Excellent 9M09 results, BUY

Jasa Marga has booked excellent 9M09 results, reflecting sound operating performance and 4% traffic volume growth. Newer toll roads – such as the Outer Ring Road – have become more important as they make an ever larger contribution. Looking ahead, we believe that the company is on track to develop more new toll roads even though land acquisition is still the biggest obstacle in completion risk. We remain positive on the counter and reiterate our BUY call. Our target price is Rp2,450.

Strong results

Total revenues increased 4.8% yoy to Rp2.6tr in 9M09. And with relatively stable operating costs, EBITDA climbed 23.8% yoy to Rp1.4tr while the EBITDA margin expanded to 51.8% in 9M09 from 43.8% last year. What’s more, the recent toll road tariff hikes are only reflected in one month in 3Q09 and will therefore only be fully reflected in the 4Q09 results.

supported by extraordinary income

Jasa Marga’s bottom line jumped 32.6% yoy to Rp735bn thanks to a combination of strong operational results and extraordinary income of Rp125bn. The extraordinary item came from the revaluation of assets (interchange construction) which was accounted as equity participation in JORR W1 North. The interchange construction was revalued at Rp180.6bn, translating into an equity stake of 23%. With Jasa Marga now having a 23% shareholding in the JORR W1 North project, it will be eligible to appoint one director and one commissioner. The one-off gain from the revaluation is Rp125bn. But as a non-cash item, it is important to realize it does not have any effect on the company’s cash flow.

Impressive traffic volume growth

The key to higher revenues growth is higher traffic volume – especially from the relatively newer toll roads such as the JORR. In 9M09, traffic volume grew 4.0% yoy to 681mn vehicles. The impressive traffic growth was largely contributed by the Purbaleunyi toll road section (the toll road to Bandung) and JORR (the Jakarta outer ring road). Since both toll roads are relatively new, the applied tariff per km is also higher than tariffs on the older toll roads. This explains the shift in revenues contribution from the newer toll road sections and demonstrates how important it is for Jasa Marga to keep adding new sections to sustain its growth rate.

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Chandra S Pasaribu

(62-21) 351 0748

chandra@danareksa.com

Chandra S Pasaribu
(62-21) 351 0748
chandra@danareksa.com
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