AKR Corporindo (AKRA.IJ Rp 1,185; BUY TP Rp 1,500)1Q25 Earnings In Line; Management Remains Cautiously Optimistic

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AKR Corporindo (AKRA IJ)

1Q25 Earnings In Line; Management Remains Cautiously Optimistic

AKRA recorded net profit of Rp565bn (-5% yoy, 23% of our/cons, in line), driven by better petroleum margin and utilities revenue.
Management reiterates its net profit target of Rp2.4-2.6tr and land sales of ~100 ha in FY25F and is cautiously optimistic on this year’s outlook.
AKRA will propose final dividend of Rp50/share in the next AGM. Reiterate BUY with TP of Rp1,500.

1Q25 result: In line with our and consensus expectations

AKRA reported net profit of Rp565bn in 1Q25 (-25% qoq/-5% yoy, 23% of our/cons ests. or in line). Revenue improved by 1.4% qoq/4.5% yoy, as trading and distribution revenue expanded by 6% yoy, driven by better margin on the petroleum business despite still declining volume (-5% yoy). Trading & distribution margin improved by 70 bps yoy, despite being 180 bps qoq lower than 4Q24. AKRA recorded no land sales in 1Q25, yet utilities revenue surged by 600% yoy due to the ramp-up in usage by tenants (i.e., Freeport). Due to the early stage of utilities ramp-up and lack of land sales, margin on both segments declined by 10 bps qoq/140 bps yoy.

Management reiterates guidance, cautiously optimistic for rest of year

Management reiterates its guidance of ~100 ha land sales and a net profit of Rp2.4-2.6tr in FY25F. Management expects the general industry, which accounted for 53% of total petroleum sales in 1Q25 vs 37% in 1Q24, to still contribute significantly to the petroleum business. Thus, we think margin should recover, though not to the FY23 level. Despite the observed higher traction in the retail fuel business, with a BEP target at the end of FY24, the contribution is small at a single digit to total revenue. Chemical volume is expected to recover in 2Q25F, as AKRA will obtain additional supply from a new supplier. AKRA expects to record ~20ha of land sales in 2Q25F from Golden Elephant Indonesia, a JV of a fertilizer chemical company from China and 3 other companies. Additionally, it expects revenue contribution from utilities to improve further given the ramp-up in Freeport operations (mid-May25).

Reiterate BUY with TP of Rp1,500

AKRA will have its AGM on April 28^th and will propose final dividend of Rp50/share (~4% div yield), with an 88% payout. We reiterate Buy rating for AKRA on expectation of earnings recovery in FY25 and attractive valuation of P/E of 9x (-0.5 SD of 5-year mean). Downside risk: 1) Lower land sales; 2) Petroleum margin.

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