CFA Institute Research Challenge · PT Wijaya Karya Komponen Beton (WIKA Kobe) and PT Wijaya Karya Krakatau Beton. WIKA Kobe is a JV with PT Komponindo Beton Jaya (Kobe, a subsidiary

CFA Institute Research Challenge

Hosted by

CFA Society Indonesia Prasetiya Mulya School of Business and Economics

W T O N I J | P M S B E

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Prasetiya Mulya School of Business and Economics This report is published for educational purposes only by students competing in the Indonesia Investment Research

Challenge 2014

Construction Materials Industry, Materials Sector

Indonesia Stock Exchange (IDX)

WTON IJ: WIKA Beton

Date : November 19, 2014 Ticker : WTON IJ (Bloomberg)

Current Price: IDR1,215 USD1.00 : IDR12,142

Recommendation: SELL Target Price : IDR850

MARKET PROFILE

Price Range from IPO IDR590 – 1,240

Trading Volume 32,369,800

Dividend payout ratio N/A

Number of Shares Outstanding

8,715,450,000

Free Float 8.72%

Market Capitalization (IDRmn)

10,632,869

P/E N/A

P/BV N/A

Source: Bloomberg

Share Price Performance (IDR)

Source: Bloomberg

Downside Potential in 2015F

Source: Bloomberg

The Sky Has Its Limits

HIGHLIGHTS We initiate this research with a SELL recommendation with a target price of IDR850 and a downside potential of 30.04% at the end of 2015F based on the closing price on 11/19. We derived the TP by applying Discounted Free Cash Flow to Equity.

WTON is not the main beneficiary in Indonesia’s infrastructure budget WTON’s growth is driven by the size of infrastructure projects. Although the size of infrastructure projects is large, WTON’s plants are highly concentrated in the Java island, while infrastructure projects are mainly located outside the Java island (Appendix 15). Even further, insufficient funding constraints may delay infrastructure project implementation in the upcoming year. Such condition may significantly downgrade WTON’s order book in 2015 as it is working to accomplish carryovers from 2014 as much as IDR635bn. This condition, all in all, would result into lower earning growths.

Market share would be undermined WTON’s major advantages in terms of having the largest production capacity and market domination may not last. Major clients of WTON, PTPP, WSKT, and Hutama Karya, began to produce their own precast products with more than 60% of WTON’s capacity. Therefore, we calculate expected WTON’s market share would be curtailed to 28% in 2015 from 38% in 2014 and 43% in 2013 due to the rivalry among SOEs. The reduced market share will subsequently decrease WTON’s ASP growth and gross margin as buyers manage to secure stronger bargaining position. Slower revenue growth, margin squeeze The above-mentioned de-catalysts will curb revenue growth to 11.1% in 2015 y-y from 35.2% in 2014 y-y. New order book will remain insignificant for the year, with new bookings growing only 12.8% y-y, a slight increase from 12% in 2014 y-y. Margin pressure will emerge as cost is estimated to double its 2014 growth to 14% in 2015. We estimate EBITDA margin to be squeezed to 15.3%, slightly lower compared to 15.9% in 2014; but managed to diminish net profit growth to 15.3% in 2015 from 41.2%.

Stock de-rating will come sooner than later

Several headwinds may exert influence on WTON’s future performance. Heavy weight in aging employees and possibility of competitor’s aggressive capacity expansion may deter WTON’s profitability in the near future. Additionally, lagging implementation of company’s capacity expansion may also hinder revenue growth target. Lastly, regulatory and legal risks exposed may restrict WTON’s maneuvers to execute its winning strategies.

4,700

4,820

4,940

5,060

5,180

5,300

300

500

700

900

1,100

1,300

WTON (LHS)

JCI (RHS)

300

500

700

900

1,100

1,300

IDR1,215

IDR850

Closing Price Current Price Target Price

-30.04%


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Figure 1: Revenue Breakdown by Segment

Source: Company ANR 2013 Figure 2: Revenue Breakdown by Sales Area

Source: Company ANR 2013

Figure 3: Shareholders Structure (Post IPO)

Source: Company ANR 2013

Figure 4: Subsidiaries Shareholder Structure

Source: Company

BUSINESS DESCRIPTION PT Wijaya Karya Beton Tbk (WTON) is a leading state-owned precast concrete (PC) piles

producer in Indonesia with approximately 42.7% market share (BCI Asia, 2014)1. WTON used to be

a business unit of state-owned company PT Wijaya Karya Tbk (WIKA) in 1977 before its spin-off in 1997. To date, WTON has ten operating factories and six sales areas from Sabang to Merauke with a total capacity of 2.0 mtpa (million tons per annum), way above the 0.25 mtpa industry average.

Products. Initiated as an electrical pre-stressed concrete producer for WIKA upon its establishment, the company has spread its wings to produce various concrete products from piles, poles, railways, high-rise buildings, to maritime constructions. Stressing the importance of innovation has led to the invention of concrete stressing by spinning process to create hollow PC piles. This particular pile largely contributed to WTON’s double-digits growth in 2013

2.

Throughout 2013, WTON’s products contributed 99.2% of its total revenue (Figure 1), the rest contributed by services provision to its clients. 51.3% of its product-generating revenue is contributed by PC piles sales with Java still the dominating sales area with 66.4% contribution to revenue, while Sumatera and Sulawesi sales areas contribute the remaining 33.6% (Figure 2).

Customers. WTON’s 2013 revenue are mostly driven by order from local private companies (59%) and followed by state-owned companies (25%) that are involved in the infrastructure, property, energy, mining and industry (each contributing 44%, 17%, 15%, 13% and 11%, respectively)

3.

Therefore, WTON’s growth drivers are highly dependent on government infrastructure projects. Its parent company, WIKA, only contributes roughly 7% in WTON’s revenue in 3Q14.

Strategies. To fulfill its commitment to become a prominent market leader in Southeast Asia region, the company concentrates on the following four strategies to strengthen its market position as well as increase revenue streams.

Maintain joint ventures (JV) with strategic partners. WTON has two joint-venture subsidiaries, PT Wijaya Karya Komponen Beton (WIKA Kobe) and PT Wijaya Karya Krakatau Beton. WIKA Kobe is a JV with PT Komponindo Beton Jaya (Kobe, a subsidiary of Mitsubishi Construction Co. Ltd) to focus on Japan-funded projects, such as the Jakarta’s MRT project; whereas the latter is a JV with PT Krakatau Steel Engineering (a subsidiary of PT Krakatau Steel Tbk) to provide PCs for the Krakatau Group and Banten areas project. Also, WTON signed a JV agreement with UMG Group to build a PC concrete factory in Myanmar as a minority shareholder (5% ownership)

4. These JVs will assure WTON with contracts from Japan, Myanmar and Krakatau

Steel.

Develop quarries and factories to relieve dependency to supplier. WTON is currently developing quarries in Southern Lampung, Cigudeg, and Palu out of four initially planned as well as two factories in Southern Lampung and Balikpapan. These plants are expected to operate in 2015

5.

Quarries are intended to reduce over-reliance on suppliers and to strengthen supply chain. However, considering its disperse plants locations and varied needs of each plant, these quarries will not significantly reduce overreliance to suppliers.

Acquire companies for regional markets expansion. In June 2014, the company acquired 70% shares of PT Citra Lautan Teduh (CLT), a South Korea-Indonesia joint venture PC concrete producer in Batam

6. Through this acquisition, WTON hopes to obtain CLT’s market shares in

Brunei Darussalam, Singapore and Malaysia. No future acquisitions are disclosed by the management as of now.

Upstream service development programs. The company highlights the importance of maintaining customer satisfaction through continuous development of its services programs. Upon providing services ranging from engineering to on-site delivery and installation, WTON will develop piling and pre-stressing services to its customers

7. This service development is

deemed necessary for WTON to strengthen market position and attain sustainable growth.

The company experienced 16.89% growth (CAGR) within 2009 – 2013 through implementation of the above-mentioned. In addition, WTON has plans to increase its capacity to 3.3mtpa in 2018

8.

However, upcoming competition and possible delay in the implementation of government of Indonesia (GOI) infrastructure projects in 2015 may pose certain risks for revenue growth.

Shareholders structure. Listed on Indonesia Stock Exchange on April 8, 2014, the company’s outstanding shares are divided among five parties. WIKA is the majority shareholder with 60.0% ownership, followed by public with 23.5% ownership of the outstanding shares. The third major shareholders, Koperasi Karya Mitra Satya (KKMS), owns 11.2% of the outstanding shares, while Yayasan Karyawan WIKA owned 1.0%. The remaining 4.3% is held as treasury stocks. (Figure 3)

As for the joint venture subsidiaries, WTON holds 51% in PT Wijaya Karya Komponen Beton, while Kobe holds 49%; and WTON owns 60% in PT Wijaya Karya Krakatau Beton, while WIKA owns 30% and PT Krakatau Engineering owns the remaining 10%. (Figure 4, Appendix 23)

51.3%

13.1%

12.2%

9.2%

7.0%

6.0% 0.8% 0.4%

PC Piles Concrete Bridge Railway Sleepers PC Poles Sheet Piles Concrete Building Services

28.0%

19.6% 18.8%

13.1%

10.5%

10.0%

Jakarta East Java Central Java North Sumatera South Sumatera South Sulawesi

60.0% 23.5%

11.2%

4.3% 1.0%

PT Wijaya Karya (Persero) Tbk Public Koperasi Karya Mitra Satya Treasury Stock Yayasan Karyawan WIKA


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Figure 5: Govt’s Infra Spending (IDRtn)

Source: Ministry of Finance

Figure 6: Subsidized Fuel Prices Over the Years(IDR)

Source: Ministry of Minerals and Resources

Figure 7: Social Assistance Funds (IDR tn)

Source: Ministry of Finance

Figure 8: 2015 Infra Budget Allocation (IDRtn)

Source: Ministry of Finance, KP3EI

INDUSTRY OVERVIEW & COMPETITIVE POSITIONING Macroeconomics: Several constraints may delay infrastructure projects

Plenty of room for project improvements Table 1: ASEAN countries infrastructure rank in Global Competitiveness Index 2014 – 20159

# rank / 144 countries MALAYSIA THAILAND INDONESIA PHILIPPINES VIETNAM

GDP/capita (USD) 10,547.97 5,674.39 3,509.82 2,790.37 1,901.70

Quality of overall infrastructure 20 76 72 95 112 Quality of roads 19 50 72 87 104 Quality of railroad infrastructure 12 74 41 80 52 Quality of port infra 19 54 77 101 88 Quality of air transport infra. 19 37 64 108 87 Quality of electricity supply 39 58 77 87 88

Source: Global Competitiveness Index 2014 – 2015

Indonesia was ranked 34 out of 144 countries in the world in a Global Competitive Index 2014 – 2015, still lagging behind its ASEAN counterparts, Malaysia (#25) and Thailand (#48). However, Indonesia scored a huge improvement in quality of overall infrastructure prior to ranking #92 (2012 – 2013) and #82 (2013 – 2014), in line with increased infrastructure spending (Figure 5). Nevertheless, in the short term, with ASEAN Economic Community 2015 approaching, there is a great need for Indonesia to improve competitiveness through enhancing connectivity between islands through implementation of Acceleration and Expansion of Indonesian Economic Development (henceforth: MP3EI). This would lead to lower transportation and logistics costs by 15% given the hike in fuel prices

10. With Jokowi’s focus to improve infrastructure, we should

expect better quality infrastructure in the future. However, budget availability may prove to be a burden to achieve the expected increase in quality.

Subsidized fuel price increase: a leeway to fund infrastructure projects? Jokowi increased subsidized fuel prices by of IDR2,000/liter effective 11/18, way below the initial expectation of IDR3,000/liter. This move slashes fuel subsidy spending by IDR120tn in 2015

11.

Subsidy cut increases the fuel prices by 19.8% (CAGR) since 2005 (Figure 6). Raised subsidized fuel prices occurred amidst the government’s difficulty to finance budget deficit. Minister of Economy, Sofyan Djalil, has stated that the earmarked budget will be mostly allocated to Jokowi’s inherited MP3EI projects in hopes to fulfill 5.8% targeted GDP growth in 2015 and 7% – 9% in 2025

12. Lower subsidy cut denotes lower state budget leeway to be allocated to the

infrastructure.

Earmarked budget also allocated to social aids Upon increasing fuel prices, the GOI is also responsible to retain deteriorated purchasing power of its 15.6mn people living under poverty as a result of hiked inflation through social aids (such as unconditional cash transfer or known as BLT). Social assistance fund surged 21.83% in 2013 following GOI’s decision to increase fuel prices by IDR2,000 (Figure 7)

13. We expect the same

trend to occur in 2015 as higher fuel prices effect is amplified, further reduces budget allocation to infrastructure projects. Therefore, the GOI must rely on other financing schemes to fund its massive, overoptimistic infrastructure projects.

MP3EI: lagging project implementation As a strategic means to become one of ten largest economies, MP3EI aims to provide national connectivity in Indonesia’s vast archipelago with an estimated budget of IDR4,012tn, of which IDR1,786 is allocated to the infrastructure sector and the rest to the real sector

14. Entering its

third year, MP3EI is off-schedule; with initiated 19.94% or 20915

out of 1,048 targeted infrastructure projects due in 2025 worth IDR422.3tn. Projects are started at an average of 6.648% per year, slightly lower than the targeted average 7.14% targeted. However, project completion remains uncertain. Main lag catalysts are discussed below.

Budget constraints may halt project execution Limited infrastructure budget remains a key issue in improving infrastructure. The government allocated IDR169tn for infrastructure in 2015, despite the needed IDR624tn

16 with hopes to

attract funds from foreign investors (Figure 8). In addition, shifting focus would occur parallel to increase in projects budget. This may occur since new priorities and strategies may alter or append new projects, for instance, out of 24 ports and 6 hubs planned in Jokowi era

17, only 11

are included in MP3EI master budget. It is highly probable that lagging and, if worst come to worse, termination may occur if the GOI fails to raise the much needed funds.

Looming layout constraints in project implementation Despite its promising prospects, challenges in land acquisitions and urban planning remain serious constraints to MP3EI progress; such challenges include escalated acquisition price, permit and cityscape. In order to solve such constraints, the GOI will enforce Law No. 12 year 2012 pertaining to Land Acquisition for Development in the Public Interest next year. This law will hold the GOI accountable for land clearing issues in infrastructure projects and may further inflate project budget by IDR5 – IDR15tn

18. However, field execution tends to differ from

expectations due to externalities; for instance, 372 (out of 612) sites for MRT development are

76 86

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455 tn, 78.69%

169tn, 21.31%

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19.80% CAGR CAGR


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Figure 9: Factories Capacity to Total Industry

Source: MARS, Team estimates Figure 10: Indonesia PC Concrete Demand

(mn ton)

Source: BCI Asia, company data

Figure 11: Cement Capacity Growth

Source: Indonesia Cement Association

Figure 12: Porter’s Five Forces

Source: Team estimates

still on the clearing process, despite having been initiated since 201319

. Such complex implementation procedures may deter investment and projects to progress on-schedule. PC concrete industry in focus Industry dominated by numerous players and buyers The PC concrete industry in Indonesia is oligopolistic in nature. With a total of 21 players and 6.0mtpa total capacity, 61% are dominated by WTON, Adhimix and Waskita Precast, while 39% are distributed unevenly among the remaining 18 players (Figure 9). They produce standardized products and quality to be befitted in accordance to buyers’ specifications. Separately, the numbers of buyers ranges from private companies (i.e, private contractors) to the government. From these players-buyers compositions, we can estimate low bargaining power of buyers, thus producers serve as the price maker in the industry.

High, yet breakable barriers to entry Characterized as a capital-intensive industry, the PC concrete industry is only dominated by a few players, each holding >500,000tpa capacity. In addition, considering high transportation cost, expansion remains a key driver for growth. Therefore, capacity and locations are paramount to be competitive in this industry. In addition, strategic locations with sizable land area, proximity to materials, transportation facilities (jetty and roads) and infrastructure projects are of paramount importance. Currently, strategic locations in Java, Sumatera and Kalimantan are occupied by existing players with expansion plans conducted in the near future.

To compete, new entrants would have to build a number of factories with capacity higher than 500,000tpa to become a significant player in this industry. While it would cost them USD12.5mn to build a factory with 500,000tpa (or 1,370tons per day) capacity

20, they would also have to

wait for another 2 – 3 years to start production. Such conditions prove to build high barriers to entry for new entrants to the industry. However, moderate availability of funds for investment would make the barrier penetrable.

Higher preference for PC concrete over conventional concrete PC concrete has two substitutes: conventional concrete and steel. Faster construction time, lower cost and longer lasting, precast concrete usage is gaining popularity in the modern construction, its demand is forecasted to increase to 7.97mn tons in 2018, up 74.2% from 4.57mn ton in 2014 (Figure 10)

21. However, PC concrete also has its drawbacks as the

installation procedure requires a high level of precision. In addition, steel, as a substitute of PC products, provides similar benefit with cheaper cost and easier installation method. Although, steel may have fundamental flaws. Unlike PC products, the entire steel construction has to be changed when the structure is damaged by fire, due to material expansion which decreases its strength. Therefore, under such circumstances, PC’s substitutes have low-to-medium bargaining power.

Abundant raw materials To manufacture PC concrete, cement, sand, split rock and steel are required and supplied by numerous suppliers. According to the Ministry of Industry, the total capacity of the cement industry would reach 78.5bn tons in 2016, up 29.2% from 60,75bn tons in 2012

22 (Figure 11). In

addition, steels are supplied by domestic and China players after ASEAN China Free Trade Agreement (ACFTA) signed in 2005

23. The demands for steel are expected to rise from 13mn

tons per annum in 2012 to 25mn tons in 2020 along with the demands of infrastructure projects in Indonesia

24. Finally, as for sand and split rock, PC companies either mine these from their

quarries or purchase them from distributors. In many ways, these materials are abundant with no sole supplier; thus the bargaining power of suppliers in PC concrete industry is relatively low.

High-rivalry nature of industry While it is apparent that this industry is walled with high, but breakable barriers to entry and is oligopolistic in nature, the extent of rivalry in the industry is comparatively high. Competitors are allured with promising future of PC concrete industry, particularly with abundant raw materials available in Indonesia’s soil.

WTON’s competitive positioning Fragile concrete walls captivate the concrete industry Being a pioneer in the precast concrete industry for more than 30 years, WTON has secured the first mover advantage and the largest capacity in the industry (Table 2 and Table 3). Years of experience in this industry gives WTON a high competence in manufacturing precast concrete products. This enables WTON to produce various high quality precast products which are divided into eight main groups: PC poles, PC piles, concrete bridge, railway sleepers, sheet piles, hydro-concrete structure, marine structure, building and housing structure and others

25. In

addition, WTON managed to create innovation in producing PC Pile, which contributes the biggest revenue, namely Pile Tip Shoe Machine (CRIMS) and two-layered PC Pile production method

26. Together, these two processes have cemented high barriers to entry to the

competition. However, shifting preference to PC concrete, entailed by numerous infrastructure

34%

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WTON Adhimix WSKT Precast Others

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Table 2: WTON Plants’ Capacity

NO LOCATION CAPACITY

(tpa) Operating 1 North Sumatera 210,000 2 Lampung 170,000 3 Bogor 530,000 4 Majalengka 110,000 5 Boyolali 210,000 6 Pasuruan 400,000 7 South Sulawesi 130,000 8 Karawang 240,000 9 Karawang - WIKA Kobe 60,000 In Progress 1 Cilegon - WIKA Kraton 100,000 2 East Kalimantan 150,000 3 South Lampung 150,000

Source: Company

Table 3: Top 5 Players in PC Industry (tpa)

COMPANY

INSTA-LLED

CAP. (‘000)

CAP. SHA-RE

# OF PLANT

S LISTED

WIKA Beton

2,060 34% 8 •

Adhimix Precast Indonesia

825 14% 4 X

Waskita Precast

800 13% 4 X

Jaya Beton Indonesia

520 9% 3 •

JHS Saeti Indonesia

343 6% 2 X

Source: BCI Asia, Team estimates

Table 4: Estimated PC Industry Market Share Market Share

2013A 2014A 2015F

WTON 42% 38% 28%

PTPP 8% 12% 14%

WSKT 15% 14% 18%

HK 0% 0% 1%

Source: Company, Team estimates

Table 5: GOI Infrastructure Roadmap & WTON’s Plants Locations

AREAS PRO-JECTS

PLA-NTS

QUA-RRY

SALES AREA

Sumatera 9 3 1 2

Java 5 6 1 3

Kalimantan 7 1 - -

Bali & NTT 2 - - -

Sulawesi 6 2 1 1

Papua & Maluku

10 - - -

Source: Bappenas, Company, Team Estimates

projects encourage contractors to build its own PC plants; thus eventually attracting more competition into the market.

Clients turned competitors WTON’s clients: PTPP, WSKT and PT Hutama Karya (each contributes 4%, 5% and 4%, respectively

27) are producing PC concrete to suffice their own needs and are planning to enter

the PC market28

. Waskita precast was recently spun off from WSKT and will commence IPO in 2016

29. Currently, PTPP has 380,000 tpa

30, while Waskita Precast has 800,000 tpa capacity. Both

are expected to increase their capacity in 2015. Waskita Precast will build two plants with combined capacity of 450,000 tpa. No information is disclosed regarding HK’s capacity, to date. As for now, WSKT and PTPP combined production capacity has amounted to 1.18 mtpa or roughly 50% of WTON’s capacity. We estimate that rivalry risk for WTON would reduce its market dominance and market share to 28% in 2015F (Table 4, Appendix 16). Therefore, we assume that the ASP and margin improvement will grow slower for WTON.

Vast sales network, but way too concentrated plant locations In 2015, WTON operates 12 factories, three quarries and six sales areas located across Indonesia, the biggest among its peers. Such sizable plans and capacities are intended to capture the demands of 15 airports and 24 ports projects within 2015 – 2019. Ironically, WTON allocated 50% of its plants in Java, while only 5 out of 39 projects are located in the same area (Table 5, Appendix 15). The government now focuses on building infrastructure in Papua, Maluku and Sulawesi by allotting 18 projects in the regions. As of now, there is no disclosure regarding WTON’s further plans to expand into the east regions. Therefore, we estimate that WTON will not be the main beneficiary in the upcoming projects in the east regions.

Quarries in question WTON utilizes about 12% of IPO (IDR144tn) funds to build three quarries (out of four planned) located in South Lampung, Cigudeg and Donggala with an estimated useful life of more than 40 years

31. However, we notice some discrepancies in the funds allocation between the three

quarries. Company’s public expose reveals that Cigudeg quarry has reached 80% progress with initial investment of IDR113bn or 78.47% of its allocated quarries funds, sparing roughly 21% (IDR31tn) for South Lampung and Donggala quarries. No additional information is garnered regarding this. We question the progress of the latter and whether these two quarries would provide any significant benefits of vertical integration to WTON.

Acquisition as a means of expansion to ASEAN Even further, together with WIKA, WTON has acquired a precast concrete company in Batam, PT Citra Lautan Teduh (CLT) with a total ownership of 80% of which 70% is owned by WTON

32.

From the total land bank of 60ha, CLT currently uses 26ha with production capacity of 100,000 tpa. With CLT, WTON secured another two advantages. In addition to lower the cost of production to fill its product demands in Sumatera, WTON would have greater opportunities to enter the export market as CLT clients are based in Brunei Darussalam, Singapore and Malaysia regions. This gives WTON the advantage to be very competitive in terms of sales networks and capacity to its peers.

Structuring subsidiaries to solidify its position In response to the aggressive investment trend from Japanese government, WTON has secured its position to benefit from the opportunity though the establishment of a subsidiary, PT WIKA Komponindo Beton (WIKA Kobe), a JV with PT Mitsubishi Construction Co., Ltd. WIKA Kobe’s first project is the first phase of Jakarta MRT with a value of USD1.25bn of which 75% is funded by the Japan International Corporate Agency (JICA)

33. Subsequently, WTON’s ties with JICA will

ensure its position in JICA’s future funded projects. In addition, another JV was conducted with PT Krakatau Engineering to build PT WIKA Krakatau Beton (WIKA Kraton), a subsidiary of WTON. WIKA Kraton will focus on supplying PC demands for Krakatau projects and Banten areas. These joint ventures will provide WTON with guaranteed repeat orders for Japan-Indonesia partnership and Banten areas infrastructures, even though WIKA Kraton is not yet in operation yet due to its unfinished plant construction.


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Figure 14: WTON vs. Industry


INVESTMENT SUMMARY

Figure 13: WTON’s Share Price and News Flows since April 2014 (stock price in IDR)

Source: Bloomberg, Kontan, Kompas.com, the Jakarta Post and Investor Daily

Team suggests a SELL recommendation for WTON with the target price of IDR850 by the end of 2015F with a downside potential of 30.04% from the closing price on 19/11 at IDR1,215. Despite holding a strong position in PC concrete industry with 42.7% market share and plans to increase its production capacity to 2.3mtpa in 2015, WTON’s current price indicates that the market has over-reacted, thus causing share price to bounce way above its fair price. Such overreaction is indicated by more than 105.93% share price increase within the seventh month after IPO, while market capitalization has elevated from initially IDR5.14tn to IDR10.63tn after the market closed on 19/11. In addition, WTON’s relatively high price in the market does not reflect potential risks, slower growth and lower profitability, particularly within one year investment horizon. Our valuation shows that WTON’s premium price is also backed with higher expected P/E (35.7x), PBV (4.41x), and P/S ratio (3.26x) than industry average (Figure 14). Based on these conditions, we can conclude that WTON’s current share price has been overvalued and does not reflect potential risks.

Valuation methods We use DCF Free Cash Flow to Equity (FCFE) to value WTON’s target price in 2015F. Multiple pricing (P/E, PBV and P/S ratio) are only applied to determine parameters that may form and to analyze WTON’s share price value in accordance to the market’s expectation.

Declining trend of earnings performance in 2015

Slower revenue growth will burden WTON’s performance in 2015 prior to insufficient budget, delays in infrastructure projects, declining market share and nonstrategic plant locations. Additionally, political power struggle in 3Q14 diminish order book for the year, therefore we could expect relatively low order book realization to be carried over to the upcoming year. In 2015, taking into account lagging MP3EI progress, we expect WTON’s order book to remain slow. Cost-wise will arise and pressure the company’s margin, which further leads to lower earnings growth. Furthermore, poor signals in earnings quality indicate an aggressive accrual method used in the financial statement. For that reason, we expect WTON’s earnings performance to loosen in 2015, eventually slashing market’s bullish expectation. Potential investment risks WTON’s future performance might be affected by several potential risks. Aging employees may burden future expansions as 62.55% of the total employees are in the > 41 year old class, which may burden WTON’s future productivity. Aggressive capacity expansion by competitors as well as lagging implementation of capacity expansion that may also hinder revenue growth target. Finally, WTON is also be exposed with regulatory and legal risk in its operations, such as low success in regulatory impact due to pending renewal of expired plants operation licenses and low success of regulatory impact. Further discussion will be discussed further in Investment Risk section.

VALUATION The procedure of using discounted cash flow in valuating WTON’s target price is deemed proper and appropriate as detailed below, whereas multiple pricing is only used to acquire the maximum and minimum range of 2015F targeted price.

DCF Valuation FCFE is used in DCF calculation. This method is considered suitable to valuate WTON since debt (consisting of MTN and bank loans) contributes roughly 3% of the capital structure. In addition,

35.68

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Figure 15: WTON Capacity and ASP

Source: Company data, Team estimates

Figure 16: WTON Capital Expenditure


Figure 17: Cap. Structure of Infra Companies

Source: Company reports, Team estimates

Figure 18: Discount Rate Comparison

Source: Company reports, Team estimates

there is no further disclosure whether WTON plans to use debt-financing to finance its future expansions. According to our DCF, the team expects the target price of WTON to reach IDR850 in December 2015 based on the following underlying factors. Sales. WTON’s Net Sales for the following five years is parallel to the company’s expected

performance. There are three main factors that back sales increase, namely: (Figure 15) 1. 9.4% CAGR for total capacity from 2014 to 2019F, 2. Average selling price (ASP) in the range of 7.5% level, and 3. 1.5% services contribution to revenue for the next 5 years.

Therefore, WTON is expected to achieve 2.8mn ton sales volume and IDR7.96bn sales by the end of 2019F. SELL assumption is strengthened by slower revenue growth in 2015F – 2019F of roughly 11% compared to the average 25% – 30% in 2012A – 2014F.

Capex. WTON performed capacity expansion and is currently building three quarries and four factories which are expected to start operating in 1Q15. Sizable capital expenditure will burden the company by IDR370bn in 2015F, while team estimates that company will maintain capex from IDR450bn to IDR500bn in the following year. Expansions in 2015F and 2016F are assumed to be in-line with IPO funds’ planning, while 2017F through 2019F expansions will be adjusted with expansion CAGR in 2009 – 2014 (Figure 16).

Capital Structure. Equity comprised 97% of WTON’s capital structure to finance its investments, thus cost of equity is then used as a discount factor. Compared to its peers who incorporate debt into their capital structure, WTON’s cost of equity will yield higher discount factors among its peers. (Figure 17 & 18)

Cost of Equity. Cost of equity amounting to 14.89 % is calculated using CAPM model with a risk free rate (RFR) of 6.2% (amount of RFR is less by CDS). RFR is obtained from calculating the median of IDFR with time to maturity of 10 to 15 years. In addition, beta of 1.05 is calculated by regressing daily required return of four WTON’s peers within the past five years to find levered beta, then followed by cleansing levered beta with D/E ratio of each company and re-levered beta with WTON’s D/E ratio. Aside from that, market risk premium of 8.3% is obtained from adding mature risk premium of emerging country (5%) with country risk premium (3.3% with CDS 2.2%

34 and deviation on equity

to bond of 1.5). Therefore, cost of equity will yield relatively high discount rate and further drags TP down. (Table 5)

Terminal Growth. Team uses Indonesia’s economic growth data within the last ten years, particularly government expenditure on material and gross fixed capital formation. Combined average growth falls between 4.8% – 6.6%. We assume 5.4% terminal growth for WTON, in line with the median of the above-mentioned growth range.

Peer group pricing: WTON “The Expensive One” Based on the peers decision of PC concrete industry derived from fit and proper test, the team has decided upon three benchmarks to be used as multipliers: P/E ratio, PBV ratio and P/S ratio. The use of multipliers in pricing is based on one-year forward medians. Industry-wise, WTON has premium price as compared to its peers. Investor’s overreactions upon WTON defies market efficiency and thus, resulting in WTON being overvalued. For what should have been investors’ expectation of WTON in next two years was realized seventh months after its IPO. This, we believe, is a sign that the market is acting too hasty.

Relatively high share price increase may be reflected from market’s limited awareness of the industry; investors may fail to consider potential risks and current condition, for instance:

1. Slower revenue growth, triggered by funds insufficiency and feasibility of MP3EI projects.

2. The company’s inability to capture the existing demand as reflected by declining order book.

3. More intense competition among the existing players as WSKT, PTPP and ADHI demanding a share in PC concrete promising future.

To better understand how the market perceives WTON, the team conducted multiple pricings using P/E, PBV and P/S by comparing WTON with its construction peers: JKON, ADHI, PTPP, WSKT and WIKA. The followings are the assumptions of team’s relative valuation.

Sales increases within 25% - 30% in 2012 until 2014F. This encourages market optimism and expectation to exceed the company’s performance. Such performance is reflected in WTON’s relatively high P/S ratio of 3.26x as compared to 1.5x of the industry’s. However, such post-IPO euphoria is dampened as sales expectations are adjusted with condition and competition of PC concrete industry, eventually dragging the revenue growth down to 11% in 2015F.

1.46

2.82 10.0%

7.5%

6%

7%

8%

9%

10%

11%

1.00

1.50

2.00

2.50

3.00

13A 14F 15F 16F 17F 18F 19F

Usage Capacity (Ton) ASP (%)

649

368 450

495

270 180

0

200

400

600

800

14F 15F 16F 17F 18F 19F

Capital Expenditure (IDRbn)

72% 97%

58% 67%

40% 57%

28%

3%

42% 33%

60% 43%

0%

20%

40%

60%

80%

100%

120%

JKON WTON WSKT WIKA ADHI PTPP

Proportion of Equity Proportion of Debt

14.4%

14.9%

14.5%

14.3%

14.0%

14.0%

13.5% 14.0% 14.5% 15.0%

JKON

WTON

WSKT

WIKA

ADHI

PTPP


8

Table 5: WTON Cost of Equity

COST OF EQUTY SCHEDULE

Cost of Equity

RFR (Based on 10-y IDFR0044) 8.38%

Market Risk Premium 8.30%

Country Risk Premium 3.30%

Default Spread 2.20%

Deviation on Equity to Bond 1.50

Mature Risk Premium 5.00%

Tax 25.00%

Re-levered Beta 0.95

Weight of Equity 97.25%

Weight of Debt 2.75%

Cost of Equity 14.89%

Source: Damodaran Estimates, Team estimates

Figure 19: P/E Comparison with Asia PC Co.

Source: Bloomberg, Team estimates

Figure 20: TP falls between the price parameters


Figure 21: Revenues and Growth

Source: Company, team estimates

Reflecting from 2013 performance, the company was able to book decent performance and 14.7% margin. However, further analysis in 2015F – 2019F shows WTON’s gross profit margin to fall within the average of 13.3%. 2013’s growth has eventually succeeded in exceeding investor’s expectation, despite the fact that the realized company performance is viable for comparison in the next two years. Such overreaction caused expected P/E ratio to increase to 35.7x, higher than 28.3x of the industry’s.

PBV falls on 4.41x, higher than 4.07x of the industry’s. Considering increases in the company’s market and book values, such comparison is not comparable. As we refer to WTON’s 90% increase in market value within seven months after IPO, this may indicate that the market is too bullish in making judgment.

Table 6: WTON’s Share Price and News Flows since April 2014 (stock price in IDR)

Market

Cap (IDRmn)

Earnings (IDRmn)

Book Value

(IDRmn)

Sales (IDRmn)

P/E Ratio PBV Ratio P/S Ratio

JKON:IJ 10,192,825 194,311 1,695,067 4,468,394 52.46 6.01 2.28

WTON:IJ 9,499,859 266,215 2,155,607 2,915,928 35.68 4.41 3.26

WSKT:IJ 8,071,394 377,439 2,445,694 9,818,781 21.38 3.30 0.82

WIKA:IJ 16,003,053 670,375 4,838,961 12,537,375 23.87 3.31 1.28

ADHI:IJ 4,980,650 328,928 1,476,929 9,334,958 15.14 2.97 0.53

PTPP:IJ 10,411,239 492,548 2,351,857 12,207,887 21.14 4.43 0.85

AVERAGE 28.3 4.07 1.5


Related to the relative valuation, price parameters are based on the incision between the maximum and minimum price of the three multipliers (P/E, PBV and P/S ratio). These parameters fall within the upper bound of IDR1,485 and lower bound of IDR825. (Figure 18, Appendix 10)

Also expensive among its APAC peers We compare WTON with other precast concrete companies in Asia Pacific region, namely Japan, China, Thailand and Malaysia. Peers are chosen based on market capitalization, industry and performance of respective companies that exhibit a certain degree of similarity with WTON. The average P/E ratio for construction materials in Asia Pacific region is 21.33x, significantly lower than WTON’s 35.68x P/E ratio. Such difference in P/E ratio further strengthens our view of WTON being overpriced compared to its peers.

Target price TP for WTON 2015F based on DCF is IDR850, which falls within the stated parameters. This shows that the valuation performed has correctly valuated the company’s overall performance and structure upon varieties in market conditions and expectation. DCF with FCFE results provides a better reflection of the overall performance and structure of the company fundamentally. Therefore, we initiate the target price of WTON in 2015F is IDR850.

FINANCIAL ANALYSIS Lower revenue growth to persist in 2015 WTON will experience 11.08% revenue growth in 2015, lower than 35.16% in 2014 due to lower market share and doubtful realization of MP3EI projects (Figure 21). As competitions start rolling in, WTON’s ability as a price maker will also be corroded. It is reflected from limited ability to increase ASP by 7.5% in 2015 compared to 10% in 2014. In addition, more intense competition may lead to lower order book booked by WTON. Aside from that, slower revenue growth is also attributable to its failure in capturing PC concrete demand growth. The company expands its capacity by 3.33% in 2015, relatively insignificant compared by 24.02% increase in PC concrete demand nation-wide (BCI Asia estimates). We expect this condition to persist as WTON’s long term planning reveals 10.53% CAGR capacity expansion within 2014 – 2018, while PC concrete demand in Indonesia is expected to increase by 16.3% CAGR (Figure 22).

Depleted unearned revenue in 2015 In 2015, unearned revenue is expected to decrease by 45.33%; while the average margin of unearned revenue to liabilities would reach to 28.76% in 2015, a major drop from 48.55% in 2009 to 2014. Slower order book growth is to be blamed for this as WTON takes the blow from possible delay in MP3EI; order book in 2015 is estimated to reach 12.81%, slowing from 35.57% in 2012. We estimate 77.85% WTON’s infrastructure project in 2015 to be delayed or still under tender process. Also resulting from lower order book is reduced carry over in 2015 by 45.33%, leading to proportionate decrease in unearned revenue. Therefore, WTON’s working capital will no longer be supported by unearned revenue, leaving it no choice but to use internal funding.

26 25

15

21 21

16 12 12

36

0

5

10

15

20

25

30

35

40

5%

10%

15%

20%

25%

30%

35%

40%

2

3

4

5

6

7

8

13

A

14

F

15

F

16

F

17

F

18

F

19

F

IDRtn

Revenue Revenue Growth

Gross Profit Margin EBITDA Margin

EBIT Margin Net Profit Margin


9

Figure 22: Increasing Production Capacity

Source: Company, team estimates

Figure 23: ITO vs. ARTO


Figure 24: Lower D/E Ratio


Figure 25: Unearned Revenue to Liabilities


Figure 26: WTON Earning Quality Indicator


Such condition will drag our valuation down even further considering the company needs free cash flow to invest in its working capital.

Margin pressure attributable to increased cost

We forecast WTON’s gross profit margin will be pressured along 2014 – 2019 with declining

CAGR 2.11%; particularly in 2015 its gross profit margin will tighten from 14.79% in 2014 to

14.11% in 2015. Such conditions would occur due to higher cost of production (current

proportion is 56% material, 24% labor and 20% operational expenses) attributed by increases in

several key components. In 2015, material cost will increase parallel to inflation by 6.9% (Asian

Development Bank, 2014), while labor cost will surge by 11.66% as government raises the

minimum wage in WTON’s plant locations (Appendix 18). Thus, we estimate cost of product per

ton will increase 14.01% in 2015, higher than 6.78% in 2014 (Appendix 19). We believe elevating

cost of product in 2015 will tighten WTON’s future profits as reflected in slower growth of

41.15% growth in 2014, compared to 15.25% in 2015. Ugly earnings growth will slash market

bullish expectation of WTON’s performance, notably in 2015.

Pre-stressing rock with mediocre profitability

DuPont analysis points out declining ROE in 2019 of 19.76%, a drop from 36.15% in 2013.

Plummeted ROE is an impact of higher equity value from higher equity risk subsequent to its IPO

in mid 2014. However, our DuPont Analysis on WTON shows increases ROA from 2014: 9.34% to

2019: 10.14%, thus illustrating slightly higher asset utilization by the management to produce

higher earnings. In addition, Sales/Asset reveals similar tendency to continuously book lenient

progress in ratio as time progresses to 109.65% in 2019 from 98.02% in 2014, eventually proving

WTON’s higher asset utilization to generate higher, but limited revenues. Conversely, WTON’s

will experience slightly lower efficiency to maximize its earnings from derived sales as implied by

declining Net Income/Sales of 9.53% in 2014 and 9.25% in 2019. Therefore, slight increases in

ROA demonstrate moderate performance of the company.

Increases ITO versus cyclical ARTO Increased inventory turnover (ITO) served to be a good indicator of WTON’s financial position. Historically, ITO increased 16.05% CAGR – from 1.49x in 2011 to 2.33x in 2014F – which indicates better efficiency in restocking its products. On the contrary, account receivables turnover (ARTO) exhibited a cyclical pattern from 2011 – 2014, thus reveals the company’s inability to control payment from customers. We believe that expected insufficiency of infrastructure budget in 2015 will be reflected in lower ARTO and longer account receivables days from 51 days in 2014 to 57 days in 2015 (Figure 23). Therefore, volatile ARTO shows that the company cannot strictly maintain its collectability.

Dependability on cash reserves for future expansions

We estimate WTON’s IDR1.2tn IPO funds to be fully depleted in 2017, therefore cash reserves

will be used to finance its capital expenditure from 2017 onwards. Indicating the company’s

solid cash-financing ability, cash ratio will be normalized at 0.11x in 2015 to 0.37x in 2019,

previously 0.55x after IPO in 2014. However, additional supply from debt issuance might be

followed by lower (less than 15%) contribution to its annual capex, particularly in 2015.

Separately, WTON will settle down to 0.00 debt-to-equity ratio in 2019F, a significant drop from

2014F’s 0.20 after estimated lower ratio within the period (Figure 24). This condition will

provide a leeway for the company to fund any future expansions plans through debt issuance.

Too aggressive accruals

Historically, unearned revenue contributed 47.43% of WTON’s liabilities in 2013. Compared to

its peers, Figure 26 shows that WTON has relatively higher unearned revenue portion in its

liabilities. Such huge portion in liabilities may indicate a tendency to recognize revenue before

its designated period, i.e. aggressive accruals that could be revealed through earnings quality

indicators (EQI). Computed as CFO/(Net Income + Depreciation & Amortization + NWC), WTON

has abnormal earnings quality pre-IPO. EQI in 2011 and 2013 falls below normal standard of

100%: featuring EQI of 75% and 26%, respectively. However, WTON shows oddly-impressive EQI

in 2012 with 210% as it multiplies 2.8x compared to the previous year (Figure 26). With no

available disclosure and/or information on ongoing projects in the previous years, team is

concerned regarding WTON’s earning quality.

0%

5%

10%

15%

20%

25%

1.5

2

2.5

3

3.5 1

3A

14

F

15

F

16

F

17

F

18

F

19

F

Former capacities New factories Additional-Former capacities

6

6.4

6.8

7.2

7.6

1.5

1.8

2.1

2.4

2.7

13

A

14

F

15

F

16

F

17

F

18

F

19

F

ITO (LHS) ARTO (RHS)

0.05

0.20

0.35

0.50

0.65

0.0

0.2

0.4

0.6

0.8

1.0

13

A

14

F

15

F

16

F

17

F

18

F

19

F

D/E Ratio (LHS) Cash Ratio (RHS)

0%

20%

40%

60%

80%

100%

WIKA ADHI PTPP WTON Other Liabilities Unearned Revenue Advances

75%

210%

26%

0% 50% 100% 150% 200% 250%

2011

2012

2013

Normal Rate


10

Figure 27: WTON Employees’ Age Structure

Source: Company, Team estimates

Figure 28: Risks Matrix


INVESTMENT RISKS Human Capital Risk: aging employees may burden future expansions | (HR) To proceed with expansion plans 2015 to 2019, WTON will require at least 683 qualified workers to run its 3.3 mtpa plants capacity (Appendix 17). With the fast growing PC industry and more intense competition, WTON would experience difficulties the human capital realm, particularly in recruiting additional skilled workers to maintain productivity and efficiency. Judging from the company’s employees age structure, WTON may have trouble in proceeding with its standardized operations and expansions plans due to aging employees. In 2013, 62.55% of WTON’s 1,020 employees are in the > 41 year old age class, while employees < 30 year old comprised less than 16% of the total employees (Figure 27). This indicates a major succession planning needed by WTON to ensure its human capital supply to compete in the more competitive PC industry in the future.

Competition risk: Competitors to perform aggressive capacity expansion | (CR) Several infrastructure contractors, which have been the company’s clients, began trying to produce their own precast concrete. WTON will be threatened if the competitors perform more aggressive capacity expansion, especially to outside of the Java Island. This is a viable threat as the GOI are currently focusing on bringing connectivity to the east region of Indonesia.

Management risk: lagging implementation of capacity expansion | (MR) Since early 2014, the management has targeted the Southern Lampung plant to be accomplished in end of 2014. However, recent news has reported that such completion may have to wait until 1Q2015. Another example is the construction for East Kalimantan plant that was initially planned to start operating in 2015 was delayed until 2016. In addition, unconducive weather condition may also further delay quarries completion, thus postpone WTON’s plan to reduce reliance on suppliers. Lags in the completion of impending capacity may affect our targeted revenue for WTON as well as losing its first-mover advantage to be a significant player in the region.

Regulatory risk: low success in regulatory impact | (RR) The Commission of Acceleration and Expansion of Indonesian Economic Development (KP3EI) managed to coordinate the completion of 51 regulations with levels ranging from Presidential Decree to Minister Decree. However, the impacts remain immaterial in the realization. Currently, there are more than 16 regulations still being discussed in various government levels; this might increase the lags in MP3EI progress, thus corrections in WTON’s targeted revenue in the coming years might be necessary.

Legal risk: pending WTON’s plants licenses | (LR) Our researches in various independent legal entities regarding WTON’s legal compliance indicate unfinished working licenses that may hinder plants’ operational activities. Among all are license for waste disposal in Boyolali plant, license for B3 waste utilization for Bogor, Boyolali and Karawang plant as well as as licenses for surface water utilization for Bogor plant. Despite having expired since 2012, these licenses were extended in early 2014. To date, there has not been any clarity pertaining to the completion of these licenses by WTON, which may expose the company to plant discontinuation and criminal sanctions.

15.98%

21.47%

62.55%

< 30 yo 31- 40 yo >41 yo


11

APPENDICES

Appendix 1: Statement of Financial Position

in IDR Millions 2012 2013 2014F 2015F 2016F 2017F 2018F 2019F

ASSETS 2,401,100 2,917,401 4,373,937 4,019,379 4,667,228 5,802,091 6,856,744 7,890,976

Current Assets 1,793,980 1,896,018 2,799,284 2,186,953 2,517,629 3,334,829 4,355,897 5,458,846

Cash and Cash Equivalent 340,319 413,027 995,287 167,176 139,137 258,113 745,367 1,424,872

Account Receivables 309,419 421,906 580,052 655,588 766,272 982,350 1,159,053 1,301,359

Accrued Income 48,857 27,517 37,193 41,315 48,712 63,529 74,956 84,159

Other Receivables 551 1,855 1,425 1,583 1,867 2,435 2,873 3,225

Tax Prepaid 24,553 36,811 36,811 36,811 36,811 36,811 36,811 36,811

Inventories 881,217 846,027 968,512 1,083,185 1,285,752 1,688,107 1,978,463 2,206,444

Advance 9,632 5,453 7,273 8,133 9,653 12,673 14,904 16,680

Prepaid Expense 179,431 143,423 172,731 193,162 229,262 300,975 353,969 396,145

Non-Current Assets 607,120 1,021,383 1,574,652 1,832,426 2,149,763 2,457,100 2,490,348 2,421,281

Deffered Tax Assets 18,815 5,789 5,789 5,789 5,789 5,789 5,789 5,789

Investment Property 3,700 3,487 3,381 3,274 3,168 3,061 2,955 2,848

Fixed Assets 584,605 1,012,107 1,565,483 1,823,363 2,140,806 2,448,250 2,481,604 2,412,644

LIABILITIES 1,796,770 2,187,383 2,218,330 1,589,092 1,937,272 2,707,362 3,327,102 3,838,052

Current Liabilities 1,778,015 1,794,348 1,819,878 1,550,588 1,892,342 2,649,560 3,259,372 3,762,327

Short Term Loans 19,492 172,519 58,103 65,896 66 66 66 66

Trade Payables 421,000 325,100 439,548 491,590 583,523 766,127 897,901 1,001,368

Advances Received 35,407 78,456 87,046 96,694 114,006 148,682 175,427 196,966

Unearned Revenue 962,660 911,803 835,897 456,980 684,392 1,083,429 1,430,599 1,725,684

Accrued Expenses 278,076 254,434 339,379 379,522 450,450 591,350 695,473 778,338

Other 61,381 52,036 59,905 59,905 59,905 59,905 59,905 59,905

Non-Current Liabilities 18,754 393,035 398,453 38,504 44,930 57,803 67,730 75,725

Obligation Under Finance Lease – Net

2,552 2,552 2,552 2,552 2,552 2,552 2,552

MTN Payable 366,000 363,530

Post Employee Benefits Liabilities 18,754 24,483 32,371 35,952 42,378 55,250 65,178 73,173

EQUITY 604,330 730,018 2,155,607 2,420,767 2,720,120 3,084,567 3,519,142 4,042,076

Share Capital 115,000 667,000 871,547 871,547 871,547 871,547 871,547 871,547

Paid-in Capital 973,194 973,194 973,194 973,194 973,194 973,194

Treasury Stock (58,246) (58,246) (58,246) (58,246) (58,246) (58,246) (58,246)

Retained Earnings 443,067 71,319 309,648 584,328 883,681 1,248,128 1,682,703 2,205,637

Non Controlling Interest 46,263 49,945 59,465 59,465 59,465 59,465 59,465 59,465

TOTAL LIABILITIES AND EQUITY 2,401,100 2,917,401 4,373,937 4,019,379 4,667,228 5,802,091 6,856,744 7,890,976


12

Appendix 2: Statement of Comprehensive Income

in IDR Millions 2012 2013 2014F 2015F 2016F 2017F 2018F 2019F

Revenue 2,030,597 2,643,724 3,573,389 3,969,440 4,680,098 6,103,635 7,201,545 8,085,735

Precast Product Sales 2,017,241 2,621,767 3,520,581 3,910,778 4,610,934 6,013,434 7,095,118 7,966,241

Service Sales 13,356 21,958 52,809 58,662 69,164 90,202 106,427 119,494

Cost of Sales 1,765,145 2,255,749 3,044,848 3,408,295 4,045,984 5,324,303 6,278,314 7,011,003

Gross Profit 265,452 387,976 528,541 561,145 634,114 779,332 923,231 1,074,732

Operating Expenses 34,167 51,773 62,561 69,333 81,426 105,572 124,216 139,252 General and Administrative

Expenses 31,243 47,903 58,254 64,699 76,263 99,428 117,293 131,681

Business Development Expenses 1,446 1,977 2,051 2,128 2,208 2,291 2,377 2,466

Marketing Expenses 1,477 1,893 2,256 2,506 2,954 3,853 4,546 5,104

Operating Income 231,285 336,203 465,980 491,812 552,688 673,760 799,015 935,480

Other Income (Expenses) 497 (4,061) 5,970 5,727 5,371 4,677 4,109 3,651

EBIT 231,781 332,142 471,949 497,539 558,059 678,437 803,124 939,132

Financial Income (Expenses) 1,900 (3,620) (23,009) 19,879 6,429 8,688 16,124 46,577

EBT 233,681 328,522 448,940 517,418 564,488 687,125 819,248 985,709

Income Taxes 54,313 87,315 108,471 125,017 136,390 166,021 197,944 238,164

Net Income 179,368 241,206 340,469 392,401 428,098 521,104 621,304 747,546

Appendix 3: Statement of Cash Flows

in IDR Millions 2014F 2015F 2016F 2017F 2018F 2019F

Operating Cash Flow (OCF)

Net Income 340,469 392,401 428,098 521,104 621,304 747,546

Depreciation Fixed Assets 95,450 110,558 132,557 187,556 236,646 248,960

Depreciation Investment Property 106 106 106 106 106 106

Change in NWC 181,060 492,863 (49,034) (48,668) (75,662) (79,161)

Total OCF 254,965 10,202 609,796 757,435 933,718 1,075,773

Investing Cash Flow (ICF)

Acquisition of Fixed Assets (648,826) (368,438) (450,000) (495,000) (270,000) (180,000)

Total ICF (648,826) (368,438) (450,000) (495,000) (270,000) (180,000)

Financing Cash Flow (FCF)

Change in Bank Loan (114,417) 7,793 (65,830)

Dividend Payment (102,141) (117,720) (128,430) (156,331) (186,391) (224,264)

MTN Repayment (2,471) (363,530)

Proceeds from IPO 1,177,740

Other 7,888 3,581 6,426 12,872 9,928 7,995

Total FCF 966,601 (469,875) (187,834) (143,459) (176,463) (216,269)

Cash Flow (OCF+ICF+FCF) 572,740 (828,111) (28,038) 118,975 487,254 679,504


13

Appendix 4: Common-Size Statement of Financial Position

% of Assets 2012 2013 2014F 2015F 2016F 2017F 2018F 2019F

ASSETS 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%

Current Assets 74.71% 64.99% 64.00% 54.41% 53.94% 57.65% 63.68% 69.32%

Cash and Cash Equivalent 14.17% 14.16% 22.75% 4.16% 2.98% 4.45% 10.87% 18.06%

Account Receivables 12.89% 14.46% 13.26% 16.31% 16.42% 16.93% 16.90% 16.49%

Accrued Income 2.03% 0.94% 0.85% 1.03% 1.04% 1.09% 1.09% 1.07%

Other Receivables 0.02% 0.06% 0.03% 0.04% 0.04% 0.04% 0.04% 0.04%

Tax Prepaid 1.02% 1.26% 0.84% 0.92% 0.79% 0.63% 0.54% 0.47%

Inventories 36.70% 29.00% 22.14% 26.95% 27.55% 29.09% 28.85% 27.96%

Advance 0.40% 0.19% 0.17% 0.20% 0.21% 0.22% 0.22% 0.21%

Prepaid Expense 7.47% 4.92% 3.95% 4.81% 4.91% 5.19% 5.16% 5.02%

Non-Current Assets 25.29% 35.01% 36.00% 45.59% 46.06% 42.35% 36.32% 30.68%

Deferred Tax Assets 0.78% 0.20% 0.13% 0.14% 0.12% 0.10% 0.08% 0.07%

Investment Property 0.15% 0.12% 0.08% 0.08% 0.07% 0.05% 0.04% 0.04%

Fixed Assets 24.35% 34.69% 35.79% 45.36% 45.87% 42.20% 36.19% 30.57%

LIABILITIES 74.83% 74.98% 39.54% 41.51% 46.66% 48.52% 48.64% 39.54%

Current Liabilities 74.05% 61.51% 38.58% 40.55% 45.67% 47.54% 47.68% 38.58%

Short Term Loans 0.81% 5.91% 1.64% 0.00% 0.00% 0.00% 0.00% 1.64%

Trade Payables 17.53% 11.14% 12.23% 12.50% 13.20% 13.10% 12.69% 12.23%

Advances Received 1.47% 2.69% 2.41% 2.44% 2.56% 2.56% 2.50% 2.41%

Unearned Revenue 40.09% 31.25% 11.37% 14.66% 18.67% 20.86% 21.87% 11.37%

Accrued Expenses 11.58% 8.72% 9.44% 9.65% 10.19% 10.14% 9.86% 9.44%

Other 2.56% 1.78% 1.49% 1.28% 1.03% 0.87% 0.76% 1.49%

Non-Current Liabilities 0.78% 13.47% 0.96% 0.96% 1.00% 0.99% 0.96% 0.96%

Obligation Under Finance Lease - Net 0.00% 0.09% 0.06% 0.05% 0.04% 0.04% 0.03% 0.06%

MTN Payable 0.00% 12.55% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%

Post Employee Benefits Liabilities 0.78% 0.84% 0.89% 0.91% 0.95% 0.95% 0.93% 0.89%

EQUITY 25.17% 25.02% 60.46% 58.49% 53.34% 51.48% 51.36% 60.46%

Share Capital 4.79% 22.86% 21.68% 18.67% 15.02% 12.71% 11.04% 21.68%

Paid-in Capital 0.00% 0.00% 24.21% 20.85% 16.77% 14.19% 12.33% 24.21%

Treasury Stock 0.00% -2.00% -1.45% -1.25% -1.00% -0.85% -0.74% -1.45%

Retained Earnings 18.45% 2.44% 14.54% 18.94% 21.52% 24.56% 27.97% 14.54%

Non Controlling Interest 1.93% 1.71% 1.48% 1.27% 1.02% 0.87% 0.75% 1.48%

TOTAL LIABILITIES AND EQUITY 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%


14

Appendix 5: Common-Size Statement of Comprehensive Income

% of Revenue 2012 2013 2014F 2015F 2016F 2017F 2018F 2019F

Revenue 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%

Precast Product Sales 99.34% 99.17% 98.52% 98.52% 98.52% 98.52% 98.52% 98.52%

Service Sales 0.66% 0.83% 1.48% 1.48% 1.48% 1.48% 1.48% 1.48%

Cost of Sales 86.93% 85.32% 85.21% 85.86% 86.45% 87.23% 87.18% 86.71%

Gross Profit 13.07% 14.68% 14.79% 14.14% 13.55% 12.77% 12.82% 13.29%

Operating Expenses 1.68% 1.96% 1.75% 1.75% 1.74% 1.73% 1.72% 1.72%

General and Administrative Expenses 1.54% 1.81% 1.63% 1.63% 1.63% 1.63% 1.63% 1.63%

Business Development Expenses 0.07% 0.07% 0.06% 0.05% 0.05% 0.04% 0.03% 0.03%

Marketing Expenses 0.07% 0.07% 0.06% 0.06% 0.06% 0.06% 0.06% 0.06%

Operating Income 11.39% 12.72% 13.04% 12.39% 11.81% 11.04% 11.10% 11.57%

Other Income (Expenses) 0.02% -0.15% 0.17% 0.14% 0.11% 0.08% 0.06% 0.05%

EBIT 11.41% 12.56% 13.21% 12.53% 11.92% 11.12% 11.15% 11.61%

Financial Income (Expenses) 0.09% -0.14% -0.64% 0.50% 0.14% 0.14% 0.22% 0.58%

EBT 11.51% 12.43% 12.56% 13.04% 12.06% 11.26% 11.38% 12.19%

Income Taxes 2.67% 3.30% 3.04% 3.15% 2.91% 2.72% 2.75% 2.95%

Net Income 8.83% 9.12% 9.53% 9.89% 9.15% 8.54% 8.63% 9.25%


15

Appendix 6: Key Financial Ratios

Key Financial Ratios 2012 2013 2014F 2015F 2016F 2017F 2018F 2019F

Growth Ratios

Sales Growth 24% 30% 35% 11% 18% 30% 18% 12%

Gross Profit Growth 29% 46% 36% 6% 13% 23% 18% 16%

EBITDA Growth 29% 42% 44% 7% 14% 25% 20% 14%

EBIT Growth 26% 43% 42% 5% 12% 22% 18% 17%

EBT Growth 23% 41% 37% 15% 9% 22% 19% 20%

Net Profit Growth 24% 34% 41% 15% 9% 22% 19% 20%

Liquidity Ratios

Current Ratio 1.01 1.06 1.54

1.41

1.33

1.26

1.34

1.45

Quick Ratio 0.51 0.59 1.01

0.71

0.65

0.63

0.73

0.87

Cash Ratio 0.19 0.23 0.55

0.11

0.07

0.10

0.23

0.38

Efficiency Ratios

Total Asset Turnover 0.96

0.99 0.98

0.95

1.08

1.17

1.14

1.10

Fixed Asset Turnover 5.86

4.44 4.18

3.98

4.01

4.56

5.18

5.85

Inventory Turnover 1.60

1.81 2.33

2.30

2.37

2.48

2.35

2.30

Days of Inventory on Hand

228.26

201.85

156.84

158.56

154.23

147.47

155.14

158.77

Payable Turnover 3.36

4.19 5.52

5.07

5.21

5.45

5.18

5.07

Number of days of payables

108.60

87.19

66.09

71.96

70.00

66.93

70.41

72.06

Profitability Ratios

Gross Profit Margin 13% 15% 15% 14% 14% 13% 13% 13%

EBITDA Margin 14% 15% 16% 15% 15% 14% 14% 15%

EBIT Margin 11% 13% 13% 13% 12% 11% 11% 12%

Net Profit Margin 9% 9% 10% 10% 9% 9% 9% 9%

Solvency Ratios

Debt Ratio 0.03

0.19 0.10

0.02

0.00

0.00

0.00

0.00

Debt to Equity Ratio 0.10

0.77 0.20

0.03

0.00

0.00

0.00

0.00

Total Debt/ Equity 74.8% 75.0% 50.7% 39.5% 41.5% 46.7% 48.5% 48.6%

Cash Flow Ratios

CFO/ Capex 39% 3% 136% 153% 346% 598%

CFO/ (NI+ D&A+ Changes in NWC) 41% 1% 119% 115% 119% 117%

CFO/ (Dividend payments+ Debt Repayment+ Fixed Asset Investments)

28% 1% 94% 116% 205% 266%

CFO/ Sales 7% 0% 13% 12% 13% 13%

Du Pont Ratios

ROE 34.69% 36.15% 23.60% 17.11% 16.59% 17.89% 18.76% 19.72%

ROA 8.46% 9.07% 9.34% 9.35% 9.86% 9.95% 9.82% 10.14%

Assets/Equity 3.97 4.00 2.03 1.65 1.71 1.87 1.94 1.95

NI/Sales 8.83% 9.12% 9.53% 9.89% 9.15% 8.54% 8.63% 9.25%

Sales/Assets 95.78% 99.42% 98.02% 94.59% 107.75% 116.60% 113.78% 109.65%


16

Appendix 7: DCF Analysis using Free Cash Flow to Equity (FCFE) in IDR millions 2015F 2016F 2017F 2018F 2019F

Net operating cash flow

Net Income 392,401 427,647 520,638 620,822 747,048

Add back depreciation 110,558 132,557 187,556 236,646 248,960

Change in working capital 492,863 (49,034) (48,668) (75,662) (79,161)

Total net operating cash flow 10,096 609,238 756,862 933,130 1,075,169

Capital Expenditure 368,438 450,000 495,000 270,000 180,000

Debt Repayment

Ending 65,896 66 66 66 66

Beginning 421,632 65,896 66 66 66

Interest Expense 42,326 4,020 8 8 8

Total Debt Repayment (398,062) (69,850) (8.03) (8.03) (8.03)

FCFE (756,405) 89,388 261,854 663,122 895,161

Appendix 8: DCF Assumptions – Cost of Equity VARIBLE VALUE

Risk-Free Rate (FR70 less CDS) 6.2%

Market Risk Premium 8.30%

Beta 1.05

Capital Structure 2.75% Debt

97.25% Equity

Cost of Equity* 14.89%

*Team computations

1. Risk-Free Rate

Bond ID Maturity Date Yield as of 31 Aug 2014 Tenor

FR0070 15-Mar-24 8.38% 9.4

FR0056 15-Sep-26 8.38% 11.9

FR0059 15-Sep-27 7.00% 12.5

FR0047 15-Feb-28 10.00% 13.3

FR0071 15-Mar-29 9.00% 14.5

Source: Bank of Indonesia

The Risk Free Rate used is based on Indonesia’s Government Bond with tenor between 10 to 15 years. The Risk Free Rate used for our Cost of

Equity is the median with a 8.38% yield.

2. Market Risk Premium

Market Risk Premium of 8.30% is calculated by adding country risk premium with mature risk premium. The application of mature risk premium

considers Indonesia as an emerging country with estimated 5% risk, while country risk premium is 3.30%, derived from multiplying default

spread on country’s bond (2.20%, rated Ba+) with standard deviation on equity to bond of 1.50 (Damodaran’s calculation).

Price Target

Terminal Growth 5.4%

Terminal Value 12,752,833

Cost of Equity 14.89%

Total PV of FCFE 7,417,881

Shares Outstanding 8,715

Target Price 2015F 850


17

3. Beta

Company Names Levered

Beta Market Cap Total Debt

D/E Ratio

Tax Unlevered

Beta D/E

WTON Relevered

Beta

PT Adhi Karya Tbk 1.47 4,980,650 1,828,568 0.37 0.25 1.15 0.03 1.18

PT Jaya Konstruksi Tbk 0.81 10,192,825 724,489 0.07 0.25 0.77 0.03 0.79

PT Wijaya Karya Tbk 1.29 16,003,053 2,293,043 0.14 0.25 1.16 0.03 1.19

(Cut-off date: 30 June 2014, Based on Company’s data and team estimation)

Levered Beta is obtained by manually regressing daily database within the period of 30 September 2009 and 30 September 2014. Team

estimates WTON’s beta by averaging its beta along with two of its peers. Beta based on average is 1.05.

4. Interest Bearing Liabilities

The following is the summary of WTON’s interest bearing liabilities, computed by multiplying the coupon rate of each lender with its contribution.

A. Short Term Bank Loans

Lending Rate 2013 2014F Weight

Bank Mandiri (Persero) 10.00% 13.50% 3.87%

Bank BRI (Persero) 10.00% 14.00% 0.00014%

Bank CIMB Niaga 11.50% 11.75% 0.00006%

Kopkar Beton Makmur Wijaya 9.50% 9.50% 0.25%

B. Lease Payables

Lease Rate 2013 2014F Weight

Orix Indonesia Finance Head Trailer 5.79% 10.72% 0.12%

IBJ Verana Finance Crawler Crane 10.84% 10.84%

0.49% Wheel Loader 11.10% 11.10%

C. Medium Term Notes Payable

Medium Term Notes Rate 2013 2014F Weight

Coupon Rate 9.50% 9.50% 94.96%

5. Marginal Tax Rate

Marginal Tax Rate of 25% is based on UU No. 38 on 2008.

6. Capital Structure

Based one year forward analysis of peers’ capital structure, WTON has distinct capital structure compared to other players in PC industry.

Company Market Cap We Wd Total Debt Total Equity D/E Ratio

PT Jaya Konstruksi Tbk 10,192,825 72% 28% 675,691 1,743,132 39%

PT Wika Beton Tbk 9,499,859 97% 3% 60,655 2,155,607 3%

PT Waskita Karya Tbk 8,071,394 58% 42% 1,935,575 2,703,992 72%

PT Wijaya Karya Tbk 16,003,053 67% 33% 2,416,662 4,848,259 50%

PT Adhi Karya Tbk 4,980,650 40% 60% 2,648,684 1,756,732 150%

PT PP (Persero) Tbk 10,411,239 57% 43% 1,782,036 2,351,857 76%


18

Appendix 9: DCF Assumptions

1. Factories capacity (in thousands metric ton)

Locations 2013 2014F 2015F 2016F 2017F 2018F 2019F

North Sumatera 210

Lampung 170

Bogor 530

Majalengka 110

Boyolali 210

Pasuruan 400

South Sulawesi 130

Karawang 240

Extended-Pasuruan 75

Extended-South Sulawesi 75

Acquisition-Batam 100

South Lampung 75 75

Cilegon 75 25

Myanmar 100

Balikpapan 150

Extended other 325 300 150

Total 2,000 2,250 2,325 2,550 3,075 3,375 3,525

Factories’ capacities are expected based on company plan from public expose. In 2019, the company only increase its capacity by 150 thousand

metric ton as there is no further disclosure and we assume that company might want to stabilize its expansion growth by 150 thousand metric

ton per year.

2. Production Volume

2013 2014F 2015F 2016F 2017F 2018F 2019F

Ideal Capacity 2,000 2,250 2,325 2,550 3,075 3,375 3,525

Normal Capacity 1,562 1,912 1,976 2,167 2,613 2,868 2,996

Normal Capacity rate (%) 78 85 85 85 85 85 85

Usage Capacity 1,456 1,778 1,837 2,015 2,456 2,696 2,816

Utilization rate (%) 93 93 93 93 94 94 94

*in thousand metric ton

Production volume of the precast concrete is based on the capacity of the factory. From the total capacity of WTON factories, only normal

capacity can be used on normal condition. The usage capacity is the capacity that is actually used from the normal capacity. The normal capacity

ratio increases from 78% to 85% in 2014 to 2019 and the utilization rate increase from 93% to 94% in 2017 because the management stated

that they can increase their total production ratio to 80% combined from normal capacity rate and utilization rate. They reach their maximum

ratio to meet demand from MP3EI even though their implementation is lagging.

3. Precast Concrete Average Sales Price (ASP) Price

2013 2014F 2015F 2016F 2017F 2018F 2019F

ASP (IDRmn) 1,799 1,979 2,127 2,287 2,447 2,631 2,828

Expected Price Increase (%) 27.49% 10.00% 7.50% 7.50% 7.00% 7.50% 7.50%

*in thousand IDR/ ton

ASP precast concrete is expected to increase from IDR1.799mn/ton to IDR2.828mn/ton as the management stated that they can increase the

price of the precast concrete by 5% – 7.5%. The growth is not substatial as 2013 because of the increasing competitiveness in the future.

4. Capital expenditures

Capital Expenditures 2014F 2015F 2016F 2017F 2018F 2019F

Increase in Capacity 250,000 75,000 225,000 525,000 300,000 150,000

Price 1,228 1,200 1,200 1,200 1,200 1,200

Total Capex 648,826 368,438 450,000 495,000 360,000 180,000

*(in million IDR)/ thousand metric ton of capacity

Capital Expenditure is based on the capacity expansion plan that the company stated in the news. The price for expansion of 1.228 million IDR is

the expected price for current year 2014 and 1.200 million IDR is the expected price for 2015 to 2019. The capital expenses distributed to each

of fixed assets category with average margin from 2009-2013. In addition, the company will also invest in quarry in 2014 and 2015 with their IPO

fund. This mining doesn’t contribute to increase in capacity.


19

5. Depreciation

Depreciation Rate p.a. 2012 2013 2014F 2015F 2016F 2017F 2018F 2019F

Land 0% - - - - - - - -

Mining 0% - - - - - - - -

Infrastructures 10% 6,631 8,741 12,153 13,134 16,005 23,181 29,985 31,687

Buildings 10% 5,490 6,056 9,856 10,400 12,593 18,074 24,104 27,393

Office Equipment 25% 32 32 214 227 271 381 320 372

Plant Equipment 14% 26,819 41,016 52,829 61,668 74,109 105,210 129,284 131,264

Mold 14% 7,951 12,351 20,276 25,005 29,264 39,912 51,624 56,626

Finance Lease 20% 122 122 122 315 798 1,329 1,618

Total Depreciation 100% 46,923 68,318 95,450 110,558 132,557 187,556 236,646 248,960

Depreciation rate follows the straight line accounting method to depreciate its fixed assets as stated in the annual report. The company uses

straight line method to depreciate its fixed assets. All data in IDR Million.

6. Change in NWC

2014F 2015F 2016F 2017F 2018F 2019F

CA

Change in Account Receivables 158,146 75,535 110,684 216,078 176,703 142,306

Change in Accrued Income 9,676 4,122 7,397 14,817 11,427 9,203

Change in Other Receivables (429) 158 283 568 438 353

Change in Tax Prepaid

Change in Inventories 122,486 114,673 202,567 402,355 290,356 227,981

Change in Advance 1,820 860 1,520 3,020 2,231 1,776

Change in Prepaid Expense 29,308 20,431 36,100 71,713 52,995 42,175

CL

Change in Trade Payables 114,448 52,043 91,932 182,604 131,775 103,467

Change in Advances Received 8,590 9,648 17,311 34,677 26,745 21,539

Change in Unearned Revenue (75,906) (378,917) 227,413 399,037 347,170 295,085

Change in Accrued Expenses 84,945 40,143 70,928 140,900 104,123 82,865

Change in Other 7,870

Change in Net Working Capital 181,060 492,863 (49,034) (48,668) (75,662) (79,161)

The company’s working capital is calculated by subtracting the current asset without cash with the current liabilities without interest bearing

liabilities. The investment in working capital is derived by calculating the change in working capital between the beginning working capital of the

period and the ending working capital of the period.

7. Sales

Sales consists of precast product sales and service sales. Precast product sales are forecasted mainly based on plants expansions and the

increase in price of precast concrete. Service sales are forecasted to increase to 1.5% margin to precast product sales in 2014 from 0.83% margin

in 2013 as the management aims to increase the contribution of services to its sales.

8. Cost of Sales

The cost of sales consists of COGS, direct cost of production and indirect cost of production. The COGS margin in 2014 to 2019 is 59.57%,

60.38%, 60.79%, 61.20%, 60.79%, and 60.38% respecitively. The increase in COGS margin is based on assumption of increase in price of raw

materials for precast concrete production. The reason is because the effect on the investment in quarry is assumed will not contribute

significantly to COGS margin.

9. Operating Expenses

The operating expenses consist of general and administrative expenses, business and development expenses and marketing expenses. General

and administrative expenses and marketing expenses are forecasted by maintaining margin to sales as they grow proportionately to sales.

Business and development expense is forecasted to increase by 3.75%, similar to its 2010 – 2013 CAGR. We do not use its 2009 – 2010 growth

because such material increase of 161.45% is expected to occur only once.


20

10. Other Income (Expenses)

Other income (expenses) consists of allowance for impairment, gain or loss on foreign exchange and others. Allowance of impairment is

forecasted by maintaining margin to the account receivables of the company. Gain or loss on foreign exchange is forecasted to be zero because

we are not able to predict the fluctuation of foreign exchange rates. Others are forecasted by averaging the others account from the past five

years considering the absence of increasing or decreasing trend of this account.

11. Interest Income (Expense)

Interest income is forecasted from the interest rates that the company receives from their cash and cash equivalent, which is currently in

Deposit on Call (DOC) and is earning interest rates of 4% to 8.5%. Interest expense is forecasted based on interest rates of the bank loans and

MTN.

12. Income Tax

Income tax is forecasted based on the average margin of income tax to EBT from 2009 to 2013, which amounts to 24.16%. We do not use 25%

tax bracket that is assigned to the company as WTON has a number of deferred tax assets. This possession allows WTON to reduce the income

tax paid.

13. Balance Sheet Computations

Account Basis

ASSET

Account Receivables Average 2009 – 2013 account receivable turnover ratio

Accrued Income Average 2009 – 2013 margin to sales

Other Receivables Average 2009 – 2013 margin to sales

Tax Prepaid Last nominal number from 2009 – 2013

Inventories CAGR inventory turnover ratio increase from 2011 to 2013 for estimation 2014. Then expected to be constant from 2014 to 2019.

Advance 2013 margin to direct cost of production and COGS

Prepaid Expense 6% margin to direct cost of production and COGS

Deffered Tax Assets Last nominal number in 2009 – 2013

Investment Property Depreciated by IDR106,438,500 each year

Fixed Assets Capex (based on expansion) and depreciation

LIABILITIES

Short Term Loans Company news

Trade Payables Average 2009 – 2013 payable turnover ratio

Advance Received Average 2009 – 2013 margin to sales

Unearned Revenue Assumption ratio from carry over of 71.96% for 2014 to 2015, 67.01% for 2016, 40% to 2018, and 30% to 2019 as lagging of government project implementation

Accrued Expenses Last margin to direct cost of production and COGS in 2009 - 2013

Other Average nominal number in 2009 – 2013

Obligation under Finance Lease Last nominal number in 2009 – 2013

MTN Payable Company news

Post Employee Benefit Payable Average 2012 – 2013 margin to general and administrative expenses

14. Dividend Policy

(IDRmn) 2011 2012 2013 2014F 2015F 2016F 2017F 2018F 2019F

Net Income 144,423 179,368 241,206 340,469 392,401 428,098 521,104 621,304 747,546

Dividend 36,830 50,548 62,622 102,141 117,720 128,430 156,331 186,391 224,264

The company stated that their dividend payment in 2014 will be 30% of the net income. We assume constant dividend payout ratio in the

following years (2014 – 2019).

Appendix 10: Multiple pricing computations & Hi-Lo method We apply multiple pricing method using 30 September 2014 database to validate the fundamental analysis performed using Price-to-Earnings

ratio (P/E ratio), Price-to-Book Value Ratio (PBV ratio) and Price-to-Sales ratio. The following presents the result of the multiple pricing of WTON.

Categories Maximum Minimum

P/E Ratio 2,361.63 681.75

PBV Ratio 1,670.21 824.93

P/S Ratio 1,483.81 243.00

Selected Range 1,483.81 824.93


21

The data above are obtained by processing the following data.

P/E Ratio Ratio Price

Maximum 52.46 2,361.76

Median 22.63 1,018.80

Minimum 15.14 681.75

PBV Ratio Ratio Price

Maximum 6.01 1,670.21

Median 3.86 1,071.33

Minimum 2.97 824.93

P/S Ratio Ratio Price

Maximum 3.26 1,483.81

Median 1.06 484.44

Minimum 0.53 243.00

Each ratio above is derived by plugging the following data to the ratio formulae for P/E ratio, P/S ratio and PBV ratio.

A. P/E Ratio

Company Market Cap Net Earnings P/E Ratio

PT Jaya Konstruksi Tbk 10,192,825 194,311.36 52.46

PT Wika Beton Tbk 9,499,859 266,215.00 35.68

PT Waskita Karya Tbk 8,071,394 377,439.89 21.38

PT Wijaya Karya Tbk 16,003,053 670,375.45 23.87

PT Adhi Karya Tbk 4,980,650 328,927.57 15.14

PT PP (Persero) Tbk 10,411,239 492,547.61 21.14

Average (Industry) Maximum Upper Quartile Median Lower Quartile Minimum

28.28 52.46 32.73 22.63 21.20 15.14

B. PBV Ratio

Company Market Cap Total Assets Total Liabilities Book Value PBV Ratio

PT Jaya Konstruksi Tbk 10,192,825 3,656,599.53 1,913,467.47 1,695,066.61 6.01

PT Wika Beton Tbk 9,499,859 4,373,936.85 2,218,330.24 2,155,606.61 4.41

PT Waskita Karya Tbk 8,071,394 10,695,167.10 7,991,175.46 2,445,693.65 3.30

PT Wijaya Karya Tbk 16,003,053 15,578,568.57 10,730,309.16 4,838,961.41 3.31

PT Adhi Karya Tbk 4,980,650 10,243,719.79 8,486,987.84 1,476,929.02 2.97

PT PP (Persero) Tbk 10,411,239 13,848,620.79 11,496,763.57 2,351,857.21 4.43


4.07 6.01 4.42 3.86 3.30 2.97

C. P/S Ratio

Company Market Cap Net Sales P/S Ratio

PT Jaya Konstruksi Tbk 10,192,825 4,468,394.23 2.28

PT Wika Beton Tbk 9,499,859 2,915,928.76 3.26

PT Waskita Karya Tbk 8,071,394 9,818,780.90 0.82

PT Wijaya Karya Tbk 16,003,053 12,537,374.85 1.28

PT Adhi Karya Tbk 4,980,650 9,334,957.78 0.53

PT PP (Persero) Tbk 10,411,239 12,207,886.96 0.85


1.50 3.26 2.03 1.06 0.83 0.53


22

Appendix 11: Sensitivity Analysis UTILIZATION

-10% -5% 0% 5% 10%

AV

ERA

GE

SELL

ING

PR

ICE -10% 885 877 868 860 852

-5% 877 869 860 852 843

0% 869 861 850 844 835

5% 861 853 844 836 827

10% 853 844 836 827 819

Sales will be affected from the increase or decrease in utilization and ASP (average selling price). As utilization declines by 5% from 2015F

forecasted utilization of 88%, sales will drop to IDR3.771bn. On the contrary, as utilization increases by 5% to 98% in 2015F, sales will increase to

IDR4.168tn. The same methodology also applies to ASP. An increase of 5% to 7.88% of ASP in 2015F will elevate sales to IDR3.983bn; while a

decrease of 5% in ASP to 7.13% will also decrease sales to IDR3.956bn.

COST OF EQUITY

-10% -5% 0% 5% 10%

TER

MIN

AL

GR

OW

TH

-10% 994 894 809 736 673

-5% 1025 919 830 754 688

0% 1058 946 850 772 704

5% 1093 975 876 792 720

10% 1130 1005 901 813 738

Cost of equity as a discount factor and terminal growth contribute largely in deriving the target price. As cost of equity declines by 10% from

14.89%, target price increase to IDR1,05 and recommendation shifts from SELL to HOLD. In addition, given both cost of equity and terminal

growth declines by 10%, thus target price would lead of IDR1,130. In other words, the target price does not propose upside nor downside

potential with 1 year forward investment horizon.

Appendix 12: IPO Fund Expansion Planning – Revised

Portion Planning to Nominal values (IDR)

85% Organic expansion 1,025,801,499,900

12% Establishment of Quarries in Southern Lampung, Boyolali, Cigudeg and Donggala

144,819,035,280

34% Establishment of New factory: South Lampung, Pasuruan and East Kalimantan 410,320,599,960

18% Additional capacity for existing factory 5% pa. 217,228,552,920

18% Additional equipment to develop new line in service business 217,228,552,920

3% Establishment mold maker 36,204,758,820

15% Additional working capital 181,023,794,100

100% Total IPO Funding 1,206,825,294,000

Appendix 13: Methodology for Selecting Peers Local Comparables. We seeked Property, Real Estate And Building Construction sector of Indonesia Stock Exchange (IDX) to find WTON’s

comparable peers. We selected four companies due to the similarity of the business process, namely PT Jaya Konstruksi Tbk (JKON), PT Waskita

Karya Tbk (WSKT), PT Wijaya Karya Tbk (WIKA), and PT Adhi Karya Tbk (ADHI). The following detail the market capitalization of each company.

Ticker(s) Market Capitalization (IDRmn)

JKON 10,192,825

WSKT 6,549,982

WIKA 13,607,202

ADHI 5,016,676

PTPP 10,411,239

Source: Indonesia Stock Exchange


23

Regional Comparables. In addition to seeking WTON’s peers in the Indonesian market, we also seek WTON’s direct peers in the Asia Pacific

region. Using Bloomberg Relative Valuation command, nine companies specializing in producing precast concrete in five countries, namely

China, Japan, Thailand, Malaysia and Indonesia. We take into account the market capitalization, industry and performance of the following

companies in comparison with our WTON.

Tickers Company Market Cap

(IDR mn) Shares Outs

(mn) EPS P/E PBV P/S

002671:CH Shandong Longquan Pipeline Engineering Co

882,208.71 443.70 762 26.06 3.31 3.98

002205:CH Xinjiang Guotong Pipeline Co 4,514,971.99 116.15 1458 24.75 2.40 2.11

DCON:TB Dcon Products Pcl 1,354,233.39 205.43 452 15.08 4.33 2.88

TPIPL:TB Tpi Polene Pcl 13,384,124.63 20.19 25 21.48 0.62 1.23

5269:JP Nippon Concrete Industry Co 3,584,893 57.78 2860 21.33 1.11 0.93

5262:JP Nippon Hume Corp 2,968,547.1 29.35 6398 15.60 1.00 0.73

1994:JP Takahashi Curtain Wall Corp 786,988.65 9.55 9500 12.21 1.85 0.89

PINT:MK Pintras Jaya Bhd 2,558,147.49 161.46 1338 11.84 2.28 3.47

WTON:IJ PT Wijaya Karya Beton Tbk 9,499,858.81 8,715.45 36 35.68 4.41 3.26

Mean

20.45 2.37 2.16

Median

21.33 2.28 2.11

Max

35.68 4.41 3.98

Min

11.84 0.62 0.73


Appendix 14: WTON’s Plants and Quarries Locations

Source: Company


24

Appendix 15: GOI 2015 – 2019 Infrastructure Development Plan and WTON’s Plants Locations

LEGEND

Existing plants

Plants in progress

Sales area

Quarry

Representative offices

Appendix 16: 2015F Market Share Computation

We compute 2015F market share computation of the precast concrete industry as follows.

ASSUMPTIONS

in tons per annum (tpa) 2013A 2014F 2015F

Scenario A Scenario B

Market Demand 3,748,000 4,572,000 5,670,000 5,670,000

Production Capacity 2,000,000 2,250,000 2,325,000 2,325,000

Usage Capacity 1,562,391 1,757,690 1,816,280 1,595,163

Marketshare 41.69% 38.44% 32.03% 28.13%

UTILIZED CAPACITY OF PC CONCRETE PLAYERS

in tons per annum (tpa)

2013A 2014F 2015F

Installed Capacity

Usage Capacity Installed Capacity

Usage Capacity Installed Capacity

Usage Capacity

WTON 2,000,000 1,562,391 2,250,000 1,757,690 2,325,000 1,595,163

PTPP 380,000 296,854 730,000 570,273 980,000 765,572

WSKT 700,000 546,837 800,000 624,956 1,300,000 1,015,554

HK uninstalled - uninstalled - 60,000 46,872

DERIVED MARKET SHARE Market Share 2013A 2014F 2015F

WTON 42% 38% 28%

PTPP 8% 12% 14%

WSKT 15% 14% 18%

HK 0% 0% 1%


25

Appendix 17: Workforce Forecast Assumption

Locations Capacity ('000 tpa) Portion Number of workforce

needed Ratio workforce

North Sumatera 210 10% 104 0.50

Lampung 170 8% 84 0.50

Bogor 530 26% 262 0.50

Majalengka 110 5% 54 0.50

Boyolali 210 10% 104 0.50

Pasuruan 400 19% 198 0.50

South Sulawesi 130 6% 64 0.50

Karawang 240 15% 149 0.50

Total 2,000 100% 1,020 0.50

Year 2013 2014 2015F 2016F 2017F 2018F 2019F 2020F

Capacity (tpa) 2,000 2,250 2,325 2,550 3,075 3,375 3,525 3,615

Ratio workforce 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5

Total Workers 1,000 1,125 1,163 1,275 1,538 1,688 1,763 1,808

Additional Workers Needed 38 113 263 150 75 45

Total Additional Workers Need 683

Source: WTON Prospectus, Team estimates

Appendix 18: Minimum Labor Wage (in IDRmn) Province 2011 2012 2013 2014 2015F

North Sumatra 1.04 1.20 1.38 1.51 1.63

South Sumatra 1.05 1.20 1.35 1.80 1.98

DKI Jakarta 1.29 1.53 2.20 2.44 2.70

Banten 1.00 1.04 1.17 1.33 1.60

South Sulawesi 1.10 1.20 1.44 1.80 2.00

Average 1.09 1.23 1.51 1.77 1.98

Source: Bureau Central Statistics, Team estimates

Appendix 19: Cost of Production (in IDRmn) 2009 2010 2011 2012 2013 2014F 2015F

COGS+ Direct Cost Production* (‘000)

891,075,344 899,736,796 1,355,075,220 1,680,301,797 2,158,286,540 2,813,421,660, 3,314,565,546

Quantity production 923,269 751,661 1,078,946 1,438,694 1,456,991 1,778,625 1,837,913

Cost of Product 965,130.80 1,196,998 1,255,925 1,500,171 1,481,331 1,581,796 1,803,440

Growth n/a 24.02% 4.92% 19.45% -1.26% 6.78% 14.01%

We assume cost of precast product is the accumulation of COGS and Direct Cost product divided by quantity production on the fiscal year. We are using CAGR growth from 2009 – 2014 as cost of product growth in 2015 – 2019. Historical data of cost of component are included.

Year Labor Cement Electricity Baja Inflation

2010 9.40% 5.00% 18.00% 27.66% 6.96%

2011 8.80% 12.00% 15.00% 44.00% 3.79%

2012 13.18% 10.71% 10.00% -10.65% 4.30%

2013 16.00% 1.61% 20.76% -13.73% 7.30%

2014F 12.00% 10.25% 32.55% -18.92% 5.30% Source: Bureau Central Statistics, Company Data


26

Appendix 20: Good Corporate Governance and Corporate Social Responsibility Corporate Governance

WTON has applied good corporate governance principles to control the company. In 2013, the company achieved the score of 75.748 or “Good”

in the GCG assessment conducted by BPKP, government owned board of supervisors finance and development. WTON also has improved the

availability of information related to the management and financial report on the company's website. In addition, we observe the quality of the

governance from other aspects, namely:

Board of Directors and Commissioners - All members have the scope of their respective duties, and there is no affiliation between the

directors and commissioners, therefore conflicts of interest in decision-making can be avoided.

Monitoring Evaluation - WTON has units of internal control systems to monitor the performance of the company, as well as to perform

risk management based on COSO - Enterprise Risk Management Framework to run the business well and effective. In addition, WTON

reviews yearly the company's policy as a guideline in implementing GCG.

Compensation Disclosure – The annual report discloses salary, remuneration, and allowances as well as other facilities provided by the

company for the board of directors and commissioners.

Workplace Safety - WTON successfully obtained two certifications of Safety and Health Management System (SMK3) in the Company with

satisfactory grades issued by the Ministry of Manpower and Transmigration based on assessment of PT Sucofindo (Persero).

Corporate Responsibility WTON actively contributes to the surrounding environment. In 2013, WTON planted 10,165 trees in Cibunian, Bogor. It is expected to be able to

reduce CO2 levels as much as 8,945,200 kilograms for the next 40 years, based on the estimation done by Trees for the Future, Maryland USA.

Furthermore, WTON provides waste management throughout the production plant. The waste treatment process produces clean water and

sediment used by the surrounding community for local infrastructure such as hardening roads and embankments.

Appendix 21: WTON Key Personnel 1. Board of Commissioners

Director Position Held Since Affiliates/ Other Work

Budi Harto President Commissioner Chairman since July 2013

>Director of Operations I, PT Wijaya Karya (Persero) Tbk

Tumik Kristianingsih Commissioner Since December 1 2012

>Chief of Planning and Human Resources Development Division at the State Ministry of State-owned Enterprises

>Secretary of Board of Commissioner at PT Berdikari

Asfiah Mahdiani Independent Commissioner Since 2010

>Advisor at PT Fajar Gemilang – Jakarta

>Expert Staff at PT Inti Eka Fajar Consultant

>Lecturer at the Faculty of Engineering of the Tujuh Belas Agustus University – Surabaya

Agustinus Boediono Commissioner

Since July 2013

President Director (1997-2012)

Nariman Prasetyo Commissioner Since 2013

Priyo Suprobo Independent Commissioner Since March 2014 Dean Surabaya Institute of Technology


27

2. Board of Directors Director Position Held Since Affiliates/ Other Work

Wilfred A. Singkali President Director

Chairman since 2012

N/A Technical and Production Director Business Development Manager.

Hadian Pramudita Marketing Director Since 2012

Marketing Manager N/A

Fery Hendriyanto Operational Director I

Since July 2013

N/A

Technical and Production Director in 2012

Company’s Operational Control Manager and Sales Area V Manager

Entus Asnawi Mukhson Finance and HRD Director Since 2011

Hari Respati Operational Director II Since July 2013

Muhammad Zulkarnain Independent Director Since March 2014

Source: Company data

Appendix 22: Holding and Company Structure Project Assumption Budget

Toll Road Cibitung-Cilincing, Jakarta Not enough fund to clear land. Will not start

in 2015. Rp 4.22 trillion

Toll Road Sumatera Hutama Karya still looking for funds. They

won’t get any funds from RAPBN 2015. Will not start in 2015.

Rp 350 trillion

Toll Road Manado-Bitung There are 2 sections. The second sections

still has land clearing problem, due to school and graveyard. Will not start in 2015.

Rp 4.33 trillion

Highway Palu-Parigi Still in tendering process, will not start in

2015. Rp 2.2 trillion

Cilamaya Seaport Still in tendering process. Will be moved due to potential problem for Pertamina. Will not

start in 2015. Rp 14.9 trillion

Soekarno-Hatta Expansion Plan Will start in 2015 Rp 26.25 trillion

Kertajati Airport Still have some land clearing isssue, will start

in 2015 Rp 8.29 trillion

Coal Railway, Kalimantan In process of revaluation due to political

conflict. Will not start in 2015 Rp 50 trillion

Loopline Elevated Railway Will start in 2015 Rp 8.9 trillion

Steam Power Plant, South Sumatera Will start in 2015 US$ 1,56 bio + US$ 780 mio

Steam Power Plant Pangkalan Susu, North Sumatera

Done, no further benefit to WTON US$3,83 mio + US$469 mio

Steam Power Plant Takalar, Sulawesi Will start in 2015 US$ 294 mio

Jati Gede Reservoir, West Java Done, no further benefit to WTON US$ 411.6 mio

Trans-Sulawesi Railway Will start in 2015 Rp 9.1 trillion

Jakarta Six Toll Roads Will start in 2015 Rp 40 trillion

Source: Team Estimates, and several news


28

Appendix 23: Holding and Company Structure

WTON COMPANY STRUCTURE

PT WIJAYA KARYA TBK EXPOSURE TO WTON

Government of Indonesia

Public (Local)

Public (Foreign)

WIKA Employees

65.15% 18.80% 14.45% 1.6%

Wika Beton WTON: IJ

Wika Rekayasa Konstruksi

Wika Industri & Konstruksi

Wika Gedung

Wika Realty PT Sarana Karya

Wijaya Karya WIKA: IJ

100.00%

83.10% 96.50% 99.00%

90.04% 85.26% 100.00%

P.S Mistubishi Construction

49%

51%

30%

60%

Kobe Wika Beton

WTON: IJ

Wika KOBE Wika

Krakatau Beton

Krakatau Engineering

Krakatau Steel KRAS: IJ


29

Appendix 24: References

1 Public Expose PT Wijaya Karya Beton Tbk on November 3, 2014 regarding Financial Reports 3Q14, p. 12. 2 WTON 2013 Annual Report

3 Public Expose, op. cit. 4 WTON 2013 Annual Report, op. cit.

5 Ibid.

6 Sukma, C. (2014). Dengan Akuisisi, WTON Perkuat Kapasitas Produksi - kontan.co.id. [online] KONTAN. Available at:

http://investasi.kontan.co.id/news/dengan-akuisisi-wton-perkuat-kapasitas-produksi [Accessed 19 Sep. 2014]. 7 WTON 2013 Annual Report, op cit.

8 Public Expose, op. cit.

9 Schwab, K. (2014). The Global Competitiveness Report 2014 - 2015. 1st ed. [ebook] World Economic Forum. Available at:

http://www3.weforum.org/docs/WEF_GlobalCompetitivenessReport_2014-15.pdf [Accessed 22 Sep. 2014]. 10

(2014). Implementasi Konsep Tol Laut: Biaya Bisa Ditekan jadi 15%. [online] Supply Chain Indonesia. Available at:

http://supplychainindonesia.com/new/implementasi-konsep-tol-laut-biaya-logistik-bisa-ditekan-jadi-15/ [Accessed 10 November

2014]. 11

Bisara, D. (2014). Indonesia Raises Subsidized Fuel Prices by Rp2,000 a Liter. [online] The Jakarta Globe. Available at:

thejakartaglobe.beritasatu.com/news/breaking-indonesia-raises-subsidized-fuel-prices-rp-2000-liter/ [Accessed 18 Nov. 2014]. 12

Master Plan of Acceleration and Expansion of Indonesia Economic Development 2011 - 2025. (2011). 1st ed. [ebook] Ministry of

Finance. Available at: http://www.kemenkeu.go.id/search/node/others/bakohumas/bakohumaskemenko/MP3EI_revisi-

complete_(20mei11).pdf [Accessed 26 Oct. 2014]. 13

Central Government Financial Statement 2009 – 2013, Government Revenue and Expenditure Budget 2014, Government Revenue

and Expenditure Budget Plan 2015 14

Master Plan of Acceleration and Expansion of Indonesia Economic Development 2011 - 2025. (2011). 1st ed. [ebook] Ministry of

Finance. Available at: http://www.kemenkeu.go.id/search/node/others/bakohumas/bakohumaskemenko/MP3EI_revisi-

complete_(20mei11).pdf [Accessed 26 Oct. 2014]. 15

Ekon.go.id, (2014). Refleksi Tiga Tahun Pelaksanaan MP3EI. [online] Available at: http://www.ekon.go.id/berita/print/refleksi-tiga-

tahun.955.html [Accessed 4 Oct. 2014]. 16

Fahriyadi, and Triyono, A. (2014). Puluhan Proyek Raksasa Mulai Ditawarkan. Kontan. p.15. 17

Triyono, A. (2014). Anggaran Proyek Tol Laut Rp 800 Triliun. Kontan. p. 20. 18

Fahriyadi and Naratama. (2014). PU Bersiap Jalankan Beleid Tanah di 2015. Kontan. p. 14. 19

(2014). Pembangunan MRT - Masih Banyak Lahan Belum Dibebaskan. Kompas. p. 10. 20

Werdiningsih, P. (2014). Waskita Precast Akan Bangun Dua Pabrik Anyar 2015. Kontan. p. 14. 21

Public Expose PT Wijaya Karya Beton Tbk on November 3, 2014 regarding Financial Reports 3Q14, p. 26

22 Indonesia Cement Association, (2013). Perkembangan Industri Semen di Indonesia Tahun 2012 – 2016. [online] Available at:

http://www.asi.or.id/berita-116-perkembanganindustrisemendiindonesiatahun2012%E2%80%932016.html [Accessed 1 Oct. 2014]. 23

Kementerian Periundustrian, (2014). Kemenperin: Industri Baja Kian Terseok-seok. [online] Available at:

http://www.kemenperin.go.id/artikel/3081/Industri-Baja-Kian-Terseok-seok [Accessed 1 Oct. 2014]. 24

Kementerian Periundustrian, (2014). Industri Baja Terkendala Pasokan Energi dan Bahan Baku. [online] Available at:

http://://www.kemenperin.go.id/artikel/8162/Industri-Baja-Terkendala-Pasokan-Energi-dan-Bahan-Baku [Accessed 1 Oct. 2014]. 25

WTON 2013 Annual Report 26

Ibid. 27

Public Expose PT Wijaya Karya Beton Tbk on November 3, 2014 regarding Financial Reports 3Q14, p. 12. 28 Werdiningsih. (2014) Waskita Precast akan bangun dua pabrik 2015. [online] KONTAN. Available at:

http://industri.kontan.co.id/news/waskita-precast-akan-bangun-dua-pabrik-2015 [Accessed 10 November 2014].

29 Anggi, L. (2014). Waskita Beton to go public, build new factories. [online] Thejakartapost.com. Available at:

http://www.thejakartapost.com/news/2014/10/28/waskita-beton-go-public-build-new-factories.html [Accessed 8 Nov. 2014]. 30

Adinda, M. (2014). PTPP Bakal Bangun 4 Pabrik Beton - kontan.co.id. [online] KONTAN. Available at:

http://industri.kontan.co.id/news/ptpp-bakal-bangun-4-pabrik-beton [Accessed 7 Nov. 2014]. 31

Public Expose, op. cit. 32

Sukirno, (2014). AKSI EMITEN: WTON Caplok 70% Saham Citra Lautan Teduh US$23,5 Juta | Market - Bisnis.com. [online] Bisnis.com.


30

Available at: http://market.bisnis.com/read/20140724/192/245769/aksi-emiten-wton-caplok-70-saham-citra-lautan-teduh-us235-juta

[Accessed 9 Oct. 2014]. 33

WTON 2013 Annual Report 34

Pages.stern.nyu.edu, (2014). Country Default Spreads and Risk Premiums. [online] Available at:

http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/ctryprem.htm [Accessed 27 Sep. 2014]. 35

WTON 2013 Annual Report


31

CFA Institute Research Challenge · PT Wijaya Karya Komponen Beton (WIKA Kobe) and PT Wijaya Karya Krakatau Beton. WIKA Kobe is a JV with PT Komponindo Beton Jaya (Kobe, a subsidiary

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