Net profit of Adhi Karya is expected to grow by an average 37 percent per year up to 2017 on the back of government-led infrastructure projects and the company's recent rights issue. One example of the projects is the USD $760  million light rail system in Jakarta. This rail system, which is estimated to start operations by 2018, will connect Cibubur (in the eastern part of Jakarta) to Grogol (in West Jakarta) through Cawang and Semanggi in South Jakarta. About 80 percent of this project is funded by the government.

Adhi Karya benefits from this project (with an estimated gross margin of 10-12 percent) being the contractor and through precast concrete sales through its subsidiary Adhi Karya Beton.

Funds Allocated to Infrastructure Spending in the Government's State Budget:

In its recent rights issue Adhi Karya raised IDR 2.7 trillion (approx. USD $197 million) which manages to lower the company's net gearing ratio to 11.2 percent in 2015, from 83.2 percent last year. Its debt-to-equity ratio is projected to decrease to 52 percent this year, compared to 130 percent last year. This means that the company will have more room to take on loans toward the future, with more better interest rates (before the rights issue Adhi Karya had the highest debt ratio among all state-controlled construction companies).

Next year, the company is estimated to collect IDR 16.4 trillion in contracts, from an expected IDR 16 trillion this year.

Adhi Karya posted IDR 137.3 billion in net profit in Q3-2015, up 36 percent from the same period last year.

Adhi Karya's Financial Highlights:

     2012    2013    2014   2015F   2016F   2017F
Revenues  7,627.7  9,799.6  8,653.6 10,027.0 14,792.0 20,795.0
Net Income    211.6    406.0    324.1    416.0    609.0    847.0
P/E Ratio (x)     14.6      6.7     19.3     16.0     13.2      9.5
P/BV (x)     2.33     2.32     2.02     1.71

in billion IDR rupiah unless otherwise stated
Sources: Adhi Karya, Annual Report 2014 & RHB OSK Securities

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