Meeting Garuda Indonesia’s subsidiary

In Indonesia last week and visited Garuda Maintenance Facility Aero Asia Tbk (GMFI), which is 90% owned by PT Garuda Indonesia.

Written by

David Chow, CFA

Director
Azure Capital

Feb 7, 2019

In Indonesia last week and visited Garuda Maintenance Facility Aero Asia Tbk (GMFI), which is 90% owned by PT Garuda Indonesia. I met up with their head of IR Pak Andromeda.GMFI is the largest maintenance, repair, and overhaul companies in Indonesia with a domestic market share reaching around 32% in terms of value and accounted for around 80% of the company’s revenue. Given that Indonesia is a vast archipelago, meaning it is dependent on-air transportation to transport people and goods. Based on data supplied by CAMRO, the total MRO business in Indonesia is expected to grow by 4-year CAGR of 11% in 2017 – 2021. In addition, with GMFI’s operational areas located in higher growth MRO markets like the Asia Pacific, making it well placed to expand its business further.Investors were previously concerned with their over-reliance on their parent Garuda for business as Garuda once accounted for 74% of GMFI business. The company recognises this concern and has worked hard to reduce this reliance. In 2018, Garuda related business is expected to fall to 52% of total revenue. In 2018, GMFI has signed partnership agreements. One of which was with Air France Industry where GMFI will get brand and technological know-how in airframe, component & engine maintenance and potential market flow. GMFI has also planned a couple of organic and inorganic initiatives for 2019.GMFI is trading at 7.3x FY19 PE compared to SIA Engineering’s 16.9x FY19 PE and ST Engineering’s 18.5x FY19 PE.