Release date :
October 29, 2018

■ ADHI booked a solid core NP in 9M18 of Rp332.2bn (+68% yoy, -9% qoq). This was ahead of our/consensus’ estimates.
■ 9M18’s new contracts booking was Rp11.4tr (+10.7% yoy vs. 9M17’s ex-LRT). Sign of pick-up in contracts seen; Sep 18 bookings alone was Rp2.9tr.
■ Add call maintained for ADHI with unchanged TP of Rp2,000, based on 8.8x CY19F P/E (1 s.d. below 3-year mean).

  • 9M18 core net profit: better-than-expected. 
  • ADHI booked a Rp9.4tr (+8% yoy, +14% qoq) revenue in 9M18. This accounted for 56%/50% to our/consensus’ FY18F estimates, or in line with our forecast (3-year mean achievement in 9M: 56%).
  •  9M18’s Jabodebek LRT revenue booking was at Rp6.8tr (accounted for 91% of our FY18F estimate). Jabodebek LRT revenue booking in 3Q18 was Rp4tr. We maintain unchanged our revenue target for Jabodebek LRT in FY18F of Rp7.5tr. Our LRT revenue target is the median of its revised LRT revenue target in FY18F of Rp7tr-8tr.
  • ADHI booked Rp1.5tr gross profit (+47% yoy, +15% qoq) in 9M18. This was ahead of our expectations at 61% of our FY18F (3-year mean achievement in 9M: 51%). 9M18’s GPM was at 15.8%, or higher compared to our FY18F’s 14.6%. This was helped by: 1) LRT revenue; and 2) better-than-expected EPC revenue of Rp707.8bn (vs. our estimate in FY18F of Rp309bn) with a higher-than-expected GPM of 17% (vs. our estimate in FY18F of 10%).
  • 9M18’s EBIT was at Rp1.1tr (+44% yoy, +19% qoq). This was above expectations at 60%/58% of our/consensus’ FY18F estimates (3-year mean achievement in 9M: 44%). 9M18’s core NP was at Rp332.2bn (+68% yoy, -9% qoq). This accounted for 46%/42% of our/consensus’ FY18F estimates, well ahead of the 3-year mean achievement in 9M of 35%.
  • ●OCF balance at the end of 9M18 was at a negative Rp2tr. This improved from the balance at end-FY17 of a negative Rp3tr. Previously, the company expected to receive a second LRT payment of Rp3.6tr by the end of Oct 18, in line with ours. Up till now, the company has not received the second payment, but we still expect this to materialise by the end of FY18F. Hence, we have an unchanged OCF outlook for the end of FY18F. 9M18 new contracts booking: behind expectations
  • In 9M18, ADHI booked Rp11.4tr in new contracts (+10.7% yoy vs. 9M17’s ex-LRT contracts). This accounted for 56%/49% of our/the company’s estimates in FY18F, or behind expectations (3-year mean achievement in 9M: 66%).
  • Despite the weaker bookings to 9M18, we maintain unchanged our new contracts forecast in FY18F of Rp20.5tr (+20% yoy vs. FY17’s ex-LRT contracts) as we expect the bookings to catch up in 4Q18. There was a significant pick-up in new contracts booking in Sep 18 alone with Rp2.9tr new contracts (accounting for 14%/12% of our/the company’s estimates in FY18F). Add call maintained with unchanged TP of Rp2,000
  • We maintain our Add call with an unchanged TP of Rp2,000, based on 8.8x CYFY19F (1 s.d. below 3-year mean). Key downside risks to our Add call are slower-thanexpected new contracts booking, LRT revenue realisation, and LRT receivable payments. Re-rating catalysts include better-than-expected earnings delivery and improved OCF balance to positive at end of FY18F.

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