WIKA booked significant quarterly growth, marked by an increase in revenue (+71.7% QoQ) and net profit (+305.7% QoQ). However, high operational costs held performance from reaching its optimum, while growth mostly caused by low basis effect in the previous quarter. The company expects the continuation of some major projects to support future performance.
We downgrade our rating for WIKA to Overweight (from Buy); with a target price of IDR1,280 per share. Our target price implies 22F P/E of 14.3x (+1 SD of 3-year average). Some risks to our TP are: 1) The continuation of Covid-19 pandemic that may potentially hinder tender process and project constructions; 2) Below target new contract achievement; 3) Weakening debt level.
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