Lower than expectation FY18
- Earnings of Rp1.5tn in FY18 (+3% yoy), below consensus and ours.
- Possible order book adjustment due to project revision and delays.
- We revise down our FY19F/20F by 9%/7%.
- Maintain Buy amid lower TP of Rp2,400 (from 2,600).
Strong top line, but higher COGS , Opex and impairment loss.
Order book imbalances due to project revision and delays.
Revise down our FY19F/20F forecast by %/%. We reduce our FY19F/20F earning forecast by 9.5%/6.6% as we apply lower order book assumption for FY19F/FY20F by 4%/3% due to possible order book write-off. In addition, we also apply higher allowance for impairment assumption of 0.8% of revenue in FY19F/FY20F (from: 0.6%) to adjust on several projects tender delay (2016-2017: 0.5-0.6%).
Maintain Buy amid lower TP of Rp2,400 (from 2,600). Despite lower earnings outlook, we maintain our positive stand to the counter given company's relatively DER (0.9x) and zero exposure towards turnkey projects. Given lower earnings estimate, our DCF-based TP ( WACC : 11.3%, TG: 2%) was decreased to Rp2,500/share representing FY19F P/E of 8.8x. Key risk to our call might come from lower than expected new contract achievement and additional impairment losses.
Sumber : IPS RESEARCH
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