Reuters Code : WIKA.JK
Wijaya Karya (WIKA) is one of the major players in construction business. Compare to ADHI and TOTL, WIKA has more stable and consistent growth in this weak economic condition. Its sales has been growing significantly since 2005. In 2009 I projected a little contraction in its revenue but I am confident that in 2010 WIKA would start its consistent growth again. I would show you the data :
WIKA shows that it is capable in make its business more efficient. The ROE is consistently growing each year. In 2009, even though I projected some negative growth in its revenue WIKA still capable in making some growth in its forecasted 2009 earning.
Its current PE ratio is 10.64 and its P/BV is 1.40 (per 11 September 2009). I believe these multiplier are too low for its potential business growth. I projected its PE ratio would be at least 12 x.
I also made some projection using a Discounted Cash Flow model (DCF) using growth factor 15.25% and required return 19%. The output from this model is the ideal today price of WIKA which is 377.
With today price of 350, I recommend a "BUY" for WIKA.
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