Monday, 16 February 2015
TOLL ROAD/COMPANY UPDATE
Jasa Marga
BUY
Target Price, IDR
8,200
Upside
18%
JSMR IJ/JSMR.JK
Last Price, IDR
No. of shares (mn)
6,950
6,800
Market Cap, IDR bn
47,260
3,695
5.3
(US$ mn)
3M T/O, US$mn
Last Recommendation
06-Feb-2015
22-Jan-2015
08-Jan-2015
BUY
BUY
BUY
Rp 7,600
Rp 7,600
Rp 7,600
JSMR relative to JCI Index
JSMR (LHS)
Relative to JCI Index (RHS)
%
IDR
15
7,500
7,000
10
6,500
5
2015 and beyond
JSMR’s FY14 results are in-line with expectations from the top line down to the
EBITDA level. In our view, the JORR-S assets write-off is completely done and thus it
won’t have much fundamental impact on JSMR going forward. In 2015F, we expect
average traffic to only increase by 4.9% to 3.76mn vehicles/day with the out-ofGreater Jakarta sections remaining the main growth driver. Moreover, JSMR will
operate three new sections, namely Gempol-Pandaan, Gempol-Pasuran (section 1),
and Surabaya-Mojokerto (section 4). All in all, we believe that JSMR remains a
convincing story given that more toll roads will be delivered in the period up to
2018F, thus growth remain firm. Incorporating the FY14 results in addition to the
newest section in Medan-Tebing Tinggi, we upgrade our TP to Rp8,200. BUY.
FY14 result: Inline operational figures
In JSMR’s FY14 result, the company restated some of its previous year’s figures to reflect changes
for the JORR-S asset which was written-off in May 2013 that leads in Rp309bn lower FY13 net profits.
The restatement won’t have a major fundamental impact given that it was only a one-time event
in 2013. Operationally, JSMR performed well in 2014. Toll revenues grew 15%y-y to Rp6.6tn, mainly
thanks to 2013’s tariff hikes on some major sections and traffic growth on the out-of-Greater
Jakarta sections. Meanwhile, salary costs grew in line with the inflation rate as reflected in the only
7.6% increase in salary-related costs/km. As a result, both the operating and EBITDA margins
remained sound at 38.1% and 49.6%, respectively, in FY14 – in-line with expectations.
6,000
2/13/15
1/16/15
12/19/14
11/21/14
9/26/14
10/24/14
8/1/14
8/29/14
7/4/14
6/6/14
5/9/14
-5
4/11/14
5,000
3/14/14
0
2/16/14
5,500
Market Recommendation
21
BUY
5
HOLD
SELL
1
Danareksa vs Consensus
Target price, IDR
EPS 2015F, IDR
PER 2015F, x
Our
8,200
236
29.5
Cons
7,576
258
26.9
Joko Sogie
(62-21) 2955 5827
[email protected]
Danareksa research reports are also
available at Reuters Multex and First Call
Direct and Bloomberg.
www.danareksa.com
% Diff
8.2
-8.5
9.6
Modest growth expected in 2015
In 2015F, JSMR will operate three new sections, namely: 1) Gempol-Pandaan, 2) Gempol-Pasuruan
section 1, and 3) Surabaya-Mojokerto section 4. All sections are expected to be operational before
the Lebaran holidays in July 2015. In terms of contribution, these three new sections will only have
a minimal impact in FY15F, accounting for only 1.9% of traffic volume and 1.5% of toll revenues.
Thus, we only expect JSMR’s average traffic to increase by 4.9% to 3.76mn vehicles/day in FY15F
from 3.58mn vehicles/day in FY14, with the out-of-Greater Jakarta sections remaining the main
growth driver. Overall, we expect toll revenues to grow 10% in FY15F to Rp7.3tn – in line with the
company’s guidance. As for capex, we foresee lower spending in 2015F than in 2014 as most of
the toll roads in the pipeline are still in the land acquisition phase.
Upgrade TP to Rp8,200. BUY
We have now incorporated both the 2014 figures and the latest toll concession in MedanKualanamu-Tebing Tinggi into our model. We expect the first section of Medan-Kualanamu to
be operational in 3Q16F, with the second section of Kualanamu-Tebing Tinggi operational in
4Q17F. Better execution of the new law on land acquisition for public infrastructure – which
became effective on 1 January 2015 – might be a game changer for JSMR as it will hasten JSMR’s
new toll road progress which, in turn, will lead to higher traffic. All in all, we continue to value JSMR
based on its toll concessions until they end. We upgrade our Target Price to Rp8,200. Maintain BUY.
Toll Revenues, IDR bn
EBITDA, IDR bn
EBITDA Growth, %
Net Profit, IDR bn
Core Profit, Rp bn
Core EPS, IDR
Core EPS Growth, %
Net Gearing, %
PER, x
Core PER, x
PBV, x
EV/EBITDA, x
Yield, %
2013
2014
2015F
2016F
2017F
5,803
3,058
(4.7)
1,028
1,056
155
(28.6)
81.5
46.0
44.7
4.5
18.3
1.4
6,646
3,583
17.1
1,403
1,540
226
45.7
87.5
33.7
30.7
4.1
16.0
1.1
7,329
3,953
10.3
1,600
1,710
251
11.1
94.6
29.5
27.6
3.8
15.0
0.9
8,316
4,678
18.3
1,877
2,007
295
17.4
101.2
25.2
23.5
3.4
13.1
1.0
9,181
4,937
5.5
1,982
2,117
311
5.5
104.3
23.9
22.3
3.1
12.8
1.2
See important disclosure on the back of this report
16 February 2015
Jasa Marga
FY14 result: Inline operational figures
In JSMR’s FY14 result, the company restated some of its previous year’s figures to reflect
changes in its accounting policy for the JORR-S asset which was written-off in May 2013. The
restatement resulted in a Rp340bn write-off in the company’s fixed assets, and also led to
Rp309bn lower FY13 net profits. In our view, the JORR-S assets write-off is completely done
and thus it won’t have much fundamental impact on JSMR going forward. Nonetheless,
quarterly comparisons in 2014 are not valid given the restatement was only made to
December 2014’s financial statement.
Exhibit 1. Restatement of the 2013 financial statement
31 Dec 2013, IDR bn
Before restatement
After restatement
Adjustment
22,893
48
1,039
5,011
22,553
90
1,107
4,702
(340)
42
68
(309)
5,826
1,143
477
1,238
5,803
1,569
382
929
(23)
426
(95)
(309)
Fixed assets –net
Other assets
Liabilities
Equity
Toll revenues
Toll maintenance expenses
Taxes
Net profit
Source: Company
Operationally, JSMR performed well in 2014. Toll revenues recorded impressive growth of
15%y-y to Rp6.6tn, mainly thanks to the 2013 tariff hikes on some major sections given that
the FY14 daily traffic only grew 3.8% to 3.58mn vehicles/day. Meanwhile, salaries – as the
largest chunk of operational costs – grew in line with the inflation rate (this is reflected in
the only 7.6% increase in salary-related costs/km in FY14). As a result, both the operating
and EBITDA margins remained sound at 38.1% and 49.6%, respectively, in FY14.
Even so, with net gearing escalating to 87% with total interest bearing liabilities reaching
Rp13.3tn as of December 2014, JSMR’s net profits came under some pressure. This stemmed
from the significant increase in interest expenses to Rp1.2tn in FY14 from Rp944bn in FY13.
Consequently, at the bottom line, net profits only reached Rp1.4tn in FY14, or up just 5%
over FY13’s figure before the restatement. Overall, from the top line down to the EBITDA
level, the figures are still in-line with expectations. However, the bottom line figure is a bit
below par, mainly because of the higher-than-expected interest expenses and tax rate in
FY14.
Exhibit 2. FY14 results – operationally inline
(IDR bn)
FY13
FY14
y-y, %
2014F
A/F, %
Traffic volume, mn
Average daily traffic, mn
Toll revenues
Operating profit
EBITDA
Net interest
Net profit
(%)
Operating margin
EBITDA margin
Net margin
1,259
3.45
5,803
1,992
3,058
(715)
1,028
1,307
3.58
6,646
2,752
3,583
(950)
1,403
3.8
3.8
14.5
38.2
17.1
32.8
36.6
1,335
3.66
6,724
2,904
3,674
(856)
1,580
97.9
97.9
98.8
94.8
97.2
111.0
88.8
31.6
48.5
16.3
38.1
49.6
19.4
39.8
50.4
21.7
Source: Company, Danareksa Sekuritas
2
16 February 2015
Jasa Marga
Modest growth expected in 2015
In 2015, JSMR will operate three new sections, namely: 1) the 13.6km Gempol-Pandaan
section, 2) the 13.9km Gempol-Pasuruan section 1, and 3) the 18.5km Surabaya-Mojokerto
section 4. As construction has nearly been completed, the Gempol-Pandaan section will soon
be operated (in 2Q15F), while Gempol-Pasuruan section 1 and Surabaya-Mojokerto section
4 are expected to be operational before the Lebaran holidays in July 2015. In terms of
contribution, these three new sections will only have a minimal impact in FY15F, accounting
for only 1.9% of JSMR’s traffic volume and 1.5% of the company’s toll revenues.
Exhibit 3. JSMR’s toll road plans
Toll road
Section
Length, km
Targeted completion
Expectedcompletion
Gempol-Pandaan
Gempol-Pasuruan
Surabaya-Mojokerto
Additional toll road 2015F
Gempol-Pandaan
1: Gempol-Rembang
4: Krian-Mojokerto
13.6
13.9
18.5
46.0
2Q15F
3Q15F
3Q15F
2Q15F
3Q15F
3Q15F
Progress
Construction 96%
Construction 80%
Construction 70%
Surabaya-Mojokerto
Surabaya-Mojokerto
Surabaya-Mojokerto
Medan-Kualanamu-Tebing Tinggi
Additional toll road 2016F
1B: Sepanjang-WRR
2: WRR-Driyorejo
3: Driyorejo-Krian
1: Medan-Kualanamu
4.6
5.1
6.1
17.8
33.6
1Q16F
2Q16F
2Q16F
3Q16F
1Q16F
2Q16F
2Q16F
3Q16F
Construction 25%
Land acquisition
Land acquisition
Construction 10%
Semarang-Solo
Semarang-Solo
Semarang-Solo
Gempol-Pasuruan
Medan-Kualanamu-Tebing Tinggi
Additional toll road 2017F
2A: Bawen-Salatiga
2B: Salatiga-Boyolali
2C: Boyolali-Solo
2: Rembang-Pasuruan
2: Kualanamu-Tebing Tinggi
17.5
24.4
7.6
8.1
43.9
101.5
3Q16F
3Q16F
3Q16F
1Q17F
4Q17F
3Q17F
3Q17F
3Q17F
4Q17F
4Q17F
Land
Land
Land
Land
Land
acquisition
acquisition
acquisition
acquisition
acquisition
Bogor Outer Ring Road
Bogor Outer Ring Road
Jakarta Outer Ring Road 2
Jakarta Outer Ring Road 2
Gempol-Pasuruan
Additional toll road 2018F
2B: Kd. Badak-Yasmin
3: Yasmin-Darmaga
Cengkareng-Kunciran
Kunciran-Serpong
3: Pasuruan-Grati
2.2
3.0
14.2
11.2
12.2
42.8
4Q16F
4Q16F
1Q17F
1Q17F
3Q17F
1Q18F
1Q18F
1Q18F
1Q18F
2Q18F
Land
Land
Land
Land
Land
acquisition
acquisition
acquisition
acquisition
acquisition
Source: Company, Danareksa Sekuritas
Thus, overall, we don’t expect strong growth in JSMR’s traffic in 2015F. Indeed, in our estimate,
JSMR’s average traffic will only increase by 4.9% to 3.76mn vehicles/day in FY15F from 3.58mn
vehicles/day in FY14. Traffic on the mature sections in Greater Jakarta will only grow 2.2%
in FY15F, but with traffic on the out-of-Greater Jakarta sections growing a much brisker
14.4%. In our view, with the average traffic already standing at 3.73mn vehicles/day in 4Q14,
our target is realistic. As for tariffs, JSMR is allowed to increase tariffs on 12 sections, with some
of these sections enjoying busy traffic. In 2015F, we expect the average tariff increase to reach
14% with the timing skewed to 2H15F. All in all, we expect toll revenues to grow 10% in FY15F
to Rp7.3tn – in line with the company’s guidance.
Exhibit 4. Daily traffic average
Exhibit 5. JSMR traffic growth
mnvehicles/day
Traffic daily average-FY
Traffic daily average-Q
Traffic growth
4.0
18
3.8
16
Greater Jakarta
Out-of-Greater Jakarta
14
3.6
12
3.4
10
3.2
8
3.0
6
4
2.8
2
Source: Company, Danareksa Sekuritas
4Q14
3Q14
2Q14
1Q14
4Q13
3Q13
2Q13
1Q13
4Q12
3Q12
2Q12
1Q12
4Q11
3Q11
2Q11
1Q11
2.6
0
2012
2013
2014
2015F
2016F
2017F
2018F
Source: Company, Danareksa Sekuritas
3
16 February 2015
Jasa Marga
As for capex, we foresee lower spending in 2015F than in 2014. For the whole of the year,
JSMR has earmarked capex of just Rp3.85tn, reflecting the fact that most of the toll roads
in the pipeline are still at the stage of going through the land acquisition process. As such,
higher capex will be spent in 2016/17F as the new toll roads are constructed. Gearing will
consequently remain high until 2017F, thus EBITDA margin is set to improve after 2017F.
With eight new toll roads to be operated by YE18F, the combined length of JSMR’s toll roads
will increase significantly to 800km from 576km as of YE14.
Exhibit 6. Gearing will remain high until 2017
Interest bearing liab., IDR tn
20
18
16
Net gearing, % (RHS)
101
95
87
120
104
100
14
12
10
8
6
80
67
60
40
4
2
0
20
0
2009
2010
2011
2012
2013
2014
2015F
2016F
2017F
2018F
Source: Company, Danareksa Sekuritas
Exhibit 7.Salary-related cost grow align with inflation
Additional
850
3300
800
3100
43
750
Source: Company, Danareksa Sekuritas
622
656
2100
1900
1700
EBITDA margin
56
54
55
52
48
50
53
52
50
49
49
45
40
35
2018F
1500
2017F
2014
2013
2012
2011
2010
10
0
576
13
14
544 544 554
517 531
2016F
22
2015F
km
500
757
46
600
550
2500
2300
34
60
2900
2700
102
700
650
Operating margin
Salary cost (RHS)
IDR mn/km
JSMR toll road
Exhibit 8. Margins improvement story post 2017
30
2010 2011
2012 2013
2014 2015F 2016F 2017F 2018F
Source: Company, Danareksa Sekuritas
Upgrade TP to Rp8,200. BUY
We have now incorporated both the 2014 figures and the latest toll concession in MedanKualanamu-Tebing Tinggi into our model. We expect the first section of Medan-Kualanamu
to be operational in 3Q16F, with the second section of Kualanamu-Tebing Tinggi operational
in 4Q17F. The capex for the first section will be reduced due to government participation
through the VGF scheme. Better execution of the new law on land acquisition for public
infrastructure – which became effective on 1 January 2015 – might be a game changer for
JSMR as it will hasten JSMR’s new toll road progress which, in turn, will lead to higher traffic.
All in all, we continue to value JSMR based on its toll concessions until they end. We upgrade
our Target Price to Rp8,200. Maintain BUY.
4
16 February 2015
Jasa Marga
Exhibit 9. Our DCF valuation
EBITDA
Tax on Ebit
Capex
Working capital
FCFF
Enterprise value
Net debt (cash)
Minorities
NAV
NAV/share, IDR
2015F
2016F
2017F
2018F
2019F
2020F
3,953
(660)
(3,971)
(235)
(914)
69,178
11,871
1,499
55,808
8,200
4,678
778
(4,787)
(110)
(997)
4,937
(814)
(4,690)
(70)
(636)
6,254
(1,047)
(265)
(1)
4,941
7,217
(1,351)
(278)
(48)
5,540
8,510
(1,733)
(292)
(19)
6,467
…
2045F
41,621
(8,402)
(611)
(90)
32,158
Source: Danareksa Sekuritas
5
16 February 2015
Jasa Marga
Exhibit 10. Profit & Loss (IDR bn)
2013
2014
2015F
2016F
2017F
Toll Revenues
Others
Operating Revenues
5,803
508
6,311
6,646
583
7,229
7,329
665
7,994
8,316
744
9,060
9,181
832
10,013
Toll collection
Service
Maintenance
JO
308
G&A
1,088
Operating Expenses
873
482
1,569
313
1,161
4,319
1,083
557
1,365
329
1,286
4,477
1,204
618
1,504
344
1,399
4,941
1,318
673
1,674
359
1,630
5,408
1,545
758
1,946
6,239
Operating Profit
EBITDA
Net Interests
Other Income (Expenses)
Pre-tax Income
Income Tax & Minorities
Net Profit
Core Profit
1,992
3,058
(715)
(12)
1,311
(283)
1,028
1,056
2,752
3,583
(950)
(5)
1,822
(419)
1,403
1,540
3,053
3,953
(852)
2,201
(601)
1,600
1,710
3,652
4,678
(1,059)
2,593
(716)
1,877
2,007
3,774
4,937
(1,061)
2,714
(732)
1,982
2,117
2013
2014
2015F
2016F
2017F
Cash & Equivalent
Other Current Assets
Total Current Assets
Fixed Assets -net
Other Non-current Assets
Total Non-current Assets
Total Assets
3,514
274
3,788
23,195
1,076
24,270
28,059
3,291
351
3,641
26,820
1,396
28,217
31,858
2,778
371
3,150
29,891
1,705
31,596
34,746
2,876
400
3,276
33,653
1,914
35,567
38,842
2,656
426
3,081
37,180
2,073
39,253
42,335
Short-term Debt
Trade Payables
Other Current Liabilities
Total Current Liabilities
Long-term Debt
Other Non-current Liabilities
Total Non-current Liabilities
Total Liabilities
Shareholder’s Equity
Total Liabilities and Equity
1,651
100
3,120
4,871
10,465
2,165
12,629
17,501
10,558
28,059
654
192
3,468
4,313
12,629
3,491
16,120
20,433
11,425
31,858
212
3,560
3,772
14,649
3,780
18,430
22,201
12,544
34,746
240
3,683
3,923
16,922
4,118
21,040
24,963
13,880
38,842
265
3,813
4,078
18,522
4,518
23,041
27,119
15,216
42,335
Source: Company, Danareksa Sekuritas
Exhibit 11. Balance Sheet (IDR bn)
Source: Company, Danareksa Sekuritas
6
16 February 2015
Jasa Marga
Exhibit 12. Cash flow (IDR bn)
Pre-tax
Minorities
Depreciation
Tax
Working Capital
Operating Cash Flow
Capex
Investment
Others
Investing Cash Flow
Debt
Equity
Dividend
Others
Financing Cash Flow
Changes in Cash
2013
2014
2015F
2016F
2017F
1,311
99
1,067
(538)
(400)
1,539
(4,929)
(5)
440
(4,494)
1,902
383
(641)
523
2,167
(788)
1,822
188
831
(435)
(455)
1,951
(4,456)
7
435
(4,014)
1,167
(2)
(535)
1,209
1,840
(223)
2,201
59
900
(583)
(235)
2,341
(3,971)
(9)
203
(3,776)
1,366
(59)
(421)
37
923
(512)
2,593
62
1,026
(689)
(110)
2,882
(4,787)
(9)
240
(4,557)
2,272
(62)
(480)
42
1,772
98
2,714
82
1,163
(720)
(70)
3,168
(4,690)
(9)
283
(4,416)
1,601
(82)
(563)
72
1,027
(220)
2013
2014
2015F
2016F
2017F
31.6
48.5
16.3
16.7
10.1
3.9
38.1
49.6
19.4
21.3
12.8
4.7
38.2
49.4
20.0
21.4
13.4
4.8
40.3
51.6
20.7
22.2
14.2
5.1
37.7
49.3
19.8
21.1
13.6
4.9
114.8
81.5
2.2
116.3
87.5
2.3
116.8
94.6
2.6
121.9
101.2
2.9
121.7
104.3
3.0
6
10
10
10
10
4.0
(23.4)
(4.7)
(35.9)
(28.6)
14.5
38.2
17.1
36.6
45.7
10.3
10.9
10.3
14.0
11.1
13.5
19.6
18.3
17.3
17.4
10.4
3.4
5.5
5.6
5.5
Source: Company, Danareksa Sekuritas
Exhibit 13. Key ratios
Profitability, %
Operating Margin
EBITDA Margin
Net Margin
Core Margin
ROAE
ROAA
Capitalization
Debt to Equity, %
Net Debt to Equity, %
Interest Coverage, x
Turnover, days
Trade Receivables
Inventories
Trade Payables
Growth, %
Toll Revenues
Operating Profit
EBITDA
Net Profit
Core Profit
Source: Company, Danareksa Sekuritas
7
16 February 2015
Jasa Marga
DISCLAIMER
The information contained in this report has been taken from sources which we deem reliable. However, none of P.T. Danareksa Sekuritas and/or its affiliated companies and/or
their respective employees and/or agents makes any representation or warranty (express or implied) or accepts any responsibility or liability as to, or in relation to, the accuracy or
completeness of the information and opinions contained in this report or as to any information contained in this report or any other such information or opinions remaining
unchanged after the issue thereof.
We expressly disclaim any responsibility or liability (express or implied) of P.T. Danareksa Sekuritas, its affiliated companies and their respective employees and agents whatsoever
and howsoever arising (including, without limitation for any claims, proceedings, action , suits, losses, expenses, damages or costs) which may be brought against or suffered by
any person as a results of acting in reliance upon the whole or any part of the contents of this report and neither P.T. Danareksa Sekuritas, its affiliated companies or their respective
employees or agents accepts liability for any errors, omissions or mis-statements, negligent or otherwise, in the report and any liability in respect of the report or any inaccuracy
therein or omission therefrom which might otherwise arise is hereby expresses disclaimed.
The information contained in this report is not be taken as any recommendation made by P.T. Danareksa Sekuritas or any other person to enter into any agreement with regard to
any investment mentioned in this document. This report is prepared for general circulation. It does not have regards to the specific person who may receive this report. In
considering any investments you should make your own independent assessment and seek your own professional financial and legal advice.
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