Anticipating Mining Sector Boost
Key Takeaways :
• In 1Q23, AKRA managed to record a revenue of IDR11.0 tn (+8.1% YoY), driven by trading and manufacturing segment. Gross profit and EBITDA grew to IDR1.1 tn (+44.9% YoY) and IDR918.9 bn (+41.4% YoY), respectively. Meanwhile, net profit was booked at IDR607.3 bn (+41.9% YoY).
• Breaking down its top-line, petroleum segment contributed top-line of IDR8.1 tn (+7.5% YoY) from high crude oil prices, while chemical segment's revenue decreased to IDR1.9 tn (-7.5% YoY) from the lower industrial demand. JIIPE's land sales contributed IDR505.4bn (+825.4% YoY)
• Indonesia's target of 53 operational smelters by FY24F, driven by surging nickel demand, will increase the need for caustic soda and sulfuric acid. We expect AKRA's chemical segment to contribute 20% to overall revenue in FY23E, benefitting from the government's nickel ore export ban.
• We estimate Indonesia's mineral mining sector to expand rapidly in FY23E, despite softening commodity prices, resulting in AKRA's revenue of IDR42.6 tn (-10.5% YoY).
• We recommend BUY for AKRA with a target price of IDR1,770 (17.6% upside), implying EV/EBITDA of 8.6x for FY23E. Downside risks: 1) lower commodity price; 2) Rupiah devaluation.
MNCS Research
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