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Dec 01, 2016 23:09:49
Key Takeaway from Adhi Karya’s (
) public expose
Adhi expects to sign the IDR23trn LRT Greater Jakarta 1st phase the latest in March 2017, later than our expectation, as Adhi is waiting the approval from Ministry of Transportation. Government plans to finance this project using the state budget and bank loan in FY17 – FY19F. Adhi expects that Government will allocate IDR10trn. Thus, during the construction Adhi will have to borrow up to IDR13trn from bank and would bear the interest const during the construction state. Post the project completion the loan will be passed to the government including interest expense.
The management estimates to have a gross loss of IDR400bn in EPC division this year, bigger than our initial estimates of IDR300bn.Moreover, there is a potential loss of IDR200bn in EPC projects next year.
Having said that,
Adhi Karya (
has revised its FY16F net profit target to IDR301bn (-35% YoY), much lower than our estimates of IDR388bn.
Conservatively, Adhi’s management guided FY17F’s NPAT of IDR500bn, lower than our initial estimates of IDR688trn. The company also aims to obtain IDR21trn new contracts and IDR14.31trn revenue next year.
Currently, we are reviewing our earnings estimates and our recommendation.