Corporate Result Flash Adhi Karya - Bahana Securities

4Q10 performance
§ ADHI booked strong 4Q10 net profit growth of 116.4% q-q to IDR IDR114b, 19% and 9% higher than our and consensus estimates respectively. This brought full-year earnings to IDR189b, up 14.5% y-y.

§ Higher than expected earnings mainly stemmed from cost efficiencies, resulting in robust operating profit growth of 224.7% q-q to IDR364b. This translated to operating margin expansion to 14% compared to 9.3% in the previous quarter. On a y-y basis, however, 2010 operating profit was flat up 2.6% y-y to IDR551b, still higher than our and consensus forecasts.

§ On the top line, while 4Q10 revenue grew 115.3% q-q to IDR2.6t, delay in budget disbursement for infrastructure projects resulted in lower 2010 revenues of IDR5.7t (-26.4% y-y), 10% lower than our and consensus estimates.

Outlook
While 2010 earnings came in higher than our and consensus estimates, weak top line achievement suggests continued problem on the execution of domestic infrastructure projects. On a more positive note, we expect improvement on the pace of infrastructure developments in 2011 to benefit of ADHI, aiming to secure total new contracts of around IDR10t.

Recommendation and valuation
Currently, ADHI is trading at undemanding 2011 implied PE of 7.3x, 60% discount to regional market PE of 18x. This low valuation would become lower as we plan to raise our 2011 earnings post this result release. BUY.