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ASII, auto rising back
🎯 🚗 📈 Rp11,609
Last 12-month cashflow +Rp40tn ⬆️
October 27th, 2020
⏰ 1 minute read
⏰ 1 minute read
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Sales
Sales growth was -33% from a year ago in the 3Q at Rp40.5tn, the 6th quarter in a row of negative growth. Sales were 13% below our forecast, 13% higher than the 2Q. Auto jumped +66% from the 2Q,, heavy equipment & palm oil declined -11% & -4%. We expect sales to rise back to Rp50tn by the 3Q 2021.
Cashflow
Despite the drop in sales, 3Q cashflow was strong. Operating cashflow was a record Rp15tn, investment was still positive Rp1tn & working capital was -Rp1tn = Rp15tn. The last 2 quarters annualized cashflow is Rp58tn! With a return to investment spending & our sales forecast, we predict a more modest Rp4tn a quarter of cashflow in this next 12 months.
Sales growth was -33% from a year ago in the 3Q at Rp40.5tn, the 6th quarter in a row of negative growth. Sales were 13% below our forecast, 13% higher than the 2Q. Auto jumped +66% from the 2Q,, heavy equipment & palm oil declined -11% & -4%. We expect sales to rise back to Rp50tn by the 3Q 2021.
Cashflow
Despite the drop in sales, 3Q cashflow was strong. Operating cashflow was a record Rp15tn, investment was still positive Rp1tn & working capital was -Rp1tn = Rp15tn. The last 2 quarters annualized cashflow is Rp58tn! With a return to investment spending & our sales forecast, we predict a more modest Rp4tn a quarter of cashflow in this next 12 months.
Sales recovery, strong cashflow, lower debt, rising capital payouts, higher shares...
Balance sheet
Because of investments & negative cashflow, the balance sheet has been in net debt. In the first quarter the net debt was Rp70.4tn. But with asset sales & positive cashflow, net debt has fallen to Rp38.6tn in the 3Q. With our forecast positive cashflow & a dividend payment of Rp6.3tn, net debt will decline to Rp28tn in 12 months time.
Profit
With sales down -33%, net profit was down -58% from a year ago as other income declined & the cash cost ratio of net profit add back depreciation minus sales as a % of sales increased to 89% from 88% last year. We use 88% as sales recover to predict the next 12 months profit is -8.7% lower at Rp21.2tn.
Value
ASII increasing debt while paying out capital is a mystery to us... but now the debt is reducing & they are paying. At Rp218.6tn, it’s 1.16x sales, 0.63x assets, 1.04x equity with a 10% profitability & 3% yield. Our cashflow forecast is higher, Rp16.7tn. At 1.6% with a 0.45x adjustment, because of the debt, gives a higher target price Rp11,609.
Because of investments & negative cashflow, the balance sheet has been in net debt. In the first quarter the net debt was Rp70.4tn. But with asset sales & positive cashflow, net debt has fallen to Rp38.6tn in the 3Q. With our forecast positive cashflow & a dividend payment of Rp6.3tn, net debt will decline to Rp28tn in 12 months time.
Profit
With sales down -33%, net profit was down -58% from a year ago as other income declined & the cash cost ratio of net profit add back depreciation minus sales as a % of sales increased to 89% from 88% last year. We use 88% as sales recover to predict the next 12 months profit is -8.7% lower at Rp21.2tn.
Value
ASII increasing debt while paying out capital is a mystery to us... but now the debt is reducing & they are paying. At Rp218.6tn, it’s 1.16x sales, 0.63x assets, 1.04x equity with a 10% profitability & 3% yield. Our cashflow forecast is higher, Rp16.7tn. At 1.6% with a 0.45x adjustment, because of the debt, gives a higher target price Rp11,609.
