Jaya Pari Steel, Tbk - PT. PEFINDO

Jaya Pari Steel, Tbk 

Secondary Report 

Historical Chart 

JCI 

JPRS 

5.500 

5.000 

600 

4.500 

500 

4.000 

3.500 

400 

3.000 

2.500 

300 

2.000 

1.500 

200 

1.000 

100 

500 

JCI JPRS 

0 

0 

Feb-12 Apr-12 Jun-12 Aug-12 Oct-12 Dec-12 Feb-13 

Source : Bloomberg 

Stock Information 

Contact: 

Equity & Index Valuation Division 

Phone: (6221) 7278 2380 

info-equityindexvaluation@pefindo.co.id 

“Disclaimer statement in the last page is an 

integral part of this report” 

www.pefindo.com 

IDR 

Ticker code JPRS 

Market price as of March 19, 2013 360 

Market price – 52 week high 560 

Market price – 52 week low 320 

Market cap – 52 week high (bn) 420 

Market cap – 52 week low (bn) 240 

Stock Valuation Last Current 

High 403 590 

Low 339 380 

Market Value Added & Market Risk 

Market Value Added 

60 

40 

20 

0 

-20 

-40 

-60 

-80 

-100 

9M11 9M12 

Market Value Added Market Risk 

Source : Bloomberg, Pefindo Equity & Index Valuation Division 

Shareholders 

1.12 

1.1 

1.08 

1.06 

1.04 

1.02 

1 

Market Risk 

(%) 

Gwie Gunawan 15.53 

International Magnificent Fortune Limited 35.70 

Vihara Limited 32.72 

Public (each below 5% ownership) 16.05 

*Notes: as of September 30, 2012 

Ready to Pursue Higher Growth 

Equity Valuation 

March 20, 2013 

Target Price 

Low High 

380 590 

Steel Plate 

Property 

Established in 1973, PT Jaya Pari Steel Tbk (JPRS) is a pioneer of private 

Indonesian steel plate producers. JPRS is a member of Gunawan Group, 

along with PT Gunawan Dianjaya Steel Tbk (GDST) and PT Betonjaya 

Manunggal Tbk (BTON). JPRS produces smaller steel plate than GDST 

since it has product specification of thickness ranging from 8 mm to 25 

mm, width range 914 mm to 1,524 mm. JPRS distributes its products to 

domestic market, such as DKI Jakarta, East and West as well as Central 

Java, Bali, Sulawesi, Kalimantan. To ensure its product quality, JPRS is 

equipped by several certificates received such as ISO 9001, Certification 

of Steel Plate Products from Indonesia Bureau of Classification, Steel 

Plate Product Certification from Lloyd’s Registered of Shipping, Factory 

Production Control Certificate to BC 1: 2008 from Bureau Veritas and the 

latest is Proper Blue certificate from the State Ministry of Environment for 

awareness and compliance with prevailing laws and regulations. 

Page 1 of 10

INVESTMENT PARAMETER 

“Disclaimer statement in the last page 

is an integral part of this report” 


Target Price Adjustment 


We have made several adjustments to our previous forecast and adjust our 

Target Price upward to the range of IDR380 – IDR590 per share, based 

on the following considerations: 

Indonesian steel market this year is forecasted to reach IDR71 trillion, 

up by 7% YoY compared to IDR66 trillion in 2012, mainly due to solid 

economic growth in domestic that could drive to the increasing of 

manufacture, automotive and infrastructure activities, further boosting 

steel consumption. 

Financial performance during 9M12. We view that JPRS’s achievement 

up to 9M12 was in line with our revenue projection in the previous 

report for 2012 period. Despite a decline performance in 9M12, 

however, in line with increasing trend of steel price and augmented with 

positive growth of national steel industry, we believe JPRS will be able to 

perform better in the years ahead. 

Risk free rate, equity premium, and beta assumption are 5.5%, 7.6%, 

and 1.0x respectively. 

Business Prospects 

In line with the positive growth of infrastructure, construction, 

infrastructure and automotive sectors, we believe steel industry has 

prospective outlook in the years ahead. This year, steel consumption in 

domestic is estimated to increase by 9% YoY or about 11 million tons, 

compared to 10.4 million tons in 2012. Meanwhile, domestic production 

capacity is predicted only 6.3 million tons this year. By considering above 

factors and augmented with JPRS product distribution for domestic market, 

we foresee that JPRS’s revenue will be able to grow by 5% CAGR during 

2011 – 2016 periods. 

Table 1: Performance Summary 

2009 2010 2011 2012P 2013P 

Revenue [IDR bn] 303 428 641 461 533 

Pre-tax Profit [IDR bn] 1 39 48 15 29 

Net Profit [IDR bn] 1 28 37 11 22 

EPS [IDR] 0.7 37.9 49.9 15.1 29.1 

EPS Growth [%] (99.0) 5,437.5 31.5 (69.7) 92.2 

P/E [x] 103.5 15.3 9.7 23.8* 12.4* 

PBV [x] 0.7 1.3 1.0 0.8* 0.7* 

Source: PT Jaya Pari Steel Tbk, Pefindo Equity & Index Valuation Division Estimates 

*) Based on share Price as of March 19, 2013 – IDR 360 per share 

March 20, 2013 Page 2 of 10

GROWTH VALUE MAP 





Growth-Value Map below provides an overview of market expectations for the 

companies listed on the IDX. Current Performance (CP) metric, running along the 

horizontal axis, is a portion of current stock market value that can be linked to 

the perpetuity of current company’s performance in profitability. Growth 

Expectations (GE) metric, plotted on the vertical axis, is the difference between 

the current stock market value and the value of current performance. Both 

metrics are normalized by the company’s book value. 

Growth-Value Map divides companies into four clusters: 

Excellent Value Managers (“Q-1”) 

Market expects companies in Q-1 to surpass their benchmark in 

profitability and growth. 

Expectation Builders (“Q-2”) 

Market has relatively low expectations of profitability in the short term 

from companies in Q-2, but has growth expectations exceed the 

benchmark. 

Traditionalists (“Q-3”) 

Market has low growth expectations of companies in the Q-3, although 

they showed good profitability in the short term. 

Asset-loaded Value Managers (“Q-4”) 

Market has low expectations in terms of profitability and growth for 

companies in Q-4. 

Growth Expectations 

Figure 1: Growth-Value Map of JPRS (Steel Industry) 

6 

5 

4 

3 

2 

1 

0 

-1 

-2 

Q-2 Q-1 

JPRS 

Q-4 Q-3 

0 1 2 3 4 

Current Performance (CP) 

Source: Bloomberg, Pefindo Equity & Index Valuation Division 

Based on financial report and market data, JPRS is classified in the Expectation 

Builders (Q-2) cluster. Market has higher growth expectation in the long term, 

but relatively lower expectation of profitability in the short term. JPRS has the 

opportunity to move to Excellent Value Managers by way of strengthening its 

internal growth and regularly updating its economic success to public. 


BUSINESS INFORMATION 





Supported by Domestic Market Optimism in 2013 

Indonesian steel market is forecasted to reach IDR71 trillion, up by 7% YoY 

compared to IDR66 trillion in 2012. It is mainly caused by solid economic growth 

in domestic that could drive to the increasing of manufacture, automotive and 

infrastructure activities. Despite shadowed by financial crisis in USA and Europe, 

we believe it will not affect domestic steel manufacturers since they can maintain 

their sales volume by selling the products in domestic market. 

in IDR trillion 

80 

70 

60 

50 

40 

30 

20 

10 

0 

Figure 2: Indonesia Steel Market and Steel 

Consumption 

41.5 

March 20, 2013 Page 4 of 10 

63.7 

66.4 

71.05 

2010 2011 2012P 2013P 

National Steel Market National Steel Consumption 

Source: IISA, various source processed by Pefindo Equity & Index Valuation Division 

Meanwhile, there is an increasing raw material price since early this year. As a 

result, several steel manufacturer has increased their selling price around 13%- 

15%. Raw material price in January 2013 compared to October 2012 has 

increased significantly, particularly scrap and iron ore which rose by 15% and 

30%, respectively. 

in USD 

200 

180 

160 

140 

120 

100 

80 

60 

40 

20 

Figure 3: Iron Ore Price 

0 

Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 

China iron ore spot price Hebei/Tangshan 

Source: Bloomberg, Pefindo Equity & Index Valuation Division 

12 

10 

8 

6 

4 

2 

0 

in million ton

FINANCE 





Better Financial Position 

In the last few years, JPRS financial position looks better, as depicted by the 

increasing liquidity and decreasing debt to equity ratio (DER). We noted that 

JPRS current ratio and DER were recorded by 2.9x and 0.3x in 2009, then it 

became 10.0x and 0.1x, respectively in 9M12. Considering above historical result, 

we believe JPRS will be able to maintain stable balance sheet ahead. 

(IDR billion) 

400 

350 

300 

250 

200 

150 

100 

50 

0 

218 

Figure 4: Parts of JPRS Balance Sheet 

76 82 

286 

272 

103111 

300 305 

March 20, 2013 Page 5 of 10 

90100 

338 

243 

24 

35 

2009 2010 2011 9M12 

Current Asset Current Liabilities Total Liabilities Total Equity 

Source: PT Jaya Pari Steel Tbk, Pefindo Equity & Index Valuation Division 

Business Prospect 

In line with the positive growth of infrastructure, construction as well as 

automotive sectors, we believe steel industry has prospective outlook in the years 

ahead. This year, steel consumption is estimated to increase by 9% YoY or about 

11 million tons, compared to 10.4 million tons in 2012. Meanwhile, domestic 

production capacity is predicted only 6.3 million tons this year. By considering 

above factors, we foresee that JPRS’s revenue will be able to grow by 5% CAGR 

during 2011 – 2016 periods. 

IDR billion 

900 

800 

700 

600 

500 

400 

300 

200 

100 

0 

641 

Figure 5: JPRS’s Revenue Estimation 

461 

533 

614 

709 

822 

2011 2012P 2013P 2014P 2015P 2016P 

Revenue Estimation 


342

INDUSTRY COMPARISON 





Table 2: JPRS and Peers Performance Summary as of September 2012 

JPRS GDST BTON BAJA KRAS 

Sales [IDR, bn] 244 1,222 118 779 15,878 

Gross Profit [IDR, bn] 15 112 23 56 1,150 

Net Profit [IDR, bn] 4 36 19 14 8 

Total Asset [IDR, bn] 377 1,164 144 840 23,376 

Total Liabilities [IDR, bn] 35 382 36 588 13,254 

Total Equity [IDR, bn] 342 782 107 252 10,122 

Growth YoY 

Sales [%] (41.2) (22.3) 2.9 24.7 25.5 

Gross Profit [%] (69.8) (48.1) 25.9 129.9 (5.0) 

Net Profit [%] (86.3) (64.4) 57.8 (13.8) (99.3) 

Profitability 

Gross Margin [%] 6.1 9.2 19.3 7.2 7.2 

Net Margin [%] 1.5 3.0 16.0 1.8 0.0 

ROA [%] 1.0 3.1 13.1 1.6 0.0 

ROE [%] 1.1 4.6 17.5 5.4 0.1 

Leverage 

DER [x] 0.1 0.5 0.3 2.3 1.3 

Source: PT Jaya Pari Steel Tbk, PT Gunawan Dianjaya Steel Tbk, PT Betonjaya Manunggal Tbk, PT Saranacentral Bajatama Tbk, PT Krakatau 

Steel Tbk, Pefindo Equity & Index Valuation Division 


TARGET PRICE 




VALUATION 

Methodology 


We apply Discounted Cash Flow (DCF) method as the main valuation 

approach considering the income growth is a value driver in JPRS instead of 

asset growth. 

Furthermore, we also apply Guideline Company Method (GCM) as comparison 

method. 

This valuation is based on 100% shares price as of March 19, 2013, using 

JPRS’s financial report as of September 30, 2012, for our fundamental 

analysis. 

Value Estimation 

We use Cost of Capital of 13.5% and Cost of Equity of 13.5% based on the 

following assumptions: 

Table 3: Assumption 

Risk free rate [%]* 5.5 

Risk premium [%]* 7.6 

Beta [x]* 1.0 

Cost of Equity [%] 13.5 

Marginal tax rate [%] 25.0 

WACC [%] 13.5 

Source: Bloomberg, Pefindo Equity & Index Valuation Division Estimates 

Notes: * As of March 19, 2013 

Target price for 12 months based on valuation as per March 19, 2013 is as 

follows: 

Using DCF method with discount rate assumption 13.5% is IDR430 – 

IDR470 per share. 

Using GCM method (PBV 1.9X and P/E 18.1X) is IDR280 – IDR880 

per share. 

In order to obtain a value which represents both value indications, we have 

weighted both DCF and GCM methods by 70%:30%. 

Based on the above calculation, target price of JPRS for 12 month is IDR380 

– IDR590 per share 

Table 4: Summary of DCF Method Valuation 

Conservative Moderate Aggressive 

PV of Free Cash Flows – IDR bn 62 65 68 

PV Terminal Value – IDR bn 250 263 276 

Non-Operating Assets – IDR bn 7 7 7 

Total Equity Value – IDR bn 319 336 352 

Number of Share, mn shares 750 750 750 

Fair Value per Share, IDR 430 450 470 

Source: Pefindo Equity & Index Valuation Division Estimates 





Table 5: GCM Comparison 

Valuation, March 19, 2013 

JPRS GDST BAJA Average 

P/E, [x] 18.2 12.9 23.3 18.1 

P/BV, [x] 0.8 1.1 3.8 1.9 


Table 6: Summary of GCM Method Valuation 

Multiples 

(x) 

Est. EPS 

(IDR) 

Est. BV/Share 

(IDR) 


Value 

(IDR) 

P/E 18.1 15 - 280 

P/BV 1.9 - 460 880 


Table 7: Fair Value Reconciliation 

Fair Value per Share [IDR] 

DCF GCM Average 

Upper limit 470 880 590 

Bottom limit 430 280 380 

Weight 70% 30% 

Source: Pefindo Equity & Index Valuation Division Estimates 


Table 8: Consolidated Statements of Comprehensive 

Income 

(IDR billion) 2009 2010 2011 2012P 2013P 

Net Sales 303 428 641 461 533 

COGS (267) (372) (585) (432) (488) 

Gross Profit 35 56 57 29 45 

Operating Expense (34) (17) (9) (14) (16) 

Pre-tax Profit 1 39 48 15 29 

Tax (1) (10) (11) (4) (7) 

Net Profit 1 28 37 11 22 

Source: PT Jaya Pari Steel Tbk., Pefindo Equity & Index Valuation Division Estimates 

Table 9: Consolidated Statements of Financial Position 

Assets 

(IDR billion) 2009 2010 2011 2012P 2013P 

Current Assets 

Cash and cash 

equivalents 




1 49 12 32 41 

Receivables 128 94 192 160 185 

Inventory 79 117 94 57 66 

Other Assets 9 26 7 23 23 

Total Current Assets 218 286 305 272 315 

Fixed Assets 19 18 15 15 15 

Other Assets 117 108 118 118 118 

Total Assets 354 411 438 404 448 

Liabilities 

Trade payables 73 93 80 35 60 

Other Short-term 

payables 

3 11 10 12 13 

Other long-term payables 7 8 10 10 10 

Total Liabilities 82 111 100 58 84 

Total Equity 272 300 338 347 364 


Figure 6: Historical P/E and P/BV 


Source: PT Jaya Pari Steel Tbk., Pefindo Equity & Index Valuation Division 

Figure 7: Historical ROA, ROE and TAT 

Source: PT Jaya Pari Steel Tbk., Pefindo Equity & Index Valuation Division 

Table 10 :Key Ratios 

Growth [%] 

Ratio 2009 2010 2011 2012P 2013P 

Sales (58.7) 41,2 49.9 (28.1) 15.6 

Operating Profit (98.2) 2,815.2 24.4 (68.5) 92.2 

EBITDA (97.6) 2,102.5 22.6 (62.3) 74.4 

Net Profit (99.0) 5,437.5 31.5 (69.7) 92.2 

Profitability [%] 

Gross Margin 11.7 13.0 8.9 6.3 8.4 

Operating Margin 0.4 9.0 7.5 3.3 5.5 

EBITDA Margin 0.6 9.5 7.8 4.1 6.2 

Net Margin 0.2 6.7 5.8 2.5 4.1 

ROA 0.1 6.9 8.5 2.8 4.9 

ROE 0.2 9.5 11.1 3.3 6.0 

Solvability [X] 

Debt to Equity 0.3 0.4 0.3 0.2 0.2 

Debt to Asset 0.2 0.3 0.2 0.1 0.2 

Liquidity [X] 

Current Ratio 2.9 2.8 3.4 5.8 4.3 

Quick Ratio 1.2 1.4 1.2 1.8 1.4 

Source: PT Jaya Pari Steel Tbk. Pefindo Equity & Index Valuation Division Estimates 





DISCLAIMER 


This report was prepared based on the trusted and reliable sources. Nevertheless, we do not 

guarantee its completeness, accuracy and adequacy. Therefore we do not responsible of any 

investment decision making based on this report. As for any assumptions, opinions and 

predictions were solely our internal judgments as per reporting date, and those judgments are 

subject to change without further notice. 

We do not responsible for mistake and negligence occurred by using this report. Last 

performance could not always be used as reference for future outcome. This report is not an 

offering recommendation, purchase or holds particular shares. This report might not be suitable 

for some investors. All opinion in this report has been presented fairly as per issuing date with 

good intentions; however it could be change at any time without further notice. The price, value 

or income from each share of the Company stated in this report might lower than the investor 

expectation and investor might obtain lower return than the invested amount. Investment is 

defined as the probable income that will be received in the future; nonetheless such return may 

possibly fluctuate. As for the Company which its share is denominated other than Rupiah, the 

foreign exchange fluctuation may reduce the value, price or investor investment return. This 

report does not contain any information for tax consideration in investment d ecision making. 

The share price target in this report is a fundamental value, not a fair market value nor a 

transaction price reference required by the regulations. 

The share price target issued by Pefindo Equity & Index Valuation Division is not a 

recommendation to buy, sell or hold particular shares and it could not be considered as an 

investment advice from Pefindo Equity & Index Valuation Division as its scope of service to, or 

in relation to some parties, including listed companies, financial adv isor, broker, investment 

bank, financial institution and intermediary, in correlation with receiving rewards or any other 

benefits from that parties. 

This report is not intended for particular investor and cannot be used as part of investment 

objective on particular shares and neither an investment recommendation on particular shares 

or an investment strategy. We strongly recommended investor to consider the suitable situation 

and condition at first before making decision in relation with the figure in thi s report. If it is 

necessary, kindly contact your financial advisor. 

PEFINDO keeps the activities of Equity Valuation separate from Ratings to preserve 

independence and objectivity of its analytical processes and products. PEFINDO has established 

policies and procedures to maintain the confidentiality of certain non -public information 

received in connection with each analytical process. The entire process, methodology and the 

database used in the preparation of the Reference Share Price Target Report as a whole is 

different from the processes, methodologies and databases used PEFINDO in doing the rating. 

This report was prepared and composed by Pefindo Equity & Index Valuation Division with the 

objective to enhance shares price transparency of listed companies in Indonesia Stock Exchange (IDX). 

This report is also free of other party’s influence, pressure or force either from IDX or the listed company 

which reviewed by Pefindo Equity & Index Valuation Division. Pefindo Equity & Index Valuation 

Division will earn reward amounting to IDR 20 mn each from IDX and the reviewed company for issuing 

report twice per year. For further information, please visit our website at http://www.pefindo.com 

This report is prepared and composed by Pefindo Equity & Index Valuation Division. In 

Indonesia, this report is published in our website and in IDX website. 

March 20, 2013 Page 10 of 10

Jaya Pari Steel, Tbk - PT. PEFINDO

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