full report - Profindo International Securities

COMPANY NOTES
PT Gajah Tunggal TBK
(GJTL:IJ)
Bayu Cahyadi
bayu.cahyadi@profindo.com
MARKET CAP
IDR 4.46 TRILLION
SHARES OS
3.5 BILLION SHARES
CURRENT PRICE
IDR 1265/SHARE
TARGET PRICE
IDR 1510/SHARE
UP/DOWNSIDE
+19.37%
RATING
BUY
Bottom Fishing Opportunity
Competition looks subside as no more competitors are coming from
overseas. Look forward, lower oil and rubber price should benefit the
company. Improving purchasing power from overseas may boost
company’s revenue as 38.5% of its products are sold outside
Indonesia. Moreover, Indonesia economy will improve as our
government is focusing on economy growth by allocating tons of
budget to the infra projects. We estimate that the fair value of equity
is at 1510/share, 10x PER FY15F.
10.5% CAGR FY09 to FY14 with Stable Gross Profit Margin
Just another tire maker that is having a hard time due to intense competition in the
industry. Despite that, top line seems growing from IDR 7.9tn FY09 to IDR 13.07tn
FY14, 10.5% CAGR. Gross profit margin looks stable around 19% as shown on table
below.
However, GJTL is selling 38.5% of its products in foreign market, exposing the
company to foreign exchange loss. It happened in FY13, the year that the company’s
net profit dropped significantly from > IDR 1tn to as low as IDR 121bn just because of
the foreign exchange loss of IDR 889bn and huge interest expense of IDR 576bn.
Full Year 2014 Result: Bottom Line Up 124% YOY
In 2014, the company posted better net profit of IDR 271bn, increased 124% YOY due
to lower forex loss of IDR 179bn. Due to forex loss volatility, we decide to omit the
forex loss as well as the other income/loss. The experiment shows that net profit
FY14 is lower than FY13: IDR 438bn vs IDR 634bn. The pressure is coming from lower
gross profit margin from 20.1% to 18.7%. No wonder that the share price dropped
further to ~IDR 1250.
April 15, 2015
www.profindo.com
PT Gajah Tunggal Tbk
Conservative Revenue Growth Assumption FY15
For 2015, we predict that the revenue can increase by 10% due to better domestic
and global economy growth – GJTL is exporting 31.5% of its products overseas. We
assume that the gross profit margin will increase 50 bps due to oil and rubber price
decrease in the global market. Net profit may grow 20.8% YOY to IDR 529bn, omitting
forex loss and other income/loss.
At 1265, the share is traded at 8.3x FY15F, very cheap compare to GDYR, traded at
PER 19.83x FY14. We estimate that the share should be traded at PER 10x FY15F, IDR
1510/share.
There are some risks on the investment: Higher forex loss due, tighter competition in
the industry and significantly higher rubber as well as oil price.
Page |2
PT Gajah Tunggal Tbk
KANTOR PUSAT
KANTOR CABANG BANDUNG
http://www.profindo.com
Gedung Permata Kuningan, Lt. 19
Jl. Kuningan Mulia, Kav. 9C, Guntur
Setiabudi
Jakarta Selatan 12980
Phone : +62 21 8378 0888
Fax
: +62 21 8378 0889
Jl. Sunda No. 50B
Bandung, Jawa Barat
Phone : +62 22 420 2678
Fax
: +62 22 420 2676
EMAIL :
bayu.cahyadi@profindo.com
abdul.aziz@profindo.com
DISCLAIMER
This research report is prepared by PT PROFINDO INTERNATIONAL SECURITIES for information purposes only and is
not to be used or considered as an offer or the solicitation of an offer to sell or to buy or subscribe for securities or
other financial instruments. The report has been prepared without regard to individual financial circumstance,
need or objective of person to receive it. The securities discussed in this report may not be suitable for all
investors. The appropriateness of any particular investment or strategy whether opined on or referred to in this
report or otherwise will depend on an investor’s individual circumstance and objective and should be
independently evaluated and confirmed by such investor, and, if appropriate, with his professional advisers
independently before adoption or implementation (either as is or varied).
Page |3