Kawasan Jababeka: Cikarang Dry Port is the company’s next highlight (KIJA, Rp111, Buy, TP: Rp150) - Mandiri Sekuritas

We went site visit to KIJA yesterday, to get a first-hand experience of the area as well as to see progress especially on the power plant and its dry port projects. The key takeaways are as follow:

 Progress on power plant is right on track. KIJA has received part of the loan disbursement totaling US$20mn from Bank Jabar (BJBR IJ), earlier this week. The company expects to receive the remaining US$20mn at end of this month, which to set go with the project that scheduled to be completed by end of this year.
 Cikarang Dry Port (CDP) will be the company’s new highlight. With a total dedicated 200ha area of land, to date the company has developed 10ha area with total 150,000 TEUs capacity.
 By Apr11, next month, CDP would be the official of Tanjung Priok Port extension, to take operation of export-import custom & clearance, part that are currently being overloaded handed in Tanjung Priok area.
 We think that CDP would offer a huge potential demand, especially from the Cikarang industrial area that currently comprises up to 60% traffic of Tanjung Priok port. This is in addition of currently on going railway yard (emplacement) construction in the area that would ease logistic distribution from the two sides. Knowing this is part of the infrastructure works, we see incentive for the government takes role in here that unlikely to not be speeding-up in terms of completion. KIJA expects this to be up in operation by June this year.
 We see the key is the completion of the emplacement. Besides, the currently in progress of KM29 exit Cikarang toll that would give direct access to the area is also important, given traffic progress that we expect would be seeing from the dry port area. The KM29 exit itself would be able to be accessed about 18months from now.
 We maintain Buy on KIJA. KIJA is now establishing itself as a proxy of fully integrated-industrial estate developer. Our TP of Rp150 excludes any contribution from the dry port which we see as an additional catalyst next year. Note that upon reaching TEUs of 276k throughput units by 2013, net income contribution from the dryport is expected to be about US$5mn/year. KIJA trades at 69% discount to RNAV11F and PE11F 12.9x