Contact our analyst Revita

45% upside, Buy

12th May 2022

Current price Rp 690

Target price Rp1230

Targetting 20% growth of New Contracts
ADHI is targeting new contracts in 2022 to grow 15-20%. Our estimate is IDR. 18.2 trillion which is an increase from 2021 new contracts of IDR. 15.2 trillion. As of March 2022, new contracts have reached IDR. 3,9 trillion, up 129% YoY from March 2021’s IDR 1.7 trillion, ADHI’s new contracts come from construction & energy (85%), property (7%), and other businesses (8%). The types of project owner are Government 33%, SOE 16%, and private 51%.
We maintain our belief that this year will see moderate growth just like 2021. We estimate the total order book for 2022 will reach IDR 52.3 trillion or up 8% yoy.

Issuing IDR 3.75 trn bonds
PT Adhi Karya (Persero) Tbk plans to issue bonds totaling IDR 3.75 trillion. This bond is phase III of sustainable bond III Adhi Karya with a target for funds raised of IDR 5 trillion. Previously, the company had issued bonds worth IDR 289.6 billion in 2020 and IDR 673.5 billion in 2021.  This bond offering will improve debt profiling and provide working capital. The new funds will be used to repay the principal of Sustainable Bond II Phase I (2017) amounting to Rp 2,812 trillion. The rest or about 25%, after deducting costs, will be used for working capital for toll construction projects, railway facilities, buildings, energy, industry and other infrastructure development projects. We believe with this addional debt, ADHI can still maintain a debt to equity ratio below 3.5x. We calculate the deb to equity during 2022-2023F will average 1.92X

Valuation: 45%upside
We have a Target price of IDR.1,230/share which is equal to a PER of 29x. With 45% upside potential, our recommendation is maintained as BUY.