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BWPT
Eagle High Plantations, Palmoil price surge
🎯🌴📈➡️ Rp260
12m Free cash flow -Rp266bn ⬆️⬆️
July 30th, 2020
⏰ 1 minute read
⏰ 1 minute read
Watch the 3 minute explainer using the data file & model ⬇️
Sales
BWPT 2Q sales growth -15% was lower than we expected and back down to the 2016 lows. Sales fell sharply -35% from the 1Q, as production and price were lower. The price has jumped in July by 40%, so we expect a recovery in sales starting from the 3Q. That means +16% growth in the next 12 months to Rp2.94tn.
Cashflow
Cashflow was back to negative -Rp146bn in 2Q, excluding working capital, because of lower sales. Investment spending is still low. But the last 12 months cashflow continues to improve to -Rp266bn in the last 12 months from -Rp523bn in the 1Q. With sales growth and low investment spending, we forecast the next 12 months free cashflow will be positive Rp261bn.
BWPT 2Q sales growth -15% was lower than we expected and back down to the 2016 lows. Sales fell sharply -35% from the 1Q, as production and price were lower. The price has jumped in July by 40%, so we expect a recovery in sales starting from the 3Q. That means +16% growth in the next 12 months to Rp2.94tn.
Cashflow
Cashflow was back to negative -Rp146bn in 2Q, excluding working capital, because of lower sales. Investment spending is still low. But the last 12 months cashflow continues to improve to -Rp266bn in the last 12 months from -Rp523bn in the 1Q. With sales growth and low investment spending, we forecast the next 12 months free cashflow will be positive Rp261bn.
16% sales growth, positive cash flow, lower debt & a high share price...
Balance sheet
Net debt while still high has stabilized as the free cashflow has improved. 2Q net debt was Rp9.26tn, which is higher than the 1Q Rp9.02tn, but still better than the Rp9.3tn in the 2Q of last year. With our forecast for positive cashflow, the net debt will improve further to Rp9tn in 12 months time, with no dividend pay out.
Profit
The sharply lower sales from 1Q to 2Q doubles the net loss from -Rp146bn to -Rp282bn. That’s also slightly higher than a year ago, -Rp243bn. Cash costs fell sharply too to Rp598bn from Rp736bn in the 1Q. We use the average of the last four quarters cash costs which is Rp667bn to get a next 12 months lower loss -Rp372bn.
Value
BWPT current market value has improved to Rp3.8tn. That’s 1.3x our 12 month sales forecast, only 0.26x the value of the assets and 1.01x the forecast equity value with no profitability yet. Yield is still 0%. We use our 1.6% cashflow valuation with a 50% discount because of the high debt level. This gives a higher target price or Rp259.
Net debt while still high has stabilized as the free cashflow has improved. 2Q net debt was Rp9.26tn, which is higher than the 1Q Rp9.02tn, but still better than the Rp9.3tn in the 2Q of last year. With our forecast for positive cashflow, the net debt will improve further to Rp9tn in 12 months time, with no dividend pay out.
Profit
The sharply lower sales from 1Q to 2Q doubles the net loss from -Rp146bn to -Rp282bn. That’s also slightly higher than a year ago, -Rp243bn. Cash costs fell sharply too to Rp598bn from Rp736bn in the 1Q. We use the average of the last four quarters cash costs which is Rp667bn to get a next 12 months lower loss -Rp372bn.
Value
BWPT current market value has improved to Rp3.8tn. That’s 1.3x our 12 month sales forecast, only 0.26x the value of the assets and 1.01x the forecast equity value with no profitability yet. Yield is still 0%. We use our 1.6% cashflow valuation with a 50% discount because of the high debt level. This gives a higher target price or Rp259.
