Strong Expansion at the Bottom

TOTL’s revenues (excluding income from JV projects) have increased to Rp2,220.3 billion in 9M24, or up by 6.9% (yoy) vs. Rp2,077.2 billion generated in 9M23. Income from JV projects however, has declined by 49.2% (yoy) in the same period to Rp20.4 billion, effectively sending the total revenues to grow by just 5.8% (yoy) in 9M24 to Rp2,240.7 billion vs. Rp2,117.4 billion in 9M23. At the bottom line, excluding the non-controlling interests (NCI), TOTL had managed to record Rp180.3 billion of core net profit in 9M24, 64.6% (yoy) higher vs. Rp109.6 billion in 9M23. Quarter-to-quarter performance has shown better results compared to Q2/24, both in terms of revenues and core net profit, while compared to the same quarter a year earlier, the results were mixed. Revenues for instance, were down in Q3/24 by 9.2% (yoy) vs. Q3/23, but up notably by 26.7% (qoq) vs. Q2/24; while core net profit was up by both 12.9% (qoq) and 61.3% (yoy) vs. Q2/24 and Q3/23, respectively. TOTL’s guidance for revenues and net profit this year are at Rp3.1 trillion and Rp175 billion, respectively; and based on the 9M24 performance, annualized revenues are still trailing at the target while the bottom line had been achieved in 9M24 and is likely to be notably surpassed in 12M24.

Margins and Returns are Set to Improve this Year

In line with strong performance at the bottom line, profitability margins have also improved at all stages. Gross profit margin – both ex-JV projects and including JV projects - have improved in 9M24 vs. 9M23, but were slightly lower compared to 6M24 as GPM in Q3/24 slipped vs. Q2/24. Similarly at the operating stage, core operating profit margin in 9M24 has been higher than 9M23, but down compared to 6M24 – also due to lower margin in Q3/24 vs. Q2/24. Finally, at the bottom line, core net profit margin (cNPM) in 9M24 was slightly higher than both 9M23 and 6M24, even as cNPM fell in Q3/24 vs. Q2/24. For detailed figures on margins, refer to the exhibit 1 in the appendix section. Elsewhere, TOTL’s return on assets (ROA) and return on equity (ROE) have improved further to 7.4% and 21.8% as of the end of September 2024, respectively based on the annualized core net profit reported in 9M24. Previously, at the end of June 2024 the ROA and ROE had stood at 6.9% and 21.5%, respectively.

Another Completion, Four New Projects Added

TOTL had completed one project in Q3/24 and added four new ones in the same quarter. The four new projects are Hari-Hari Office & Swalayan, Iris 2, Batam Epson, and Hotel Artotel Magelang. After these additions and completion, the total value of ongoing projects as of the end of Q3/24 was Rp4.95 trillion. TOTL has stated that it aiming for getting a total of Rp3.5 trillion worth in new projects this year and as of the end of October 2024, the Company has reported that the total value of its new projects was at Rp4.4 trillion.

Valuation Adjusted

We have simplified our valuation method on TOTL and have updated the data to reflect the most recent financial report. Since our previous update, TOTL’s share price has increased from Rp605 per share to Rp685 per share as of November 22nd 2024 while year-to-date, the price has significantly increased by 82.2%. Our new target price is now based solely on three price multiples: Price-to-Earnings Ratio (PER) and Price-to-Revenues Ratio (PRR) which are based on trailing-twelve-month (TTM) data; and Price-to-Book Value Ratio (PBV). The average of the target prices based on these multiples is at Rp767 per share, which implies PER (TTM) of 12.0x, PRR (TTM) of 0.8x, and PBV (MRQ) of 2.5x. Compared to the current price of Rp685 per share, the new target price offers 12.0% upside potential. We believe that TOTL is to continue as an attractive pick compared to its peers based on its returns, strong market cap, debt-free status, and consistent dividend payment.