1H10 results were above our expectations. Net profit was at Rp400bn compared with Rp31bn in the previous year. CMNP booked other income from unrealized gain from debt valuation amounting to Rp236bn. Meanwhile, operating margin increased to 60.6% from 53.1% due to strong revenue growth. We are awaiting the results of the government review of the stalled toll projects as the Depok-Antasari toll are included on the lists. Currently it trades at PER10F of 3.7x, maintain Neutral.
1H10 revenue up by 26%yoy. CMPN booked 1H10 revenue of Rp366bn (+25.7%yoy, 6.0%qoq) due to higher tariff and traffic volume. The JIUT (Jakarta Iner Urban Toll Road) (23.6Km) contributed around 94% of toll revenue and the remaining come from the Waru-Juanda (12.8Km) toll road. Traffic volume in the JIUT rose 3.5%yoy amounting 92.5mn vehicles during the 1H10.
Widen operating margin. Operational margin became wider due to increase in tariff on the JIUT section by around 18% for passenger cars which was implemented in 28 Sep 09. Meanwhile the Waru-Juanda toll road had increased its tariff on 7 Jun 10, (tariff for passenger car was increased from Rp5,000 to Rp5,500.
Unrealized gain and extraordinary income. CMNP booked unrealized gain from increase of debt fair value amounting to Rp236bn, and extraordinary income from debt restructuring of Rp60bn. Hence, net income 1H10 at Rp400bn compared with Rp31bn in 1H’09. If we offset both items, net income 1H10 should equal to Rp104bn (+235.3%yoy)
Remain neutral. We use DCF valuation (WACC 12.7%) to arrive at fair value Rp1,328 per share, representing PER10F of 5.3x and PER11F of 5.6x. Due to the delay in its only live project “Depok-Antasari”, we think all positive factors such as the tariff hike has been factored in the share price. We reiterated our Neutral recommendation and gave 30% discount to our target price. Hence, we have a TP of Rp930 per share, converting to PER10F of 3.7x and PER11F of 3.9x.
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