CORPORATE - JAKARTA. PT AKR Corporindo Tbk (AKRA), a leading Indonesian distributor of fuel and chemicals, reported a solid performance in 2023, with analysts predicting continued positive momentum in 2024.
AKRA's net profit grew by 15.7% year-over-year (YoY) to IDR 2.7 trillion in 2023, according to BRI Danareksa Securities analyst Hasan Barakwan.
This achievement came despite an 11.5% YoY decline in revenue to IDR 42 trillion due to lower fuel and chemical product prices.
The company's success stemmed from a combination of factors, including stable fuel volume growth and a significant increase in land sales.
AKRA's gross profit rose 5.2% YoY to IDR 4.4 trillion, driven by higher land sales, particularly in the fourth quarter, which saw a jump of 90 hectares compared to 10 hectares in the previous quarter.
Land sales boomed in 2023, reaching a record high of 91 hectares, doubling the 2022 figure of 44 hectares. The JIIPE industrial estate was a major contributor to this surge.
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AKRA maintained stable fuel trading volumes throughout the year, with the chemical segment also experiencing relative flatness. However, the fourth quarter witnessed a significant 34.1% quarter-on-quarter (QoQ) growth in chemical volumes.
Fuel margins remained flat for most of 2023, but the fourth quarter saw a substantial increase of 18%, reaching a record high for fuel margin per liter.
Looking ahead, AKRA management anticipates a 5-6% YoY increase in B2B Fuel Oil (BBM) sales volume in 2024, driven by demand from clients in Kalimantan and Sulawesi.
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However, BRI Danareksa Securities maintains a more conservative estimate of 1% growth due to the slowdown in the mining sector, particularly with the slow progress in RKAB approvals in the first quarter of 2024. Notably, 50% of AKRA's mining segment volume comes from coal mining.
Analysts at Mirae Asset Securities Indonesia, led by Robertus Yanuar Hardy, are optimistic about AKRA's performance in the fuel and chemical distribution business for 2024, citing the recent surge in fuel prices.
The core business segment, which contributes 64% to AKRA's consolidated figures, saw pre-tax profit rise 8% QoQ to IDR 925 billion in the fourth quarter, alongside a 9% QoQ increase in revenue to IDR 10.9 trillion.
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Robertus attributes this growth to a significant rise in distribution volume, driven by miners seeking economies of scale due to lower energy prices at the year's end.
With the expectation of future oil price increases and potentially higher production levels from Indonesia's largest mining companies, Robertus believes AKRA has the potential for even stronger figures in the first quarter of 2024.
AKRA's industrial area business segment also saw impressive results, with pre-tax profit soaring 264% QoQ to IDR 509 billion in the fourth quarter.
This surge aligns with a 390% QoQ increase in revenue to IDR 1.4 trillion, primarily due to significant land sales to companies in heavy industries like downstream petrochemical and metal sectors.
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Overall, AKRA's EBITDA and consolidated net profit for 2023 reached IDR 3.8 trillion and IDR 2.8 trillion, respectively, reflecting a year-on-year increase of 11% and 16%. These figures align closely with Mirae Asset's previous estimates.
Based on these positive developments, Robertus recommends a "buy" rating for AKRA with a target price of IDR 1,900 per share.
He sees further potential for price increases due to rising oil prices, higher production guidance from major miners, and the anticipated entry of global players into AKRA's industrial area.
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Hasan of BRI Danareksa Securities also maintains a "buy" recommendation for AKRA with a target price of IDR 2,000 per share. While they project a more conservative revenue forecast for 2024 and 2025, with EPS growth of 2% and 4% respectively, they acknowledge the potential for AKRA to outperform expectations if land sales reach the management target of 133 hectares.
Potential risks to this outlook include delays in land sales, lower fuel volumes, and a decline in fuel margins per liter.
