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BKSL
Sentul City, Rp250bn hidden cashflow?
🎯 🏡 📈 ➡️ Rp125
12m Free cashflow minus Rp546bn 54/76
January 10th, 2020
⏰ 1 minute read
⏰ 1 minute read
Rp250bn hidden cashflow?
Sales
On the face of it, very tough times for BKSL with a dramatic drop in property sales & a total sales decline of 40% in the last 12 months. But we note an appreciation of the rupiah now which can allow rupiah interest states to fall & could jump start property sales. We are forecasting a weak 4Q, but a return to 5% sales growth over the next 12 months to Rp1.1tn.
Cash flow
On the face if it, the cash flow is even worse. There’s hardly been any positive operating cash flow in the last 5 years & the total free cash flow is minus Rp2.7tn since 2015. But the last 12 months has seen some improvement of the trend & if we strip out the working capital the ‘hidden’ free cash flow is a positive Rp250bn! Assuming a return to sales growth & positive working capital, we predict Rp244bn free cash flow over the next 12 months.
Balance sheet
BKSL has raised both debt & equity. Just over Rp2tn of equity in 2017 & net debt has increased from Rp1tn at the beginning of 2015 to now Rp2.3tn. The total assets has now reached Rp17tn out of which Rp5tn is in non cash short term assets. With our forecast free cash flow, net debt would decline to Rp2.1tn over 12 months.
Profit
Even after adding back the working capital, the reported net profit is still far ahead of the cash flow because about half of the interest has been capitalized. We assume this continues & net margins stay high, around the 30% level which were at in the 3Q,. The last 12 months profit was Rp353bn & our forecast for the next 12 months is Rp327bn.
On the face of it, very tough times for BKSL with a dramatic drop in property sales & a total sales decline of 40% in the last 12 months. But we note an appreciation of the rupiah now which can allow rupiah interest states to fall & could jump start property sales. We are forecasting a weak 4Q, but a return to 5% sales growth over the next 12 months to Rp1.1tn.
Cash flow
On the face if it, the cash flow is even worse. There’s hardly been any positive operating cash flow in the last 5 years & the total free cash flow is minus Rp2.7tn since 2015. But the last 12 months has seen some improvement of the trend & if we strip out the working capital the ‘hidden’ free cash flow is a positive Rp250bn! Assuming a return to sales growth & positive working capital, we predict Rp244bn free cash flow over the next 12 months.
Balance sheet
BKSL has raised both debt & equity. Just over Rp2tn of equity in 2017 & net debt has increased from Rp1tn at the beginning of 2015 to now Rp2.3tn. The total assets has now reached Rp17tn out of which Rp5tn is in non cash short term assets. With our forecast free cash flow, net debt would decline to Rp2.1tn over 12 months.
Profit
Even after adding back the working capital, the reported net profit is still far ahead of the cash flow because about half of the interest has been capitalized. We assume this continues & net margins stay high, around the 30% level which were at in the 3Q,. The last 12 months profit was Rp353bn & our forecast for the next 12 months is Rp327bn.
Rp244bn free cashflow
Value
BKSL shares are trading at 4x our sales forecast which is only 1/17th of the total assets or 0.06x! The shares are also only 0.39x the equity value with a profitability of 2% if we use our forecast operating cash flow. It’s a classic property company with very low asset turnover, we use a 20x PE to get a target price of Rp125.
BKSL shares are trading at 4x our sales forecast which is only 1/17th of the total assets or 0.06x! The shares are also only 0.39x the equity value with a profitability of 2% if we use our forecast operating cash flow. It’s a classic property company with very low asset turnover, we use a 20x PE to get a target price of Rp125.
