Is 2018’s Revenue Target Accomplished?
We conduct a site visit to IPCM a few weeks ago. In the early of 2018, IPCM targeted the revenue of IDR1.1 trillion (+30.6% y-y) and the net profit of IDR150 billion (+26.5% y-y). It is also heavily reliant on pilotage and towage services as its revenue’s main driver in 2018. The growth in port traffic correlates to IPCM’s revenue; thus, the improvement in commodities prices, particularly coal and crude prices boosting export activities, is potential for increasing IPCM’s revenues.
We estimate that IPCM is likely to post revenue of IDR878 billion (+17.6% y-y) and net profit of IDR147 billion (+16.8% y-y). Factors underlining our conservative estimate are 1)The trade war and the rupiah depreciation potential for any changes in policies curbing imports with a view to keep current account deficit in check, 2) Until 6M18, IPCM posting revenue of IDR361 billion or 32.8% of the target, 3) in accordance to the Ministry of Transportation data, traffic containers in ports posting per year average growth of 2.39%, 4) limited number of vessels as setback in increment of services volume.
Traffic in ports has its rush hours; thus, to keep vessels in well-maintained condition, one vessel should only operate 60% from the total operational hours. This fact urges IPCM to rent vessels with a view to completing its target, sends the cost of partnership to soar, and whittles away gross margin.
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