Feb 27, 2017 11:37:36

Wijaya Karya ($WIKA), FY16’s results above our estimate

  • Wijaya Karya (WIKA IJ, BUY, TP: IDR2,950) recorded IDR1trn (+61.9% YoY) net profit in FY16, above our and consensus estimates due to one off revenue from land plot selling worth IDR250bn, higher GM and lower interest expense than expected.
  • On the other hand, its revenue only reached IDR15.7trn (+15.0% YoY), only 87%/88.4% of our/consensus estimates. It was dragged down by delay in HSR project which was expected to contribute IDR2.5trn last year.
  • Its gross margin was expanded to 14.2% in FY16, improved from 12.1% in FY15. It was supported by IDR250bn land plot selling in revenue and higher gross margin from infra Building segment.
  • In quarterly basis, Wika obtain IDR610bn (+323.8%QoQ,160.2% YoY) net profit in 4Q16, while its revenue grew +91.5%QoQ, 14.5%YoY. Thus, Wika booked the highest level of GM of 17.5%, higher than 11.7% in 3Q16.
  • Up to third week of Feb’17, Wika has raked IDR7.14trn new contracts, 16.5% to its new contracts target and improved +255%YoY compare to same period last year.
  • We maintain our BUY call on the stock as the company will start to recognize HSR contract as revenue this year, its robust growth and healthier balance sheet post rights issuance. (Dony Gunawan)