Mandiri Sekuritas Adhi Karya: A slow start, below than expected (ADHI, Rp660, Buy, TP Rp800)

ADHI’s 1H10 revenue dropped by 38.3% yoy, quite a slow start due to lower government projects realization in 1H10. We also note that pretax income fell by 19.8%, as ADHI booked gain on asset sales of Rp44.4bn, whilst there was no additional income in 1H10. Such result is lower than our and consensus estimates. However, we believe project realization to start in 2H10, thus they could meet our and consensus target. The company is currently trading at a relatively low PER10 of 6.8x.

Mandiri Sekuritas Adhi Karya: FY10F revenue to grow 11.8% yoy (ADHI, Rp580, Buy, TP Rp800)

In its latest presentation material which was released yesterday evening for the next public expose (22 April 2010), the company reveals its new contract target for 2010 of some Rp9tn (+36.8% yoy). Around 65% of its portfolio will be government related project. They expect revenue and net profit to grow by 11.8% yoy (to Rp8.6tn) and 12.1% yoy (to Rp185bn), respectively. Note that this target has factored in another provision for Al Habtoor projects as much as Rp146bn, yet still above our and consensus
estimates. Their earnings expectation reflects PER10F of 5.6x, slightly lower compare with our projections of 6.3x.