Jasa Marga (JSMR.IJ Rp 4,900; BUY TP Rp 6,500) JTT divestment is signed and sealed

Stock Code	Last Price	Change	Change %
DSSA	50.900	2.650	5,49%
CTBN	5.300	450	9,28%
SMMA	15.800	400	2,60%
CUAN	8.875	350	4,11%
SINI	3.500	310	9,72%
BESS	1.495	240	19,12%
NICL	1.055	175	19,89%
SGRO	2.570	170	7,08%

Jasa Marga (JSMR IJ)

JTT divestment is signed and sealed

JSMR has signed SPA on JTT divestment, with expected total proceeds of Rp15.3tr, to be paid in two terms (Sep24 and Dec24).
The proceeds should enable JSMR to deleverage, thus our FY25E core NP expectation of Rp4.2tr and Rp8tr deleveraging are not stretched.
The signed agreement should remove JTT divestment overhang. Reiterate Buy on JSMR with a TP of Rp6,500.

JSMR signed SPA on JTT divestment

JSMR officially signed SPA on JTT divestment on 27th Sep, 2024. This agreement also includes the issuance of 1.2bn new shares at the JTT level. After the completion of this transaction, JTT's final ownership will be as follows: 65% JSMR, 24.5% Metro Pacific Tollways (Salim) through 2 vehicles (Metro Pacific Tollways Indonesia Services and Margautama Nusantara), and 10.5% Warrington Investment Pte Ltd (GIC).

Proceeds amount of Rp 15.3tr, to be paid in two terms

JTT divestment proceeds will be Rp12.8tr (before tax, ~Rp11tr after tax), which will go to JSMR at the parent level and, therefore, could be used for deleveraging. The proceeds from JTT divestment will be paid in two terms: Rp6.7tr for 1st term (Sep24), and Rp6.1tr for 2nd term (Dec24). In addition, there will be Rp2.5tr proceeds from the issuance of new JTT shares (received immediately by Sep24), which will go to the JTT level and be used to pay JTT bridging loan in acquiring RDPT-MIET and KIK-DINFRA back in FY23 and early FY24. Thus, total proceeds will be Rp15.3tr (~Rp14tr after tax), implying ~2x PBV transaction value.

Deleveraging should go as expected, reiterate Buy on JSMR

Overall, this event is in line with our expectation and should be positive for JSMR through the removal of overhang on JTT divestment. We think our FY25F core net profit expectation at Rp4.2tr is far from stretched, with assumptions of 10bps lower cost of debt in FY25F and total Rp8tr deleveraging in FY24F-FY25F. The latest capex schedule also shows delay in Jogja-Bawen (Section 1 & 6, ~14km) completion target from FY25 to FY26, reducing pressure in FY25-26F interest expense. Furthermore, we are also surprised by the quicker tariff hike implementation for Cawang-Tomang-Pluit route (which contributes to 16% of total JSMR traffic) by 7% in Sep24. We reiterate our Buy rating on JSMR with a TP of Rp6,500. Downside risks: 1) Mandate to purchase toll road beyond the current capex schedule; 2) Delay on tariff hike.

… Read More 20241002 JSMR