• AKRA reported positive QoQ revenue growth in 4Q23 of +19.6% QoQ to IDR 12.1tn. However, the 4Q23 figure is lower than 4Q22 (-6.5% YoY); the slip was mainly caused by lower ASP in AKRA’s T&D business, leading to the drop in the company's T&D revenue (-11.2% YoY to IDR 10.3tn; 86.9% of revenue).
• AKRA’s industrial estate business generated IDR 1.2tn of revenue for the quarter, 8.7% of the company’s 4Q23 consolidated revenue (3Q23: 2.8%, 4Q22: 6.5%), thanks in part to the additional sales volume of 61ha. Aside from generating massive revenue, the business also booked substantial gross profit of IDR 661bn, 30.7% of AKRA’s consolidated 4Q23 gross profit (3Q23: 10.3%)
• 4Q23 marked the highest profitability margin since 2022, attributed to lower COGS (-15.9% YoY); with T&D business which contributed 88% of COGS was down -15.3% YoY, resulting in GPM of 13.2%, OPM of 11.3% and NPM 8.8%.
• AKRA’s top-line cumulative numbers were in-line with consensus: revenue of IDR 42.1tn (-11.5% YoY) (SSI: 92.7%, cons: 100.1%), while net profit of IDR 2.8tn (+15.7% yoy) was higher than expectations (SSI: 106%, cons: 107.1%).
• We expect AKRA to carry its growth momentum into 2024, supported by its T&D business on the back of higher demand from Eastern Indonesia and its successful logistic business. Given AKRA’s higher than expected 4Q23 results, we are likely to raise our 2024F earnings by 5-10% which will also result in higher TP (Our old TP was 1,900 implying an FY24F P/E of 12.2x). That said, we currently maintain our positive view and BUY rating on AKRA.