Mandiri Sekuritas Wijaya Karya: 1H10 net profit grew 50.8% yoy, better than expectations (WIKA, Rp590, Buy, TP:Rp570)

􀂄 Despite lower revenue (-15.2% yoy) of Rp2.5tn as per 1H10, gross profit was up 7.7% yoy, on the back of better quality projects which provide higher margin as well as higher gain from joint operation projects. The figure is above our and consensus estimates. Yet on the operating level, we noticed that the company posted higher general and administration expense (+33.1% yoy), which resulted in lower operating profit (-1.7% yoy).

􀂄 Going further down, the company booked lower loss from forex (-92.9% yoy) as well as interest expense (-84.7% yoy). Furthermore WIKA booked gain in the extraordinary account as much as Rp33.5bn, which boosted net profit by 50.8% yoy. Excluding such account, core net profit still grew 22.3% yoy. In general, such result is above our and consensus estimates. WIKA is currently trading at PER10F of 12.8x.

Mandiri Sekuritas Adhi Karya: A slow start, yet it may reach our FY10 target (ADHI, Rp590, Buy, TP: Rp800)

􀂄 ADHI’s 1Q10 revenue drop 29.5% yoy, quite a slow start yet still inline with our and consensus estimates as historically, 1Q only represents around 10-17% of FY figure. We also note that margins are improving thus the company could book operating profit from operating loss in 1Q09. A lower figure in the bottom line level is because the company booked Rp44bn gain from asset sale in 1Q09, whilst there was no additional income in 1Q10. The company is currently trading at a relatively low PER10 of 6.0x.