Contact our analyst Revita
11 April 2023
Price Rp 165
Target Price Rp 330 BUY
Investment Consideration
Targetting 23% growth in new contracts
WTON booked new contracts in 2022 of IDR. 7.01 trillion which is an
increase of +34% YoY. Based on sectors, the new contracts are
dominated by infrastructure projects at 61.46%, followed by property
18.35%,Industry 6.59%, Electricity 5.50%, Mining 4.4% and Energy
3.56%. Based on project owner, the private sector still dominates at
58.78% followed by WIKA group 26.09%, SOEs 13.13%, and
Government 2%. The Top 3 customers based on new contracts are WIKA
at 26.09% followed by PLN (Persero), and PTPP. We target WTON’s total
2023 new contracts to increase +23% YoY to IDR. 8.6 trillion with an
estimated utilization rate of 60% or better to support WTON’s production.
WTON has no plan to shutdown the plant this year.
Developing new products
WTON continued to develop innovative new products in 2022, namely
WTON “Splice sleeve”, which is a WTON product innovation used to
connect between precast concrete components. This product has been
used in The Morowali AIM Project IMIP. The second product is called
“Gravity wall”, which is used for soil retaining walls. Modules are
patterned to add aesthetics when used in urban areas. The pilot project of
this product was installed on PPB Subang land.
Targeting better margins
WTON 2022 bottom line profit margin increased significantly to 2.71%
compared to 1.92% in 2021. This was due to an increase in the plant
utilization rate from 42.9% in 2021 to 60.0% in 2022, higher than 2020’s’s
53.1% This resulted in better production costs which helped to improve
the GPM to 8.6% in 2022 compared to 5.2% in 2021. With a better
utilization rate, we expect better margins again in 2023-2024 as WTON is
targeting anutilization rate at above 60% for 2023F. We expect that
margins will improve as production and utilization rates improve in 2023-
2024. We are forecasting that the 2023 – 2024F net profit margin will
improve to 2.70% and 3.20% respectively.
Valuation: significant upside
Based on 2022 results, we maintain our target price of IDR. 330/share
within 1 year, which is a 9.4x PER. With significant potential upside, we
maintain our recommendation to BUY.