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ASII, very cheap at less than 2X capital paid
Current 6,075 Target 17,445 (+187%)

October 29th, 2021
1 minute read

Sales up 8%

• Sales grew by 8% in the third quarter to 60,002 billion rupiah which is just above our forecast 59,042 billion rupiah
• This brings the quarterly average growth to 10%
• We predict average growth of 4% in this next 12 months to bring sales to 70,757 billion rupiah in the third quarter of 2022.

Costs lower

• The cash cost ratio was lower at -79% in the third quarter & net profit increased to 7,918 billion rupiah.
• The Cashflow cost ratio is now at -80%
• We use the latest -79% cost ratio to predict a 10,879 billion rupiah profit in the third quarter of 2021.

Data file & model

Cashflow to rise to 12 trillion rupiah

• Free cashflow was slightly lower at 6,441 billion rupiah in the third quarter as investment spending increased to -3,862 billion rupiah.
• Average quarterly Cashflow is now at 7,217 billion rupiah.
• We assume lower -1,866 billion rupiah investment spending which with higher sales gives a 12,680 billion rupiah Cashflow in the third quarter of 2021.

Balance sheet, higher leverage

• Cash increased from 58,000 to 60,538 billion rupiah in the third quarter.
• Liabilities increased from 150,000 to 152,663 billion rupiah so net cash worsened from -92,000 to -92,125 billion rupiah
• With our forecast cashflow & a -19,935 billion rupiah equity payout net cash will be -64,986 billion rupiah in 12 months time.

Valuation very cheap at less than 2X capital paid

• ASII capital from the last six years increased to 89,615 billion rupiah in the third quarter & will rise to 136,690 billion rupiah in the next 12 months.
• At the current market value of 245,900 billion rupiah (so less than 2X the capital) based on our forecasts it’s at 0.69X assets with a 6.3 years payback & an 8% yield.
• Our cashflow forecast is 47,075 billion rupiah which means an 5.2X valuation. At a 15X valuation gives a 187% higher target price of 17,445 rupiah.