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Friday, January 6, 2012

PT Jasa Marga Tbk - Entitled to Premium

by Indopremier Securities

Entitled to Premium

JSMR reported 9M11 financials in-line with our estimates that goes for Rp1.45tn net profit and Rp4.8tn revenue this year. At yesterday’s closing price, JSMR is trading at 16X our FY12 estimates, above its regional peers, while at the favorable spot in terms of PEG ratio. In view of Indonesia’s resilient traffic on the back of its continued economic growth, we view the counter as defensive one with DCFderived target price of Rp4,800/share.

9M11 Figures

JSMR reported 9M11 revenue of Rp3.6tn (+12%, YoY), with operating profit of Rp1.8tn (+11.8%, YoY), and net profit of Rp1.05tn (+9.3%, YoY). Profitability is maintained at the same level YoY, with operating margin at 48.9% in 9M11 pretax margin at 38% in 9M11 (vs. 36.4% in 9M10), and net profit margin at 29.2% in 9M11 (vs. 29.9% in 9M10). Financials is backed by volume growth to an average of 2.92mn vehicles of daily traffic in 9M11, an increase of 13% YoY, from an average daily traffic of 2.58mn cars in 9M10.

Valuations

While relatively high in terms of earnings multiple, growth offered has placed JSMR in a favorable spot of PEG ratio among the highest capitalization toll road operator and investor players in the Asia. Indonesia’s government focus in infrastructure development will benefit JSMR years ahead and provide stability to its steady revenue model.

Recommendation

Current projects, which will see at least 40% additional length expansion in 2-3 years time, will sufficient to support earnings growth. We favor JSMR dominance in toll road business in Indonesia, commanding 73% market share and among listed companies with the highest market capitalization in Asia with favorable PEG ratio. With DCF method (WACC of 10.1% and LTG of 1%), we derived Rp4,800/share as JSMR’s target price. Maintain our BUY recommendation.

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