Contact our analyst Revita

39% upside. BUY 

31st August, 2023

Current price Rp97

Target price Rp129 

Optimism in new targets
As of 8M23, WEGE’s new contracts have reached IDR 2.7 trillion, hitting 54-68% of the 2023FY goal of IDR 4-5 trillion. Notably, total new contracts for 1H23 showed a significant increase compared to 1Q23, amounting to IDR 516.65 billion. This growth was fueled by a substantial contract from the IKN project, specifically the ASN residential contract worth IDR 1.63 trillion. As of 8M23, the new contracts were sourced from: government projects (85.6%), state-owned enterprises (SOEs) (5.32%), and private entities (9.09%). Noteworthy among the private contracts is the Sky House Alam Sutera IDR project, valued at IDR 237.1 billion. Building on the 1H23 results, we’re targeting a new 27% CAGR revenue growth in 2024F compared to 2022A, with a new burn rate target of 18%.

Margin rise in 2024F
In 2023, WEGE anticipates a growth rebound, driven by a strategic focus on securing contracts from well-funded government, SOE, and private projects, aimed at reducing receivables. The integration of new technologies, such as Building Information Modeling (BIM), is expected to enhance performance. Despite a 1H23 slowdown, we project WEGE’s net profit margin to average 2.69% in 2023, improving to 5.76% in 2024F. The current year’s margin reduction can be attributed to increased costs and a decrease in burn rate.

Valuation: 39% upside
After adjustments from the 1H23 results, our new target price is set at IDR 129 per share, equivalent to a trading multiple of 5x PER. With a promising 39% upside, we maintain our BUY recommendation.