TOTL - 9M23

Another Solid Quarter

Earnings Review 9M23

TOTL posted yet another solid quarter as its revenues and core net profit have increased significantly in 9M23 as well as in Q3/23, while its profitability margins have also improved from a year earlier. In Q3/23 alone, TOTL has added seven new projects and completed three projects, and including 33 other 33 projects in progress, the total contract commitment stood at Rp7,167.1 billion at the end of Q3/23. Based on the updated financial information, the target price for TOTL has been slightly adjusted to Rp481 per share, implying 31% upside potential from the reference closing price.

Bigger and Better

For TOTL, Q3/23 was a solid quarter as it posted Rp862,7 billion in total revenues, up 37.3% (yoy) vs. Q3/22 and higher by 44.8% (qoq) vs. Q2/23. In addition, income from joint venture projects have also increased by 43.6% (yoy) to Rp8.9 billion, despite being lower than Rp24.2 billion in Q2/23. At the bottom line, net profit gained 93.3% (yoy) to Rp42 billion in Q3/23 vs. Q3/22, as well as up by 10.6% (qoq) vs. Q2/23. Gross profit margin (GPM), operating profit margin (OPM) and net profit margin (NPM) were all higher in Q3/23 vs. Q3/22, albeit they turned lower vs. Q2/23.

Cumulatively, TOTL’s total revenues climbed to Rp2,077.2 billion in 9M23, up from Rp1,742.2 in 9M22 or 19.2% (yoy) higher. In addition, income from joint venture projects also jumped from Rp15.3 billion in 9M22 to Rp40.2 billion, or 162.6% (yoy) higher. At the bottom line, core net profit also expanded from Rp66 billion in 9M22 to Rp109.6 billion in 9M23, or up by 66.1% (yoy). In terms of margin, gross profit margin, operating profit margin and net profit margin were all improving in 9M23 vs. 9M22, albeit lower than those in 6M23.

More Projects

Three projects had been completed in Q3/23, while seven new projects had been added to the long-list of 33 ongoing projects. As of the end of September 2023, the total value of contract commitments held by TOTL amounted to Rp7,167.1 billion, or 6% (qoq) higher than its value at the end of June 2023.

In Consolidation Mode

Since our last report, TOTL had reached its highest monthly closing price of Rp384 per share in August 2023 after which it drifted sideways within a tight range of Rp360-Rp370 (on monthly closing basis).

Valuation Relatively Unchanged

We have updated our valuation of TOTL based on the recently published financial statements for the 9M23 period as well as other new data used in our assumptions. As a result, the average target price calculated using three valuation methods: multiples, discounted cash flows and dividend discount model has been slightly lowered to Rp481 per share (vs. Rp484 in previous report). This target price implies 31% upside potential from the closing price of Rp366 per share (November 10th 2023).