Logo Minnapadi
aboutusmpi.png
<< Back To Full Report And Update

AGII - 3Q20 Update

WITHIN OUR EXPECTATIONS, BUT OVERVALUED SHARES
As of 9M20, AGII booked revenues of Rp1.6T (-2.5% Y/Y; 75.4% of 2020F estimate). 3Q20 GPM was slightly down to 41.3% from 41.4% in 2Q20 and 44.8% in 3Q20, but lower 3Q20 operating expenses (-7.8% Q/Q; -10.5% Y/Y) kept AGII’s EBIT afloat. 9M20 net profit is above our expectations at Rp30B (-59.8% Y/Y; 81.6% of 2020F estimate), but we changed our recommendation to SELL, as share price, which stood at Rp905/share on December 1st, far exceeded its fair value at Rp530/share.
 
GAS PRODUCT CLIMBED UP
3Q20 gas sales has been satisfying so far, standing at Rp500B (+12.1% Q/Q’5.7% Y/Y); but 3Q20 result remains insufficient to offset weak 2Q20 result, thus 9M20 gas product sales declined by -1.4% (Y/Y). Gas product margin also recovered to 41.3% vs. 38.6% in 2Q20 but is still lower than that of 3Q19 at 46.9%. On the other hand, equipment margin nosedived to 28.5% from 46.4% in 2Q20. Overall, 3Q20 AGII’s GPM stands at 41.3% vs. 41.4% in 2Q20, but is far lower than GPM in 3Q19 at 44.8%. Despite a surge in sales, margin-wise the Company is not really coping well. Going forward, we are still confident in our 2020F estimate, but margin may remain moderate, if not weak.
 
PUSHING DOWN THE COSTS
AGII has been doing a good job in pushing down its costs: 3Q20 operating expense was down by -7.8% (Q/Q) and -10.5% (Y/Y) and 3Q20 finance expense declined by -9.3% (Q/Q) and -3.8% (Y/Y). Margin-wise however, remains below the pre-pandemic margin: 3Q20 EBIT at 16.6% vs. 1Q20 18.1% vs. 3Q20’s 18.1%. AGII’s 9M20 net profit stood at Rp30B, which represents 81.6% of our 2020F estimate.
 
IT’S CURRENTLY OVERVALUED
AGII share price has gone up by +30.2% in one month and a staggering 85.5% in 3-month time, standing at Rp905/share as of December 1st. According to our model, AGII’s fair value stands at Rp530/share and requires no change, as 3Q20 results are quite in line with our expectations. As a result, we downgrade our call to SELL from HOLD.
 
VALUATION
We downgrade our HOLD recommendation to SELL with 12-month target price of Rp530/share (previous TP: Rp530/share), which represents P/E of 28.9 and P/B of 0.5x

Wed December 2Th, 2020

Disclaimer

En Lorem Ipsum In Eiusmod.

EN HOME LOREM IPSUM EU NISI NISI LABORE ANIM REPREHENDERIT ADIPISICING SED LABORE QUIS UT TEMPOR ESSE QUIS CILLUM VENIAM CILLUM SUNT NISI CILLUM UT FUGIAT FUGIAT UT OFFICIA ET QUIS.

En Lorem ipsum Velit sit magna adipisicing laborum eu voluptate exercitation minim sit ex incididunt exercitation ut in sunt culpa quis magna sed dolor in et amet sunt id fugiat sint laboris sed officia est id officia eiusmod eu reprehenderit ullamco sed esse aliquip ex minim occaecat amet ad nulla voluptate do officia in reprehenderit quis officia dolore pariatur in quis consectetur ut nostrud aliqua sed officia fugiat nisi incididunt anim in laborum.

Lorem ipsum Dolor dolor dolore quis magna nulla aute ea sed velit id amet ut id minim proident cupidatat anim pariatur ex do dolore ut sit mollit ex voluptate consequat sit eu esse cillum exercitation eu dolore pariatur sunt et ut est Ut dolore id voluptate qui Ut in fugiat non exercitation Excepteur sunt magna ullamco sint do quis laboris dolore dolore pariatur laboris nulla mollit nisi laboris magna in aute Ut enim Excepteur est culpa in enim officia enim ea cillum fugiat dolore proident officia eiusmod pariatur in elit et aliquip esse culpa sint in fugiat aliquip cupidatat non id aliquip sit ad reprehenderit mollit dolor aliqua Duis in amet exercitation ut ut cillum et adipisicing qui aliqua.