Date of Report: October 15, 2024
Broker Name: UOB Kay Hian
Company Overview
Jasa Marga (JSMR) is Indonesia’s largest toll road operator, with a total concession length of approximately 1,260 km, spanning across Java, Sumatera, Kalimantan, and Sulawesi. The company is a significant player in Indonesia’s toll road infrastructure, with the Government of Indonesia holding a 70% stake. Jasa Marga’s market capitalization stands at Rp35,418 billion (US$2,275 million), and its stock is listed under the Bloomberg ticker: JSMR IJ.
Stock Data
- Share Price: Rp4,880
- Target Price: Rp6,000 (22.9% Upside Potential)
- Market Cap: Rp35,418 billion
- 52-week high/low: Rp5,700 / Rp4,000
- Shares Issued: 7,257.9 million
- Average 3-month daily turnover: US$2.0 million
- PE (2024F): 8.3x
- P/B (2024F): 0.8x
Financial Performance
Key Financials for 2024-2025:
- Revenue Growth: Expected to increase from Rp26,147 billion in 2024 to Rp28,153 billion in 2025.
- EBITDA: Expected to grow from Rp11,496 billion in 2024 to Rp12,436 billion in 2025.
- Net Profit: Forecasted to decrease from Rp4,253 billion in 2024 to Rp3,951 billion in 2025, excluding the one-off tax benefit in 2024.
- Core Profit Growth: Expected to grow by 9.4% year-over-year in 2025.
Major News and Developments
JTT Divestment
Jasa Marga successfully finalized the divestment of its subsidiary, Jasamarga Transjava Toll (JTT), on September 27, 2024, for a total value of Rp15.3 trillion. The divestment was conducted in two phases: Rp6.7 trillion in September 2024 and Rp6.1 trillion in December 2024. After tax, Jasa Marga is expected to receive approximately Rp11 trillion in cash.
- Contribution of JTT: JTT contributed 27% of Jasa Marga’s consolidated toll-road revenue in the first half of 2024. JTT’s total road length spans 673 km, accounting for 38.8% of Jasa Marga’s overall concession length.
- Impact of Divestment: The divestment is primarily aimed at reducing Jasa Marga’s debt and funding future toll road expansions. Despite the divestment, Jasa Marga will retain a controlling 65% stake in JTT. The divestment will help reduce interest costs while securing funding for five new toll road projects worth Rp84 trillion, and two additional projects valued at Rp34 trillion.
Tariff Increases
Jasa Marga is planning major tariff increases in 2025. The company expects to adjust toll tariffs for 21 of its 29 toll roads based on the regional Consumer Price Index (CPI) for 2023-2024. Notably, the Semarang-Batang and Solo-Ngawi toll roads are expected to see significantly higher adjustments.
- Key Catalyst: Tariff adjustments are expected to drive revenue growth and improve financial performance in 2025. Capital expenditure (Capex) for 2025 is projected to remain between Rp8 trillion and Rp10 trillion, with the addition of 101 km of new toll roads.
Debt and Funding
The proceeds from the JTT divestment will be used primarily for debt repayment and future toll road expansions. As of 2024, Jasa Marga’s net debt to equity ratio is expected to drop to 116.5%, down from 227.3% in 2023. This will help improve the company’s balance sheet and support future expansion plans.
- Capex Plans: Jasa Marga plans to invest in five new toll roads over the next five years, which require a total equity portion of Rp15.7 trillion. The company is also exploring two additional projects with an investment value of Rp34 trillion.
Profitability and Valuation
- EBITDA Margins: Expected to remain stable at around 44.0% to 45.3% between 2024 and 2026.
- ROE (2024F): 11.6%
- Net Profit Margin (2025F): 14.0%
- Valuation: The company’s target price is set at Rp6,000, based on an EV/EBITDA multiple of 7.7x, which reflects lower core profit growth expectations for 2025 and the impact of the JTT divestment on minority interest.
Major Shareholders
- Government of Indonesia: 70.0% ownership
Conclusion
Jasa Marga is strategically positioned to benefit from the proceeds of the JTT divestment, which will help reduce debt and fund future toll road expansions. The company is expected to see growth in core profit in 2025, driven by significant tariff adjustments on its toll roads. Despite some near-term challenges, including lower core profit growth expectations, Jasa Marga remains a BUY with long-term growth prospects.
