Jasa Marga, Implementing regulation could be out soon, Deutsche Bank

Implementing regulation could be out soon
The implementing regulation draft on new land law was submitted to the
State Secretary last week. It is currently under review before being submitted
to the President for approval. Overall, we believe there is a high
probability that this regulation could be out soon (even in this month).

24 toll roads to be excluded from new land law
The Minister of Public Works urges the National Land Authority (BPN) to
exempt 24 toll roads, which have secured their location permits, from applying
new land law as this would reset back their land acquisition progress
from zero again. Based on new land law, the land procurement would take
maximum of 442 working days (<1.25 years).
Good news for Jasa Marga; reiterate Buy rating with TP of Rp6,575
We rate JSMR as one of prime beneficiary from this land reform as this
helps the company to address its land procurement process. Indeed, we
expect completion of its nine toll roads (211km; US$2.7bn) in the pipeline
to translate into 1) better salary cost efficiency amid zero employment policy,
2) higher traffic volume following interconnection with existing toll
roads, 3) IRR improvement given these are more profitable projects, and 4)
enhance its equity value by ~22% . Overall, we reiterate Buy on the stock
with more than 40% upside from current level.