Waskita Karya (WSKT) 1Q13 net earnings came at Rp5.4bn, a significant increase from 1Q12 net earnings of only Rp632mn. The increase in net earnings was mainly attributed by 18.8% yoy growth in revenue; 140bps gross margin improvement and 29.7% yoy decline in interest charges (as company started utilized IPO proceed). The 1Q13 achievement (1.7% of FY2013) was in line with the past 2 years figures (0.2% and 1.2% 1Q contribution in 2012 and 2011).
1Q13 revenue was at Rp957.4bn, or 18.8% yoy growth from Rp806.1bn. 1Q13 revenue achievement equals to 8.9% of FY13 revenue (consistent with the 1Q number in past two years, 9.2% and 9.8% in 2012 and 2011, respectively). We expect that the company should be able to book most part of the revenue in 2nd semester of the year as government projects are normally being tendered at that time.
1Q13 gross margin (10.3%) was improved by 140bps compared to the same period last year (FY12 and FY13 gross margin were at 8.3% and 9.1%, respectively). Margin improvement was due to company’s effort to be selective on sizeable and high margin projects .
New contract secured during 1Q13 period was Rp3.3tn (our FY2013 new contract target is at Rp12.5tn). We are comfortable with the achieved new contract and some upside may be existed as more government projects will be tendered in the 2nd half of the year.
We are currently in the process of reviewing our recommendation for the counter. WSKT is currently trading at 23.0x 2013PE and 16.9x 2014PE.
Indonesia Market Summaries, April 29 2013
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