Corporate Result Flash Jasa Marga - Bahana

2Q11 performance
§ JSMR reported solid 2Q11 net profit of IDR381b, up 11% y-y, bringing 1H11 earnings to IDR752b (+16% y-y), in line with our and consensus estimates, supported by steady traffic volume growth of 3.6% q-q to 268m vehicles.
§ Stable 2Q11 operating toll road expenses allowed for modest operating profit growth to IDR626b (+7% y-y), translating to 1H11 operating income of IDR1.2t, up 12% y-y, accounting for 53% of our and consensus forecasts.
§ On the top line, 2Q11 revenue reached IDR1.2t, up 10.4% y-y, partially supported by growth in non-toll revenue of 48% y-y, albeit from a low base. 1H11 sales reached nearly IDR2.4t, up 12.2% y-y, 48% of our full-year projection. This is in line given higher tariffs in 3Q11.

Outlook
We expect higher volumes in the following quarters coupled with tariff adjustment in September to bring JSMR earnings meeting our 2011 net profit estimate of IDR1.4t, up 16% y-y. It is worth noting that the full positive impact from the upcoming tariff adjustment or around 10% would occur in 2012, resulting in higher estimated earnings growth of 28% y-y next year.

Recommendation and valuation
With the current share price reaching close to our 2011 target price, we roll over our JSMR’s valuation to 2012, resulting in raised DCF-based target price of IDR4,800. We continue to like the company’s defensive nature, which would continue to benefit from automatic tariff adjustment schedule, stable volume growth on existing routes and developments of new projects. Reiterate BUY on 22% upside potential.