Feb 24, 2011

Jababeka to sign JOA with PLN

Bekasi Power, a subsidiary of PT Jababeka Tbk(KIJA), will sign a joint operation agreement (JOA) today, with regards to the long-delayed power plant project. The JOA will have a tenor of 20 years.
PLN will be the 100% off-taker of the 130MW gas fired power plant capacity. In the mean time, BP will have an option to buy back electricity from PLN to ensure supply to the industrial tenants within Jababeka Industrial Estate. Scheduled COD of the power plant is December 2011.
In an investor digest published by Mandiri Sekuritas today, the power plant deal with PLN is the main catalyst for KIJA that people has been expecting since early of 2010.
KIJA would potentially obtain some US$80 million of annual power revenues (US$28 million of EBITDA), which expected to contribute 75% of total revenue onwards. Our 2011F valuation stands KIJA at Rp455/share.
"We call buy with target price Rp133/share that we may revise higher, reducing discount that we put earlier due to the lingering deal. The stock currently trades at a very attractive 77% discount to our RNAV11F and PE11F 6.1x." Jababeka surges 17.31% to Rp122 per share this morning.

Disclosure: No position at the stock mentioned above.  

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