AKR Corporindo (AKRA IJ)

Inline FY24 result; Expect a Gradual Recovery on Petroleum and Land Sales in FY25F

• AKRA recorded net profit of Rp2.2tr in FY24 (-20% yoy, 96% of our/cons est, in line), despite weaker land sales in FY24.
• We expect gradual recovery in petroleum vol. with flattish margin, and higher industrial land sales, accompanied by higher utilities income.
• We trim our FY25F/26F EPS by 6%/2%. Reiterate Buy rating with a lower SOTP-derived TP of Rp1,500.

FY24 result: in line despite weak industrial land sales

AKRA recorded net profit of Rp2.2tr in FY24 (-20% yoy, 96% of our/cons estimate, in line). 4Q24 revenue reached Rp756bn (+62% qoq/-29% yoy). The higher net income was boosted by a lower final tax bracket (14.6% in FY24 vs. 16% in FY23). Meanwhile, revenue reached Rp38.7tr in FY24 (-8% yoy), 97%/100% of our/cons estimate, in line. 4Q24 revenue reached Rp10.1tr (+2% qoq/-16% yoy). Despite lower land sales in 4Q24, AKRA recorded revenue improvement on a qoq basis, implying better petroleum ASP in 4Q24.

Lowering our margin and earnings estimation, but we still expect recovery in petroleum and industrial estate

We upgrade our revenue assumption by 1%/1% in FY25F/FY26F, as we expect better vol. growth in petroleum and chemicals, upside in utilities income, and 72ha/90ha of industrial estate sales (our FY25F industrial sales are slightly lower than management guidance, as we expect more clients to purchase in stages instead of one-off bulk). As Freeport is ramping up its production, with expectations of full utilization by 2H25F, we expect this to enhance utilities income. However, we cut our GPM/EBIT margin assumption by 10-60bps/30-70bps in FY25F-FY26F, as we expect flattish margin on petroleum and normalization of chemical margin. Thus, we lower our EPS by 6%/2% in FY25F/FY26F, offset by higher associate income (from port operation). Nevertheless, our GPM/EBIT margin expectation still reflects gradual improvement in FY25F-FY27F vs low-base in FY24, with GPM in FY27F back to FY23 level (>10%).

We expect gradual recovery; reiterate BUY with a lower TP of Rp1,500.

We expect 10%/16%/13% EPS growth in FY25F/FY26F/FY27F, despite our lower estimate. We reiterate BUY rating with a 6% lower SOTP-derived TP of Rp1,500. AKRA is currently trading at 9x P/E at -1std, on par with its 5-year average. Downside risk: 1) Lower land sales execution; 2) Lower petroleum growth due to weak mining activity.

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