We just recently visited WIKA, and came out convinced of better outlook for its construction business. There are only 2 projects out of 70 undergoing projects which have been deferred. In contrast, the company expects new projects obtained this year to reach Rp10.5tn (+23.1% yoy), which some will be translated into FY09F targeted
revenue of Rp7.4tn (+15.6%). It can be seen that WIKA’s revenue growth target is way above its biggest rival, Adhi Karya (ADHI, Rp270, Neutral, TP Rp250) of only 3.1% yoy. We therefore adjust up our revenue forecast to Rp6.6tn, which we believe WIKA can easily arrive at our figures. Based on that, we reverse our Sell recommendation to Buy with a price target of Rp260/share.
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