

Currently, Depok‐Antasari is the only one company’s toll road project. The 21.54 km‐long toll road project will be divided into two sections, namely, 12 km‐long Antasari ‐ Sawangan and 9.5 km‐long Sawangan ‐ Bojong Gede. Based on our last meeting with the management, they are optimist that the first section of Depok‐ Antasari will be finished on schedule. Depok‐Antasari will be fully operated in the mid of 2014 since land acquisition requires two years starting from 2011 till 2012, and one year for construction period. Meanwhile, the second section will be constructed in 2024 to ensure the stability of traffic volume. The value of investment for the first section estimated at IDR 3,073 Billion and second section at IDR 1,073 Billion. To Finance its project, CMNP granted a loan facility of Rp 1.7 trillion from bank syndication led by PT Bank Mandiri Tbk.

Expansion Time

Based on our last meeting with the management, CMNP has targeted for acquisition of the 24 stalled toll road projects that have just been evaluated by the government. The toll projects targeted by the company are within the Jakarta area and connecting with Jakarta Inner‐City Toll Road network. However, the management refuses to disclose the exact name of the toll roads that will be under taken. Quoted from Kontan, CMNP is also planning to establish a toll project initiation, plus acquiring a mining company's infrastructure provider.

Total funds needed approximately IDR 5 trillion. However, the expansion plans still under discussion with the management, and hence we are not able to consider it into our valuation.

Raise Fund From Private Placement and Bond issue To Finance its expansion plans, the shareholders already approved to issue a 10% non preemptive right issue plan worth of IDR 240 billion. CMNP also plans to issue bonds amounted of IDR 3 to 4 trillion in several stage, at first stage CMNP indicate to raise IDR 1 trillion in the last quarter of this year. However, our main concern if they plan to issue bond, which is worth IDR 3 to 4 trillion, it might have a negative impact to company’s net profit in the short term due to the higher interest expense.

Valuation

We value CMNP using DCF (Discounted Cash Flow) assuming the contribution from Depok‐Antasari project resulting IDR 2,200 per share which is hide 37% potential upside and reflect 13xPE12F cheaper than its closest peers JSMR 15xPE12F.




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