Company Fundamental Research, November 27,

2 2012

Company Information:
Price [November 26, 2012] :

IDR 1,700

Target Price

IDR 2,025

52wk Range

: 435.00 - 1,640.00

JCI

4,375

Beta

1.37

Market Cap [IDR mil.]

IDR 3,062,244

Shares outstanding [mil.]

1,801.32

Stock Code

ADHI

Sector

Construction

PT Adhi Karya Tbk

Company Performance: Outstanding performance
Summary

3Q11

2Q12

Revenue

1,184

1,790

51.16%

36.86%

80

79

158

100.08%

96.69%

EBT

47

51

108

111.31%

129.27%

150.89%

586.89%

150.89%

570.08%

Net Income
EPS

24

59

0.66%

2.00%

3.32%

4.92

13.14

32.98

61%

Public - Local

30%

Source: Company, Indosurya research

Public - Foreign

19%

40,000,000
35,000,000

1,800

10 per. Mov. Avg. (Series4)

20 per. Mov. Avg. (Series4)

1,600
1,400

30,000,000

1,200

25,000,000

1,000

20,000,000

800

15,000,000

600

10,000,000

400

5,000,000

200

M J S D M J S D M J S D M J S D M J S D M J S D M J S D M J S D M J S

Y-Y

1,308

45,000,000

Q-Q

Operating Income

Government

Share Performance:

3Q12

(In Billions of IDR)

Profit Margin

Share Holders Information:

(ADHI |BUY|TP: IDR2,025)

Revenue +36.86% y-y and +51.16% q-q, ADHIs

s revenue grew 36.86% compare to its
revenue in same period last year.
year
Profit Margin +3.32% 3Q12, ADHI could book profit margin more than what it achieved in
same period last year around 0.66%.
0.66%
EPS Growth +570.08% y-y and +150.89% q-q, ADHIs EPS grew
ew higher than last year.

Outlook
Outlook:
Seriousness of the government in prioritizing infrastructure development has a positive
impact on ADHI.
ADHI As a state-owned enterprise (SOE), ADHI has big opportunities to obtain the
projects. Government programs to expedite the project deployment process, MP3EI and PPP,
will remain as
a catalyst to accelerate project to be started. ADHIs
ADHI effort to achieve revenue
and contract targets will be reached following the pattern that always gets a lot more
m
in the
last quarter.
quarter We believe ADHI could achieve its IDR13.5
5 trillion contract target this year by
seeing its pattern in getting more project in last quarter especially government project.
ADHIs decision to create new line business, property and real estate,
estate in order to stabilize its
st
revenues is found as a right decision. Recurring income will reduce its lack of revenue in 1
nd
and 2 Quarter. ADHIs ace project, Monorail, is likely to have big chance to be selected by
the newly elected Jakarta governor
go
rather than MRT.

Valuation and Recommendation:

Recommendation BUY with potential 19% upside
rd

th

Outstanding
ding performance in 3 Quarter and its potential to create better performance in 4
Quarter make ADHI as one of the leading stock from construction sector. Government
seriousness in improving infrastructure quality implies large of potential in years ahead.
ahead Our
calculation through DCF method led us to the fair price
pr at IDR2,025
25 with potential 19% upside
In 2013.

Company Fundamental Research, November 27,

2 2012

FINANCIAL
Revenue Pattern: always fat in 4th quarter::
th

Most of ADHIs revenue comes from revenue in 4 quarter if we look at the

th
pattern from historical data. In 2011, ADHIs 4 quarter revenue is around
th
37% of ADHIs total revenue. While in 2010, ADHIs 4 quarter revenue is
st
around 46% from its total. Interesting thing is that ADHIs revenue in 1
nd
rd
and 2 quarter in 2012 is decreasing by 5% and 1%,
1% while revenue in 3
quarter jumps by 37%. If ADHI could achieve its 22% growth target until
th
end of this year, means that its 4 quarter revenue will jump for around
30%. Until September 2012, ADHI has achieved 44% from its 2012 revenue
target.

Source: Company, Indosurya research

Revenue Stream and Cost Structure:

Real Estates
2%

Property
2%

EPC
10%

Construction
Services
86%

Source: Company, Indosurya research

Source: Company, Indosurya research

The biggest contributor in ADHIs revenue comes from its Construction Services business with 86% from its revenue in 3Q 2012,
2012
while ADHIs new business line, Property, contribute 2%. Compare to its revenue in 3Q 2011, ADHIs
ADHI revenue grow 36.9%,
Construction Services grow 30%, EPC grow 76% and Real Estates grow 21%.
21%
90%
80%

9%

ADHIs EBIT contributor composition is a bit different than its Revs. Property
contribute 9% with 43% margin while Real Estates only 1% with 8% margin.
Construction Services still the biggest contributor followed by EPC. ADHIs EBIT
grow by 56% with 11% margin from its Revs compare to same period last year.
year
Construction Services grow 34%, EPC grow 283% while Real Estates down
d
by 67%.

Property

Source: Company, Indosurya research

76%

70%
60%
50%

43%

40%
30%
20%
10%

10%

14%

16%
1%

0%
Construction
Services

EPC

EBIT

8%

Real Estates

Gross Margin

Company Fundamental Research, November 27,

2 2012

Billions

Cost Structure 3Q12

250
200
Depreciation

150

Selling
100

General
Salary and Allowances

50
2010

2011

3Q11 1Q12 2Q12 3Q12

Source: Company, Indosurya research

Source: Company, Indosurya research

rd

ADHIs operating cost grew by 6% compare to its cost in 3 quarter 2011. Slower growth in operating cost made ADHI could book
rd
more EBIT in 3 quarter. Salary & Allowances and Depreciation cost grew by 16% and 50% while General and Selling cost down by
12% and 1%.

Earnings Performance:

4-Year EPS CAGR

120
100
80
60
40
20
0

92.71
62.69

2007

108.23

103.97

2010

2011

46.89

2008

2009

Earnings per share (EPS)

Source: Company, Indosurya research

Source: Company, Indosurya research

ADHI shows strong earnings growth by 570% in 3Q 2012 compare to its earning in 3Q 2011. ADHIs strong 3rd
3 Quarter performance
also supported by its 4-year
year earnings CAGR at 13.48%. If ADHI could achieve its 2012 earnings target, then ADHI will have 5-year
5
earnings CAGR at 22.94%.

By Sector:
Market Capt. based on revenue in year 2011
ADHI booked the second biggest revenue by 27% below WIKA, compare to revenue of
all construction company in year 2011.

Source: Company, Indosurya research

Company Fundamental Research, November 27,

2 2012

3rd Quarter 2012 performance

EPS Growth
Gross Margin Operating Margin Profit Margin
4-Year CAGR
3Q yoy
13.48% 570.08%
11.29%
8.83%
3.32%
26.78%
NA
NA
NA
NA
88.51% 200.35%
37.03%
24.72%
21.39%
23.20% 138.18%
19.98%
11.51%
10.46%
28.45%
34.18%
9.85%
8.19%
4.75%

Market Cap.
ADHI
PTPP
SSIA
TOTL
WIKA

2,936,152
3,970,801
5,552,195
2,728,000
9,163,752

ROA
0.83%
NA
4.81%
2.61%
1.02%

ROE
5.65%
NA
11.75%
8.68%
4.67%

Source: Company, Indosurya research

rd

ADHI has the biggest growth in 3 Quarter yoy followed by SSIA and TOTL. Government plan in increasing infrastructure quality has
rd
given positive influence to government construction companies such as ADHI, PTPP and WIKA. PTPP has not released its 3 Quarter
report.

Outlook:
Contract target 2012

Contract target 2012 Break

eak down

In IDR (tn)
EPC, 2.7

Real Estate, 0.1

Property, 0.3

Construction,
10.4

Source: Company

ADHIs contract target in year 2012 is IDR13.5 trillion. Until October 2012, ADHI has achieved around 68% from its target
or around IDR9.2 trillion. The project dominated by Building, EPC and Road/ Toll Road project.
Most of ADHIs project came from government based project. As a statestate
owned enterprise (SOE), ADHI has the advantage in obtaining project from
the government and other SOE. Only 13% contract comes from private
sector.

Source: Company

Company Fundamental Research, November 27,

2 2012

ADHIs next projects (Recurring Income)

ADHIs revenues were coming from contractual based project. To stabilize the revenue stream, ADHI has created new
business line in Property and Real Estate in 2011 which will provide recurring income. In 2013, ADHI will deploy 4 (four)
Property
roperty and Real Estate projects which are Taman Dhika Cinere, Taman Dhika Cibubur, Hotel The GrandDhika and
Mixed Use Area ADHI Kalimas.
Real Estate
Taman Dhika Cinere

Source: Company

Taman Dhika Cibubur

Source: Company

Company Fundamental Research, November 27,

2 2012

Property
Mixed Use Area ADHI Kalimas

Hotel The GrandDhika

Source: Company

Source: Company

Monorail
ADHIs abandoned Monorail project has been pushed back since the newly governor of Jakarta, Joko Widodo whos also
known as Jokowi elected. Jokowi is known as someone who pro for public transportation development rather than
adding new road. New plan had been presenting to the newly governor and appears to be getting good impression. The
advantage of Monorail compared to MRT is that with lower budget,
budget, more lines could be covered. While Monorail seems
one step ahead of MRT, if ADHI could win this project which rumored to be announced in January, 2013, then this
project will boost ADHIs performance.
Sector Outlook
ADHIs contract target in 2012 shows that about 87% of the contract source is coming from government project. In 2013,
government plan to increase its budget for Infrastructure project. Around IDR204
IDR20 trillion will be prepared by
government for infrastructure only which increase 16.6%
16
compare to its budget this year around IDR174.9
IDR174. trillion.
Indonesia government
overnment estimates total funds that will be issued by government and private sector for infrastructure
development in 2013 is around IDR458
458 trillion. Government program, MP3EI and PPP, which created
cre
to expedite
infrastructure development and government spending, shows the seriousness and clarity of government to improve the
quality of Indonesian infrastructure within measured timeline.
Toward election in year 2014, will led year 2013 to be the golden year for ADHI. Incumbent government will strive to
make landmark to create positive impression for its assets prior to election.
election One of the impressions that are usually used
is successful in improving the quality of infrastructure to support economic development,
development, since lack of infrastructure
quality has been main concern to improve the Indonesian economy.
economy Thus, there
here is no doubt that ADHI will play big role
in any government and SOE project in 2013.
2013

Company Fundamental Research, November 27,

2 2012

ABOUT COMPANY
ADHIs Business Model:
Key Partnership

Key Activities

- Other related company (Joint

Operation)
- Bank
- Supplier

- Construction
- Operation & Maintenance
- Business development
- Humar resources development
- Marketing

Key Resources
- Brand "ADHI"
- SOE
- Human Resources

Value Preposition

Customer Relationship

- Experienced construction
company
- Integrated construction
company (Constructio, EPC, Real
Estates & Property)

- SOE
- Central & Regional
Government
- Private

Channel
- Advertising
- Marketing office
- Infrastructure & Property event

Cost Stream

Revenue Stream

- Salary and Allowances

- General
- Selling
- Depreciation

- Construction Services
- EPC
- Real Estates
- Property

Source: Indosurya research

Customer Segment

Company Fundamental Research, November 27,

2 2012

Projection Summary
Income Statement

2009

2010

2011

2012E

2013E

(In Billions of IDR)

Revenue

7,715

5,675

6,695

8,163

8,693

Cost

7,229

5,220

6,251

7,621

8,117

Operating Income

485

455

444

541

577

Earnings before taxes

332

321

326

447

499

Taxes

169

131

144

112

125

Net Profit

163

190

183

335

375

Balance Sheet

2009

2010

2011

2012E

2013E

307

242

552

673

717

94

3,498

3,132

4,002

4,879

5,196

Inventories

814

681

822

1,002

1,067

Fixed assets

1,011

871

735

896

955

Total assets

5,629

4,928

6,113

7,453

8,028

2,850

2,214

3,133

3,819

4,067

988

771

973

1,186

1,263

Depreciation

Infrastructure development will

support ADHI in achieving its
revenue targets

(In Billions of IDR)

Assets
Cash
ST Investments
Accounts receivable

Liabilities and equity

Accounts payable
Accruals
Notes payable
Total current liabilities
Long-term bonds
Total liabilities
Total common equity
Liabilities and equity
Ratios
Earnings per share (EPS)

494

416

770

812

812

4,331

3,401

4,875

5,817

6,143

567

666

254

268

268

4,898

4,067

5,129

6,085

6,410

731

861

984

1,367

1,618

5,629

4,928

6,113

7,453

8,028

2012E

2013E

2009

2010

2011

92.71

108.23

103.97

176.50

197.20

Book value per share (BVPS)

416.11

490.04

559.73

719.98

851.83

Debt Ratio

87.01%

82.52%

83.91%

81.65%

79.85%

Return on Assets

2.89%

3.86%

2.99%

4.50%

4.67%

Return on Equity

22.28%

22.09%

18.57%

24.51%

23.15%

4.75

8.22

7.69

9.10

10.50

2.11%

3.35%

2.73%

4.11%

4.31%

Price-to Earnings Ratio

Profit Margin
Source: Company, Indosuryaresearch

Big source of financing needed for

big scale of project

From the last 4-yr, ADHIs EPS CAGR

is 13..48% and we estimate its 5-yr
EPS CAGR is around 23%

Will managed
m
to maintain Profit
Margin around 4%

Company Fundamental Research, November 27,

2 2012

Equity Research Team

www.indosuryaresearch.com
Branch Office:
Jakarta:
Surabaya:
GrhaKencana Lt 2
Indosurya Tower Lt 2
Jl. Perjuangan No 88
Jl. BasukiRahmat 75
KebonJeruk,
Surabaya
Jakarta
Telp: +6231 - 535 3333
Telp: +6221 - 5365 0385

Medan:
West Plaza Lt 5
Jl. Diponegoro No 16
Medan 20152
Telp: +6261 - 455 8545
Fax: +6261 - 457 5548

Palembang:
Komplek PTC Mall
Blok 1 No 8
Jl. R. Sukamto, Palembang
Telp:+62711 - 382627

Solo;
JlSlametRiyadi No 401
Surakarta
Telp: +62271 - 711958

Disclaimers:
PT. AsjayaIndosurya Securities does not give any warranty in relation to the accuracy, completeness and reliability of this report
report as it only expresses his/her personal
views. This report is prepared for internal use and clients of PT. AsjayaIndosurya Securities only. PT. AsjayaIndosurya Securities
Secur
does not responsible for any
transactions with regard to any recommendation mentioned in this report. The final
final decision is in your hands. Please learn of risk and return first before making an
investment