View
215
Download
1
Category
Preview:
Citation preview
Page | 1 | PHILLIP SECURITIES INDONESIA
United Tractors (UNTR ID)
Relies on spare part sales and services
INDONESIA | HEAVY EQUIPMENT | INITIATION
13 July 2015
Coal remains depressed
Due to unfavorable condition coal miners cut their production, and even
stop producing altogether since with current coal price the margin is so thin. The national coal production target of 425 million tons will likely not
be achieved after several coal miners slashed their production.
Mining sector is still unfavorable for heavy equipment
Undeniably, heavy equipment business will be also affected by sluggish
coal industry. Until 5M15 sales to other sectors were also weak, with slow progress in the construction and agriculture industries. The plantation
business had expanded minimally so far this year. Production of heavy equipment is targeted at around 5,000-6,000 units this year
Revenue is expected to decline
We expect UNTR total revenue to decline 8.82% this year amid
unfavorable condition in mining sector which is a major contributor to the company’s revenue. On the other hand, we see potential 6.7% increase in
revenue from heavy equipment services as machinery maintenances are still in demand although periodically.
Heavy Equipment Sales & Services We estimate heavy equipment sales to drop 22% to 3,144 units in FY15F
from 4,049 units in FY14. Conversely, spare part sales can be expected to grow 5.6% supported by e-commerce (klikut.com). The site is expected to
contribute 10% to spare part sales. Heavy equipment services to increase 6.7% in FY15F backed by workshop service and non destructive test.
Coal production reduced to 3 million tons The company deliberately reduced coal production to control its
production cost as coal price will likely not going to improve in the near future. The coal production will concentrate on Asmin Bara Bronang which
has the largest production capacity of 7 million tons/year and has a variety of coal qualities from medium to high grade. The company also
buys coal from third parties in order to maintain sales.
Mining services to follow the decline
In FY15F we estimate revenue from mining services as major contributor to total revenue to decline 14.05% as weak coal prices will encourage
several coalminers to cut their production to minimum with the intention of maintaining their coal reserves and efficiency. A number of small coal
miners have stop their operations since the current coal price cannot offset their production costs. UNTR will likely to maintain strip ratio of
6.7x.
Construction services to contribute 5% to total revenue
We expect ACST revenue to increase 18.60% this year supported by several construction projects. With Astra group behind them it is easier for
ACST to expand its business as Astra has strong brand positions in Indonesia. ACST also can take benefit from Astra’s construction projects.
Astra group carries out construction works of around IDR 15 trillion per year and ACST will likely to secure at least 25% from these projects.
Accumulate CLOSING PRICE IDR 18,800
TARGET PRICE IDR 22,000
UPSIDE 17.04% COMPANY DATA
O/S SHARES (MN) : 3,730.14
MARKET CAP (IDR BN) : 70,872.56
MARKET CAP (USDBN) : 5.45
52 - WK HI/LO (IDR) : 25,350 / 16,425
AVG. VOLUME 3M (Share) : 29,516
PAR VALUE (IDR) : 250
TOP 5 SHARE HOLDER, %
ASTRA INTERNATIONAL Tbk : 59.50
LAZARD LTD:
MATTHEWS INTERNATIONAL CAPITAL:
FRANKLIN RESOURCES:
2.72
1.54
1.35
PUBLIC (<5%): 34.89
PRICE vs. JCI
Source: Phillip Securities Indonesia Research
KEY FINANCIALS
FY Dec FY14 FY15F FY16F
Revenue (IDR bn) 53,142 48,456 51,167
NI (IDR bn) 5,370 6,434 6,794
EPS, adj. (IDR) 1,440 1,725 1,821
P/E (X) 13.06 10.90 10.32
BV (IDR bn) 38,577 40,398 43,150
P/BV (X) 1.82 1.74 1.63
DPS (IDR) 535 551 691
EV/EBITDA 8.31 6.88 6.63
Debt/Equity 5.47% 5.83% 6.09%
ROE 8.91% 10.19% 10.10%
ROA 13.92% 15.93% 15.75%
Source: Phillip Securities Indonesia Research Est.
Valuation Method: Discounted Cash Flow
Destya Faishal (+6221 57900800) deta@phillip.co.id
60
70
80
90
100
110
120
Jun-14 Sep-14 Dec-14 Mar-15 Jun-15UNTR IJ JCI Rebased
PHILLIP SECURITIES INDONESIA | 2 | P a g e
UNITED TRACTORS INITIATION
Business diversification to offset depressed mining sector We think the decision to acquire ACST is correct. Through establishing
construction services segment, the company could partake in Indonesia’s plan to add more infrastructure and facilities construction
projects in order to cut high logistic cost and improve its economy. Acquisition on ACST also becomes another realization of the company’s
plan to diversify its business to reduce its dependency on coal industry.
Other than construction sector, UNTR also diversifies its business to gold mining by acquiring Sumbawa Juturaya through Pamapersada. However,
the gold mine is still in exploration stage to determine gold reserve and we assume it will take 3-5 years to start production.
Investment Action
We initiate UNTR IJ with “Accumulate” recommendation and 52-weeks price target of IDR 22,000 per share with potential upside of 17.04%
based on DCF valuation with long term growth of 3%. Our price target implies P/E of 10.32x compared to current P/E of 10.9x. PBV of 1.63x
VS 1.73 x currently. FY15F EPS of IDR 1,725 and FY16F EPS of 1,821 backed by increase of spare part sales and heavy equipment services
with assumption that the company’s customers especially miners will
only maintain existing machines instead of buying new units as they reduce the amount of work that requires the use and purchase of heavy
equipments due to lowered production targets and even postponed expansion plans.
Major Assumption
FY14 FY15F FY16F FY17F
Heavy equipment sales (unit) 4,049 3,144 3,533 3,828 Coal mining (mn tons) 5.9 3.7 4.1 4.6 Coal delivery (mn tons) 119.4 104.5 112.3 120.6 Overburden removal (mn bcm) 806.4 706.3 726.2 747.8
Source: Company, PSI Research estimate
PHILLIP SECURITIES INDONESIA | 3 | P a g e
UNITED TRACTORS INITIATION
Coal remains depressed
As we know the overall mining sector especially coal mining is still under pressure due to oversupply, as demand from China- the biggest coal
importer continues to decline due to economic slowdown and air pollution issue. On the other hand, domestic demand from Indonesia
does not improve to absorb coal stockpile as majority of industries and power plants still use liquid fuel as primary source of energy. Due to
these unfavorable conditions, coal miners cut their production to reduce losses. Undoubtedly, heavy equipment business will continue to be
affected.
The government’s plan to develop 35,000 megawatt (MW) power plants
will increase domestic coal consumption to around 200 million tons per year, which currently stands at around 90 million tons per year.
However, the government’s plan also raised questions among environmental activists, who fear that the government might prioritize
building cheap, environmentally unsustainable power plants to support economic growth and meet the country’s growing electricity needs. It is
no secret that, among all energy sources available in the world, coal
remains the dirtiest. The government had no cheaper economic alternative than to build coal fired power plants as coal is an abundant
energy source available in Indonesia and it is still relatively cheap. Miners will have to abide by existing regulations and pay close attention
to environmental health. There also will be production controls, not in terms of figures but in terms of quality. Such production restrictions
would result in better environmental health and maintain the national coal supply therefore coal price could improve. Moreover, India’s coal
consumption will likely to pick up following growth in steel consumption.
Although India's steel sector is not yet a dominant force, it is clearly starting to show strength in supporting demand in oversupplied global
market. India’s coal import from Indonesia was the highest of 188.4 million tons in 2014.
But we consider that achievement is the peak and will start to decline as
India plans to stop their coal import in 2017 and will be more dependent on domestic output. Due to this event we estimate coal export to India
to reach around 120 million tons in 2015 or 36% lower from export in
2014 as India will begin to reduce their imports. For the long term we expect coal price to remain low at around below USD 60/metric tons.
The national coal production target of 425 million tons will likely not be
achieved as 1Q15 coal production dropped 21% to 97 million tons from the same period last year of 124 million tons after several coal miners
slashed their productions even stop producing due to narrow margin.
Mining sector is still unfavorable for heavy equipment
Heavy Equipment Manufacturer Association of Indonesia estimates that
mini to middle size heavy equipments (10-30 tons) will dominate the production in the year ahead to support infrastructure development
which has been planned by the government. Besides construction and
infrastructure, there is still hope to improve heavy equipment sales from other sector/industries, such as agriculture and forestry. However, until
5M15 sales to other sectors have also been weak, amid slow progress in the construction and agriculture industries. The plantation business had
expanded minimally so far this year due to CPO oversupply. The association estimates heavy equipment sales in 2015 will stagnate and
sets production target of 5,000-6,000 units this year.
PHILLIP SECURITIES INDONESIA | 4 | P a g e
UNITED TRACTORS INITIATION
Heavy equipment industry in Indonesia has installed capacity of 10,000 units per year. However, utilization rate is estimated at only 50% due to
increasing imported heavy equipments and slow realization of infrastructure projects, which will only likely to speed up in 2016.
Revenue is expected to decline
United Tractors is the leading and the largest distributor of heavy
equipments, providing product brands such as Komatsu, UD truck, Scania, Bomag, and Tadano. The company also provides heavy
equipment rentals such as forklift and excavator. United Tractor as market leader with market share of 37% (May 2015) sets heavy
equipment sales target of 3,000 units in 2015. This target was revised from previous target of 4,000 units. Heavy equipment sales are the
second major contributor to total revenue (25%) after mining services (63%).
We expect revenue from all segments except construction and heavy equipment services to decline this year amid unfavorable condition in
mining sector which is a major contributor to the company’s revenue. On the other hand, we expect heavy equipment services to increase as
machinery maintenances are still in demand although periodically. Revenue estimates
Total Revenue -8.82%
Sales: Heavy
equipment -0.28%
Slightly declining. 6% increase in spare
parts sales will buffer overall sales.
Sales: coal mining -35.81% Coal production target has been slashed to
3 million tons in 2015.
Services: Heavy
equipment +6.70% Supported by workshop service
Services: mining
contracting -14.05%
Several coalminers cut their production
targets amid unfavorable condition
Services: construction
contracting +18.60%
We expect to contribute 5% to total revenue
backed by the government’s commitment to
improve infrastructure.
However, revenue for FY16F can be expected to improve as the
government’s infrastructure project will likely to commence in 2016 and certainly the government will need significant amount of heavy
equipments.
Source: Company, PSI Research estimate
Machinery sales, 25%
coal mining, 9%
Machinery services, 4%
Mining services, 63%
Revenue FY14
Machinery sales, 26%
coal mining, 6%
Machinery services, 4%
Mining services, 61%
Construction services, 5% Revenue FY15F
PHILLIP SECURITIES INDONESIA | 5 | P a g e
UNITED TRACTORS INITIATION
Heavy Equipment Sales & Services We estimate heavy equipment sales to drop 22% to 3,144 units in
FY15F from 4,049 units in FY14 as mining sector to remain sluggish this year. Until 1Q15 the company only sold 894 units, a 35% decline from
the same period last year. Second hand imported heavy equipments are still widely used in Indonesia due to cheaper price. According to the
association, currently the ratio between new and second hand machines
is 2:1. We can expect that if the government does not stop giving import license of capital goods especially for second hand heavy
equipments to contractors, then domestic heavy equipment industry will deteriorate in the middle of infrastructure developments/building
projects which require significant amount of heavy equipments.
Source: Company, PSI Research estimate
Conversely, spare part sales can be expected to grow 5.6% supported
by e-commerce. Earlier this year the company released e-commerce for
heavy equipment parts titled klikUT.com. The site is the first online shop for heavy equipment parts in Indonesia, offering an easy and practical
transaction experience that will save customers time and effort. We see the site (klikUT.com) as a positive effort to improve the company’s
revenue, as the company could also expand its sales distribution and increase brand awareness through e-commerce. The site is expected to
contribute 10% to spare part sales and attract 3,000 customers.
Source: Company, PSI Research estimate
3,111
6,760
10,761
6,979
5,013 4,049
3,144 3,533 3,828 4,219
2009 2010 2011 2012 2013 2014 2015F 2016F 2017F 2018F
Unit sales
3,597
4,108
4,864
5,889 5,518
5,980 6,314
6,637 7,036
7,415
2009 2010 2011 2012 2013 2014 2015F 2016F 2017F 2018F
Spare part sales (IDR bn)
PHILLIP SECURITIES INDONESIA | 6 | P a g e
UNITED TRACTORS INITIATION
Source: Company, PSI Research estimate
Heavy equipment services to increase 6.7% in FY15F backed by
workshop service and non destructive test, with the objective of this program is to restore heavy equipment to its peak condition and also to
reduce owner's undercarriage maintenance costs. Undercarriage is one of the most important parts of the heavy equipment that consumes up
to 40% of the total maintenance cost. We assume that the company’s
customers especially miners will only conduct full maintenance to heavy equipments their already owned instead of buying new ones as they
reduce the amount of work that need the use and purchase of heavy equipment since they slashed their target production and even
postponed their expansion plan. Some components such as undercarriage can be rebuilt and it can reduce cost of up to 60%
compared to the cost to buy new components.
In the midst of depressed mining sector, we consider heavy equipment
companies will make efforts to improve their sales by increasing the production of mini heavy equipments with operating weight of less than
6 tons such as mini excavator, wheel loader, backhoe, and dump truck which is generally used for construction, plantation, highways, and
drainage maintenance tool.
Komatsu Heavy Equipment Sales Contribution per Sector
Source: Company, PSI Research estimate
United Tractors has a strategy to strengthen its brand by deepening the relationship with its customers. This strategy is also a value added in
heavy equipment services compared to its competitors that could gain
0 0
1,271 1,525 1,623
1,883 2,009
2,168 2,309
2,478
2009 2010 2011 2012 2013 2014 2015F 2016F 2017F 2018F
Heavy equipment services (IDR bn)
24% 20% 17% 24% 30% 24% 24%
16%11% 10%
16%
25%28% 32%
9%6%
6%
8% 14%15%
60% 61% 67%54%
37% 35% 29%
2009 2010 2011 2012 2013 2014 2015F
Agriculture Construction Forestry Mining
PHILLIP SECURITIES INDONESIA | 7 | P a g e
UNITED TRACTORS INITIATION
customers confidence through trainings the company provided to its clients about maintenance and operation of heavy equipments that they
bought. With these trainings the clients can perform light maintenance on their own without depending on United Tractors. In addition, the
company also routinely held customer gatherings in order to get customers feedbacks for improvement. The company also has parts
financing program cooperating with banking institutions, where the
company provides loan facility for its customers to purchase parts and service. Through this program, business partners have benefits such as
credit limit of up to IDR 3 billion, no collateral, and free of administration costs. With end to end service and a wide range of products, the
company could maintain its market shares above 35%.
From product view there is no question about Caterpillar (CAT) for its superiority and reputation. However, Komatsu offers almost similar
value with less cost and more eco-friendly compared to CAT. According
to heavy equipment operators they prefer Komatsu because it is more comfortable to use since Komatsu has better suspension system thus
reduce vibration compare to CAT. In term of power, CAT has the upper hand but Komatsu is not too far behind. Stronger USD also gave
advantage to Komatsu sales. Even though both companies have factories in Indonesia, import costs for components are relatively
cheaper in JPY rather than USD, allowing lower production cost to generate more competitive selling price.
Coal production reduced to 3 million tons For coal mining segment, further decline in coal prices due to
unfavorable coal market conditions force the company to mine at minimum production level in order to maintain its financial performance.
The company sets target production of 3 million tons this year or 50% lower from realized production of 6 million tons in FY14. In order to
maintain coal sales, the company will buy coal from third parties. We assume coal sales to reach above the production target as the
company’s sales has reached 2.3 million tons in 5M15. We forecast coal
sales to reach 3.71 million tons in FY15F or decreased 37.5% from 2014.
Source: Company, PSI Research estimate
Given the Japan 2030 energy mix plan that allows little room for any generation from fossil fuel and focuses on renewable and nuclear energy
generation, Japan’s coal import will likely to decrease in years ahead. This situation will affect the company’s coal production and sales as the
company has been exporting to Japan, South Korea, and Taiwan. In the
2.40 3.05
4.49
5.57
4.18
5.94
3.71 4.09
4.63
5.17
2009 2010 2011 2012 2013 2014 2015F 2016F 2017F 2018F
Coal mining (million tons)
PHILLIP SECURITIES INDONESIA | 8 | P a g e
UNITED TRACTORS INITIATION
next few years the local coal miners can only hope that their coal will be absorbed by domestic consumption especially by the 35,000 MW power
plants.
Until 2014 United Tractors has concession over 9 coal mines located in
Kalimantan with estimated total reserve of 405 million tons and coal quality ranging from medium to high. After restructuring in 2014 the
mining business is operated by Tuah Turangga Agung (TTA) as holding
company of all subsidiaries under mining business segment previously under Pamapersada and TTA. The purpose of the restructuring is to
enhance operation and strengthen business focus. With the restructuring it is more efficient and easier for United Tractors to manage since each
business line has one holding company.
For production in this year, Tuah Turangga Agung and Duta Nurchaya is expected to operate at minimum production levels in order to control
cost efficiency. Production in Asmin Bara Bronang will be improved and
expected to produce 2 million tons to offset the decreased production of other concessions. The company deliberately reduced coal production to
control its production cost as coal price will likely not going to improve in the near time. In 2H15, the other concession will follow to operate at
minimum. The coal production will concentrate on Asmin Bara Bronang which has the largest production capacity of 7 million tons per year and
has a variety of coal quality from medium to high. Given most of the concessions operate at minimum production level we expect coal mining
cost to decrease 17.85% in FY15F.
Concession Reserve
(million tons)
Production Capacity
(million tons/year)
Quality
(kcal/kg)
Prima Multi Mineral (PMM) 2 3 5,800
Tuah Turangga Agung (TTA) 27.8 2.5 5,890
Agung Bara Prima (ABP) 9.2 1 5,890
Bukit Enim Energi (BEE) 177 5 3,163
Asmin Bara Bronang (ABB) &
Asmin Bara Jaan (ABJ) 99 7 4,300 - 6,095
Duta Sejahtera (DS) &
Duta Nurchaya (DN) 44.7 2 5,766 - 5,891
Piranti Jaya Utama (PJU) 45 - 4,762
Source: Company, PSI Research
Mining services to follow the decline
United Tractors through its subsidiary Pamapersada Nusantara (PAMA)
has delivered coal of 25.3 million tons in 1Q15 or 19.35% lower from the same period last year of 27.7 million tons, overburden removal
declined 12.95% to 175 million bcm compared to 201 million bcm in 1Q14. In FY15F we estimate revenue from mining services as major
contributor to total revenue to decline 14.05%. Overburden removal to decrease 14.2% to 706 million bcm and coal delivery to decline 14.3%
to 104 million tons as weak coal prices will encourage several coalminers to keep their production to minimum with the intention of maintaining
their cost efficiency. A number of small coal miners have stop their
operations since the current coal price cannot offset their production costs. The average operating cost for small coal miners is USD 50-
60/tons and for big miners is USD 40-50/ton. Current coal price of around USD 62/ton is very unattractive. We assume most coalminers
will feel confidence to continue their expansion if coal is traded above USD75-80/tons but we see that is not going to happen in the near
future.
PHILLIP SECURITIES INDONESIA | 9 | P a g e
UNITED TRACTORS INITIATION
Source: Company, PSI Research estimate
PAMA is the market leader in mining contracting with market share of around 30% and entrusted to continue to manage 14 mining contracting
projects with major clients including Adaro Energy (ADRO IJ), Tambang Batubara Bukit Asam (PTBA IJ), and Indo Tambangraya Megah (ITMG
IJ). Most of them want to keep production at the same level as last
year. To meet the clients’ demand, UNTR will likely to continue its “Cost Down Program”. The idea is to reduce cost while maintaining production
level. After successfully lowering strip ratio in FY14 to 6.75x from 8.04x in FY13, for this year the company will likely to maintain strip ratio of
6.7x.
As we know demand from the biggest coal importer China decreases every year due to economic slowdown and the government’s policy to
protect local coal miners. Moreover, demand from Indonesia domestic
market is not improving given the slow realization of power plant construction which the government plans to build with total capacity of
35,000 MW in the next 5 years. Until this report is written the construction has not been commence. Land acquisition in Batang,
Central Java faces rejection from local residents backed by environmental society, and it seems the construction will not start by
this year. Given the condition, domestic coal demands will likely not going to improve until the project is finished.
Although coal will remain as important energy fuel in the next decade, coal consumption begins to decrease as many developed countries in
the world are concerned about pollution, prompting them to switch to green or renewable energy. On the other hand a large section of the
population in the developing nations of Asia and Africa are yet to have access to electricity. For most of these developing nations, thermal coal
is the preferred choice of electricity generation as coal price is relatively cheap compared to other sources of energy. So we assume next
destination for coal is Africa and developing nation of Asia.
598652
792856 845
806
706 726748 769
6878
8794
105
119104
112121 122
0
20
40
60
80
100
120
140
0
100
200
300
400
500
600
700
800
900
2009 2010 2011 2012 2013 2014 2015F 2016F 2017F 2018F
Overburden removal (mn bcm) Coal delivery (mn ton)
PHILLIP SECURITIES INDONESIA | 10 | P a g e
UNITED TRACTORS INITIATION
Construction services to contribute 5% to total revenue In late 2014, United Tractors through its subsidiary Karya Supra Perkasa
acquired Acset Indonusa (ACST IJ), a construction company, to diversify its business to offset the declining coal mining sector. ACST works on
projects that include foundations, civil works, detail designs, mechanical & electrical, plumbing, and finishing, making ACST a construction
company with the ability to provide end to end construction services.
Through ACST, United tractors wish to participate in the government’s plan to improve infrastructure in order to support economic growth. The
company believes that through participation in infrastructure project it could increase revenue also strengthen business portfolio to provide end
to end services to its customers.
In 1Q15 ACST posted revenue of IDR 313.35 billion, increased 19.8% from IDR 261.64 in 1Q14. ACST also secured new contract of IDR 1.36
trillion or 68% of new contract target of IDR 2 trillion. We expect ACST
revenue to increase 18.60% in this year supported by several construction projects such as Harris Hotel, Yellow Hotel, Gayanti City,
TCC Batavia Tower, Taman Anggrek Residence, and Thamrin Nine phase 2. The company does not have big expectation that construction sector
will soar in this year due to pending realization of massive infrastructure projects in the country.
Source: Company, PSI Research estimate
With Astra group behind them, it is easier for ACST to expand its
business as Astra has strong brand positioning in Indonesia. Also, ACST
can take benefit from Astra if they need funding from financial institutions to finance its projects since Astra certainly has cheaper
credit facility. ACST can also take benefit from Astra’s construction projects. Astra group carries out construction work of around IDR 15
trillion per year and ACST will likely to secure at least 25% from the projects.
Construction business in Indonesia remains attractive since Indonesia is
the biggest construction market and contributes more than 65% to
construction business in ASEAN. However, domestic construction business is dominated by state owned general constructions as SOE
always secure contracts to work on government projects. SOEs also have larger order book, working cap, market cap, etc. This fact makes it
harder for private construction companies with smaller size to compete with SOEs to secure large projects that require high working capital. But
that matter is relatively not a significant threat for specialist construction companies such as ACST which specializes in foundation
669.91
1,014.50
1,350.91
1,601.78
1,898.49
2,249.98
2,666.51
2012 2013 2014 2015F 2016F 2017F 2018F
Construction services revenue (IDR billion)
PHILLIP SECURITIES INDONESIA | 11 | P a g e
UNITED TRACTORS INITIATION
works since demand for foundation works will increase along with building constructions and ACST will likely secure most of the foundation
works. Foundation works also generate higher margin of 10%-20% than general building constructions of max.10%. Other than that, the
government’s mandate that forbid SOE construction to work on projects with value less than IDR 30 billion also offer opportunity to private
construction companies to grow. Private construction companies barely
secure a project from the government but SOE also barely get a job from private.
The government mentions that Indonesia needs to spend around USD
550-660 billion for improving infrastructure in the next 5 years, the government will finance 40% from state budget and the remaining 60%
is from private investment. SOE contractors will likely acquire the most infrastructure projects. However, private contractors with experience
undertaking infrastructure projects could obtain several infrastructure
projects although through joint operations with SOEs. ACST has experience in infrastructure project such as Suramadu Bridge that
connects East Java with Madura.
Business diversification to offset depressed mining sector The government has slashed hundreds of trillions of rupiah in fuel
subsidies that will be redirected to fund basic infrastructure projects, with construction among the priority projects has created new
opportunities for contractors across the nation. With the acquisition of
ACST, United Tractors could take benefit from building or infrastructure projects and construction machinery rentals such as tower crane,
passenger hoist, and concrete pump which are run by ACST.
We think the decision to acquire ACST is correct, through establishing construction services business segment the company could partake in
Indonesia’s plan to add more infrastructure and facilities construction projects in order to cut high logistic cost and improve its economy. This
acquisition also becomes another realization of the company’s plan to
diversify its business to reduce its dependency on coal industry.
Other than construction sector, UNTR also diversifies its business to gold mining by acquired Sumbawa Juturaya through Pamapersada with total
transaction of USD 2.56 million. Pamapersada holds 75.5% share in Sumbawa Juturaya. However, the gold mine is still in exploration stage
to determine gold reserve. We assume it will take 3-5 years to start production. UNTR prepares USD 10 million (IDR 130 billion) to finance
the exploration. The company believes that gold has positive outlook for
the long term and has relatively steady price volatility if compared to other mineral commodities, since gold is still seen as safe havens during
times of recession and uncertain economic conditions. If the exploration failed, then UNTR will only loss the exploration cost which is not very
significant if we look at the company’s cash of IDR 14.06 trillion in FY15F. So the diversification into gold mining is not going to hurt the
company’s financial ability by significant degree.
PHILLIP SECURITIES INDONESIA | 12 | P a g e
UNITED TRACTORS INITIATION
FY Dec (IDR bn) FY14 FY15F FY16F FY17F
Valuation Ratios
P/E (X). Adj. 13.06 10.90 10.32 10.11
P/B (X) 1.82 1.74 1.63 1.52
EV/EBITDA (X), adj. 8.31 6.88 6.63 6.57
Dividend Yield (%) 2.84% 2.93% 3.67% 3.68%
Per Share data (IDR)
EPS, reported 1,440 - - -
EPS, adj. 1,440 1,725 1,821 1,860
DPS 535 551 691 692
BVPS 10,342 10,830 11,568 12,380
Growth
Revenue 4.17% -8.8% 5.6% 5.7%
EBITDA -4.25% 27.1% 5.8% 2.4%
EBIT -2.07% 27.0% 6.0% 1.6%
Net Income, adj. 11.09% 19.8% 5.6% 2.1%
Margins
EBITDA Margin 18.9% 26.3% 26.4% 25.5%
EBIT Margin 12.2% 16.9% 17.0% 16.3%
Net Profit Margin 10.1% 13.3% 13.3% 12.8%
Key Ratios
ROE (%) 8.91% 10.2% 10.1% 9.6%
ROA (%) 13.92% 15.9% 15.7% 15.0%
Debt / Equity 5.47% 5.8% 6.1% 6.3%
Income Statement (IDR bn) FY14 FY15F FY16F FY17F
Revenue 53,142 48,456 51,167 54,101
EBITDA 10,036 12,759 13,498 13,821
Depreciation & Amortization (3,569) (4,547) (4,796) (4,976)
EBIT 6,468 8,212 8,702 8,844
Net Finance (Exp) / Income 154 239 210 216
Associates & JVs 0 0 0 0
Profit Before Tax 6,622 8,452 8,912 9,061
Taxation (1,782) (2,144) (2,235) (2,268)
Profit After Tax 4,840 6,308 6,677 6,792
Non-controlling Interest (530) (126) (117) (145)
PATMI 5,370 6,434 6,794 6,937
Balance Sheet (IDR bn) FY14 FY15F FY16F FY17F
PPE 22,774 23,462 25,435 27,577
Intangibles 0 0 0 0
Associates & JVs 0 0 0 0
Investments 1,159 1,286 1,439 1,344
Others 2,780 2,536 2,728 2,878
Total Non-current assets 26,712 27,284 29,602 31,799
Inventories 7,770 6,501 6,991 7,208
Account Receivables 13,113 13,312 13,341 14,485
Investments 0 0 0 0
Cash 10,060 14,059 15,485 16,694
Others 2,637 1,958 1,873 2,001
Total Current Assets 33,580 35,831 37,690 40,387
Total Assets 60,292 63,115 67,292 72,186
Short Term Loans
Account Payables 13,382 13,324 13,858 14,584
Maturities of long term loans 1,255 1,110 1,279 1,361
Others 1,660 1,880 2,051 2,159
Total Current Liabilities 16,298 16,314 17,188 18,104
Long Term Loans 1,319 1,464 1,643 1,807
Deferred income tax 1,945 2,451 2,714 3,133
Employee Benefit Obligations 1,290 1,538 1,545 1,807
Others 864 950 1,051 1,157
Total Non-current Liabilities 5,417 6,403 6,953 7,904
Share Capital 933 933 933 933
Additional paid in capital 9,704 9,704 9,704 9,704
Retained earnings 24,420 27,641 30,340 33,336
Non Controlling Interest 1,917 2,121 2,174 2,206
Shareholder's Equity 38,577 40,398 43,150 46,178
CF Statements (IDR bn) FY14 FY15F FY16F FY17F
CFO
Net Income 5,370 6,434 6,794 6,937
Adjustments (5,909) (3,878) (3,295) (4,286)
Depreciation & Amortization 5,697 755 540 591
WC Changes 4,029 2,235 985 1,781
Cash flow from ops 9,186 5,546 5,024 5,024
CFI
Capex (1,869) (1,122) (3,493) (3,808)
Others (1,574) 560 2,732 3,049
Cash flow from Investments (3,443) (562) (761) (759)
CFF
Share Issuance 0 0 0 0
Loans, net of repayments (1,171) (210) (128) (36)
Obligation 0 0 0 0
Dividend (1,995) (2,054) (2,576) (2,582)
Others (439) 102 (107) (136)
Cash flow from financing (3,605) (2,163) (2,810) (2,754)
Net change in cash 2,138 2,821 1,453 1,511
CCE, end 10,060 14,059 15,485 16,694
PHILLIP SECURITIES INDONESIA | 13 | P a g e
UNITED TRACTORS INITIATION
Important Information
Rating for Sectors: Overweight : We expect the industry to perform better than the primary market index (JCI) over the next 12 months. Neutral : We expect the industry to perform in line with the primary market index (JCI) over the next 12 months. Underweight : We expect the industry to under-perform the primary market index (JCI) over the next 12 months. Rating for Stocks: Buy : The stock is expected to give total return (price appreciation + dividend yield) of > +20% over the next 12 months. Accumulate : The stock is expected to give total return (price appreciation + dividend yield) of +5% to +20% over the next 12 months. Neutral : The stock is expected to give total return of between -5% and +5% over the next 12 months. Reduce : The stock is expected to give total return of between -5% and -20% over the next 12 months. Sell : The stock is expected to give total return of -20% or lower over the next 12 months. Outperform : The stock is expected to do slightly better than the market return. Equal to “accumulate” or “moderate buy” Underperform : The stock is expected to do slightly worse than the market return. Equal to “weak hold” or “moderate sell” Analyst Certification The research analyst(s) primarily responsible for the preparation of this research report hereby certify that all of the views expressed in this research report accurately reflect their personal views about any and all of the subject securities or issuers. The research analyst(s) also certify that no part of their compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed in this research report. Disclaimers This document has been prepared for general circulation based on information obtained from sources believed to be reliable. But we do not make any representations as to its accuracy or completeness. Phillip Securities Indonesia (PSI) accept no liability whatsoever for any direct or consequential loss arising from any use of this document or any solicitations of an offer to buy or sell any securities. PSI and its directors, officials and/or employees may have positions in, and may affect transactions in securities mentioned herein from time to time in the open market or otherwise, and may receive brokerage fees or act as principal or agent in dealing with respect to these companies. PSI may also seek investment banking business with companies covered in its research reports. As a result investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.
Contact Information (Indonesia Research Team)
PHILLIP SECURITIES INDONESIA | 14 | P a g e
UNITED TRACTORS INITIATION
Management
Gunawan Sutanto (Head, Research - Equities)
+62 21 57 900 800 gunawan.sutanto@phillip.co.id
Fardini rahma Dewi (Research Assistant)
+62 21 57 900 800 fardini.dewi@phillip.co.id
Automotive | Strategy Cement | Construction | Property | Toll Road Banking | Telecommunication Gunawan Sutanto +62 21 57 900 800 Martha Christina +62 21 57 900 800 Milka Mutiara +62 21 57 900 800 gunawan.sutanto@phillip.co.id martha@phillip.co.id milka@phillip.co.id Agriculture | Consumer Goods Retail Trade | Poultry Gas | Mining | Heavy Equipment Edward Lowis +62 21 57 900 800 Muhamad Farhan +62 21 57 900 800 Destya Faishal +62 21 57 900 800 edward.lowis@phillip.co.id farhan@phillip.co.id deta@phillip.co.id
Contact Information (Regional Member Companies)
SINGAPORE
Phillip Securities Pte Ltd Raffles City Tower
250, North Bridge Road #06-00 Singapore 179101 Tel +65 6533 6001 Fax +65 6535 6631
Website: www.poems.com.sg
MALAYSIA Phillip Capital Management Sdn Bhd
B-3-6 Block B Level 3 Megan Avenue II, No. 12, Jalan Yap Kwan Seng, 50450
Kuala Lumpur Tel +603 2162 8841 Fax +603 2166 5099
Website: www.poems.com.my
HONG KONG Phillip Securities (HK) Ltd
11/F United Centre 95 Queensway Hong Kong
Tel +852 2277 6600 Fax +852 2868 5307
Websites: www.phillip.com.hk
JAPAN
Phillip Securities Japan, Ltd. 4-2 Nihonbashi Kabuto-cho Chuo-ku,
Tokyo 103-0026 Tel +81-3 3666 2101 Fax +81-3 3666 6090
Website:www.phillip.co.jp
INDONESIA PT Phillip Securities Indonesia
ANZ Tower Level 23B, Jl Jend Sudirman Kav 33A Jakarta 10220 – Indonesia
Tel +62-21 5790 0800 Fax +62-21 5790 0809
Website: www.phillip.co.id
CHINA Phillip Financial Advisory (Shanghai) Co Ltd
No 550 Yan An East Road, Ocean Tower Unit 2318,
Postal code 200001 Tel +86-21 5169 9200 Fax +86-21 6351 2940
Website: www.phillip.com.cn
THAILAND Phillip Securities (Thailand) Public Co. Ltd
15th Floor, Vorawat Building, 849 Silom Road, Silom, Bangrak,
Bangkok 10500 Thailand Tel +66-2 6351700 / 22680999
Fax +66-2 22680921 Website www.phillip.co.th
FRANCE King & Shaxson Capital Limited
3rd Floor, 35 Rue de la Bienfaisance 75008 Paris France
Tel +33-1 45633100 Fax +33-1 45636017
Website: www.kingandshaxson.com
UNITED KINGDOM King & Shaxson Capital Limited
6th Floor, Candlewick House, 120 Cannon Street, London, EC4N 6AS
Tel +44-20 7426 5950 Fax +44-20 7626 1757
Website: www.kingandshaxson.com
UNITED STATES Phillip Futures Inc
141 W Jackson Blvd Ste 3050 The Chicago Board of Trade Building
Chicago, IL 60604 USA Tel +1-312 356 9000 Fax +1-312 356 9005
AUSTRALIA PhillipCapital
Level 12, 15 William Street, Melbourne, Victoria 3000, Australia
Tel +61-03 9629 8288 Fax +61-03 9629 8882
Website: www.phillipcapital.com.au
SRI LANKA Asha Phillip Securities Limited
No 10, Prince Alfred Tower, Alfred House Gardens, Colombo 3, Sri Lanka
Tel: (94) 11 2429 100 Fax: (94) 11 2429 199 Website: www.ashaphillip.net/home.htm
INDIA
PhillipCapital (India) Private Limited No. 1, C‐Block, 2nd Floor, Modern Center , Jacob
Circle, K. K. Marg, Mahalaxmi Mumbai 400011 Tel: (9122) 2300 2999 Fax: (9122) 6667 9955
Website: www.phillipcapital.in
PHILLIP SECURITIES INDONESIA | 15 | P a g e
UNITED TRACTORS INITIATION
ANZ Tower Level 23B, Jl. Jendral Sudirman Kav 33A, Jakarta, 10220 - Indonesia
Telp. (62-21) 57 900 800, Fax. (62-21) 57 900 809, Email : customercare@phillip.co.id
Website: www.phillip.co.id | www.poems.co.id | www.poems.web.id
Jakarta
Komp. Ruko Mega Grosir Cempaka Mas Jl. Let. Jend. Soeprapto
Blok D No. 7 Jakarta, 10640 Telp. (62-21) 4288 5051 / 52; Fax. (62-21) 4288 5049
E-Mail: franky@phillip.co.id
Mangga Dua Ruko Bahan Bangunan Mangga Dua Blok F1/8
Jl. Mangga Dua Selatan Jakarta 10730 Telp. (62-21) 6220 3589; Fax. (62-21) 6220 3602
E-Mail: yosen.tjong@phillip.co.id
Rukan Sentra Latumenten Jl.Prof.Dr Latumenten no.50
Blk AA 12 Jakarta, 11460 Telp. (62-21) 5694 1781; Fax. (62-21) 5694 1791
E-Mail: hendra.k@phillip.co.id
Roxy Pusat Niaga Roxy Mas Blok B2/2
Jl. KH. Hasyim Ashari - Jakarta Barat Telp. (62-21) 6386 8308; Fax. (62-21) 6333 420
E-Mail: adminroxy@phillip.co.id
Pantai Indah Kapuk Jl. Pantai Indah Barat Rukan Ekslusif BGM Blok B-6
Telp. (62-21) 5694 5791/92/93; Fax. (62-21) 56945790 E-Mail: pik.admin@phillip.co.id
Taman Palem Rukan Malibu Blok H No. 23 Cengkareng, Jakbar 11730
Telp. (62-21) 5694 5055 / 5077; Fax. (62-21) 5694 5013; E-Mail: adminpalem@phillip.co.id
Tanah Abang
Pusat Grosir Metro Tanah Abang (PGMTA) Lantai 6, Jl.Fachrudin Tanah Abang - Jakarta Pusat 10250
Telp : (021) 3003 6745 / 3003 6746; Fax : (021) 3003 6748 E-Mail: tarjo@phillip.co.id
Kelapa Gading Jl. Boulevard Raya Blok WB2/27 Kelapa Gading Jakarta Utara
Telp. (62-21) 7070 0050/4587/9264; Fax. (62-21) 453 2939; E-Mail: mike@phillip.co.id
Citra Garden 2
Komp. Citra Niaga Blok A No.18 Citra Garden 2 - Kalideres, JakBar
Telp. (62-21) 5436 0175; Fax. (62-21) 5436 0174 E-mail: tandy@phillip.co.id
Alam Sutera Ruko Prominence Blok 38 - G No. 18
Jl. Sutra Barat Boulevard Alam Sutra 15143, Tangerang No. Telp : (021) 50314300
Jawa Tengah Purwokerto
Jln. Perintis Kemerdekaan No. 38 Purwokerto - Jawa Tengah, 53110
Telp. (62-281) 626 899; Fax. (62-281) 891 150 E-Mail: hadi@phillip.co.id
Yogyakarta Kantor Perwakilan (KP) BEI Yogyakarta
Jl. Mangkubumi No. 111 Yogyakarta Telp. (0274) 557367
E-mail: sugiyanto@phillip.co.id
Semarang Jl. Karang Wulan Timur No. 2 - 4 Semarang
Indonesia Telp. (62-24) 355 5959; Fax. (62-24) 351 3194
E-Mail: adminsmg@phillip.co.id
Tegal Kompleks Nirmala Square Blok C no.7
Jl. Yos Sudarso - Tegal 52121 Telp. (62-283) 340773; Fax. (62-283) 340774
E-mail: admintegal@phillip.co.id
Jawa Barat Batam
Komp.Paskal Hypersquare Blok C-21 Jl Pasirkaliki 25-27 Bandung
Telp. (62-22) 8606 0690; Fax. (62-22) 8606 0765 E-Mail: adminbandung@phillip.co.id
Kompleks Mahkota Raya Blok A no. 10 Batam Centre, Kota Batam 29456, Kepri
Telp. (62-778) 748 3337/3030/3131; Fax. (62-778) 748 3117; E-Mail: mariaty@phillip.co.id
Jawa Timur Kalimantan Barat
Jln. Flores No. 11 Surabaya, 60281 Telp. (62-31) 501 5777; Fax. (62-31) 501 0567
E-Mail: surabaya@phillip.co.id
Jl. Teuku Umar Komplek Pontianak Mal C 23-24 Pontianak, Kalimantan Barat
Telp. (62-561) 777 887; Fax. (62-561) 745 103 E-Mail: adminptk@phillip.co.id
Jambi Denpasar
Jln. GR. Djamin Datuk Bagindo No. 56A Jambi, 36142
Telp. (0741) 707 8260, 7555 699 E-Mail: mimi@phillip.co.id
Kantor Perwakilan (KP) BEI Denpasar Jl. P.B. Sudirman 10 X Kav. 2
Denpasar - Bali (0361) 255 900
Lampung
Jl. Ikan Tongkol No. 33 Blok 7-8 Teluk Betung - Bandar Lampung, 35223
Telp. (62-721) 474 234; Fax. (62-721) 474 108 E-Mail: medawati@phillip.co.id
Recommended