Samuel Sekuritas Indonesia: There are 3 Reasons why KIJA Attractive, Time to BUY

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PT Samuel Sekuritas Indonesia issued its recommendation received by editorial team via email on Tuesday (25/4) regarding attractive shares and this time Jababeka Industrial Estate (KIJA) is recommended.

Akhmad Nurcahyadi, Senior Research Analyst at PT Samuel Sekuritas Indonesia, explained the reason why KIJA’s shares are interesting, “KIJA’s shares are attractive, given its low valuation. This year’s growth will be boosted by three reasons, the operation of the power plant business at full capacity, the benefits to be received by Cikarang Dry Port for its location within the strategic economic corridor and the expectation of better pre-sales for Tanjung Lesung.”

The first reason concerning Jababeka power plant business, he said that the leakage has been repaired. “The leak in one of the boilers has hit the revenue contribution of the power plant segment. After the leak was repaired, the power plant will operate in full capacity vs. 50% last year. It will boost the business sector of KIJA infrastructure to get better again,” he added.

The second reason on its dry port business, Akhmad said, “Cikarang Dry Port (CDP) keeps trying to grab the opportunities in the increasing logistics flows. With single window policy, CDP offers shorter dwelling time with more attractive location surrounded by 11 industrial estates with tenants of more than 3,000 manufacturing companies.”

Akhmad added that the size of TEUs, which is considered fairly small, even provides a big power to capture the market. The throughput rate grows at a CAGR of 95% (FY11-FY15), while FY16 growth was +28.3% YoY and is targeted to reach +30.3% this year to 85K TEUs.

The last reason is the continuation of the development of Kendall and Tanjung Lesung. “Kendal Industrial Park (KIP) will benefit from the potential of sustainable demand for industrial land and logistics warehousing. The price of land and the regional standard wage which are lower than other industrial estates will also become a catalyst for the growth,” he explained.

Akhmad added, “KIP will also be an alternative choice when other ports such as Tanjung Priok are overwhelmed with too high traffics. We also see other projects in Tanjung Lesung (including government priority projects), such as the supporting infrastructure development (East Serang-Panimbang Toll Road), will drive the growth and improve the pre-sales figure.”

He recommended BUY with TP at Rp450 in his press release. “Amidst the confirmation of improvements in some sectors have yet to see, KIJA has become an attractive option with low valuation, high portion of recurring income and USD revenue,” he said.

On the risks, Akhmad mentioned low pre-sales figures, several stagnant sectors and delayed execution of some projects. (Rachmat/TPP)