PT Inovisi Infracom Tbk

Growing Performance
Through investing in various industries and focusing on telecommunication sector, the company is able to maintain its growth continuously. On 3rd quarter of 2013, company’s revenue has grown 47.19% YoY. Gross profit also grows around 23%. Since the margin is pretty low, the company did some efficiency in its sales and marketing expenses, which affect operating income to grow better at 25.6% YoY. Earnings after tax grow 22.90% YoY.

Table Financial summary PT Inovisi Infracom Tbk (INVS). Source: Profindo International Securities

Free Trade Agreement 2015 Momentum
In 2015, we expect there will be huge money inflow to Indonesia due to free trade agreement. Conglomerates companies, as well as Inovisi Infracom, will be benefited from this regulation. Also, we believe that the election in 2014 will be done peacefully. Moreover, infrastructure is going to be the country’s focus in the next decade, which is a good catalyst for company’s infrastructure businesses.

Although coal sector is a risk for the company, its contribution is still small compare to other divisions. With a recovery in developed nations such as The United States and European Union, we hope that coal price will recover. We argue that recovering developed nations will increase products’ demand from Asia. Asia, especially China and India, is still using coal as a source of energy to produce goods.

Entering Challenging Industry
INVS will focus its business to mining activities, oil & gas and electronic system trafficking. Entering the coal industry will be challenging for the company since there are countries are reducing the use of coal for power plants. However, the company can focus to target domestic market and huge international market like China and India.

Diversified businesses will be a plus for Inovisi. With nine subsidiaries, the company has a strong fundamental and a well-diversified business. Also, Inovisi is targeting not only domestic market, but also international market.

Well-diversified Company
Inovisi Infracom Tbk is a well-diversified Investment Company, operates in telecommunication, technology & media, energy as well as engineering.

Acquiring 75% PT CakraDaya Energy
The company just bought 150.000 shares, representing 75% total shares of PT CakraDaya Energy, with a total value of Rp 97.712.000.000.

Valuation
We estimate its fair equity value of Rp 15.99 tn. We derived out fair value estimate using DCF and PE multiple. The fair equity value implies 28.87x 2015F PE.

Table Financial ratios PT Inovisi Infracom Tbk (INVS). Source: Profindo International Securities

 

*Bayu Cahyadi is PT Profindo International Securities' Analyst of Equity Research. This article is part of the Equity Research of PT Profindo International Securities