CLSA Indonesia's construction analyst Hendy Soegiarto initiates coverage on Waskita (WSKT IJ) with BUY TP 850 - 29% upside - the last of his series on the big 4 SOE contractors. Pretty much a pure construction play, Waskita is the fastest growing contractor and should continue to post strong growth (2013 new order book growth @ 46%, 2013-14 earnings growth @ 47-61%) and potentially beneficiary of govt push of infra projects.
Key points from the report:
· Waskita is one of the big 4 SOE contractors. WSKT is the fastest growing contractors with a new order book YoY growth of +46% in 13CL, in-line with guidance.
- WSKT is the purest play on construction among the big 4 SOE contractors with construction services contributing 90%+ of revenue. WSKT focus has been pre-cast concrete factory which it has successfully expanded into helping margin expansion in the 1Q13 and expected to continue. We forecasts margin to expand to 10.4% in 13CL from 8.6% in FY12.
- WSKT is on-track to deliver this with 21% of new order book filled as of April 2013. We expect infrastructure spending to remain strong in 2013, positive for the sector.
- We initiate with a BUY, target price 1,100 implying 29% upside. Our valuation is based on a 17x 2014 P/E in-line with average regional peers.
source : Listri Adistri
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