RISET CIMB 26 JUNI 2013

RISET FR CIMB 26 JUNI 2013 :

1.Jasa Marga   | More traffic ahead
JSMR IJ / JSMR.JK | OUTPERFORM - Maintained | Rp5,850.00 - Tgt. Rp7,300.00
Mkt.Cap: US$3,974.00m | Avg.Daily Vol: US$5.72m | Free Float: 30.00%
Toll Roads | Author(s): Erindra KRISNAWAN,

JSMR’s in-line but unexciting 1Q13 earnings fail to reflect the stock’s positive outlook from new toll-road deliveries in 2H13. Its recent correction offers an attractive entry point. 1Q13 core EPS accounted for 16% of our full-year forecast, which we deem in line as future quarters will get a lift from a toll rate hike in Sep and lower interest cost. We maintain our EPS forecasts and DCF-based target price of Rp7,300 (WACC: 10%). The stock remains an Outperform given its favourable prospects due to new toll roads and tariff adjustments.

Unexciting and in-line 1Q
1Q13 net earnings of Rp322bn (-16% yoy) came in at 16% of our full-year forecast and 17% of consensus numbers. We view the 1Q13 earnings as being in line since earnings in the coming quarters will be supported by a toll rate hike in September 2013 and lower interest cost from bond refinancing. Gross profit from toll road operations (ex-construction and other revenues) came in flat yoy at Rp806bn or 19% of our full-year forecast. The pedestrian 1Q13 showing reflects inflation of toll-related expenses (+13% yoy, 22% of FY13 forecast) against unchanged tariffs for JSMR’s main toll roads.

Potential traffic upside
On a more positive note, 1Q13 traffic of 299.3m vehicles (+5% yoy) met our expectations as it accounted for 23% of our full-year forecast, in line with the historical pattern. The experience in 2008 showed that traffic was only marginally dented by the fuel price increase as traffic during the 12 months after the May 2008 fuel price rise still edged up 2.6% yoy compared to 3.2% prior to the fuel price hike.
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We think that our traffic forecast could also see support from three toll road projects, i.e. Nusa Dua-Benoa, Surabaya-Mojokerto and Gempol-Pandaan which will be operational by 4Q13.

Attractive entry point
The recent market sell-off has pushed JSMR’s FY13 P/E down to 20x, which we consider attractive given our 3-year EPS growth forecast of 24%, the positive outlook, defensive earnings and catalysts from the commissioning of new projects.