## CENT, almost making money

🎯 📡 📈 Rp95

Last 12-month cashflow -Rp 1,941 billion ⬆️

## Watch the 1 minute explainer ⬇️

Sales

We had expected sales momentum to slow down & it did in the third quarter. Growth was +1% compared to the second quarter & at Rp 292 billion, just slightly above our forecast Rp 290 billion. Tower revenues were stronger though at +5% & we still see sales rising +22.3% further in this next 12 months to Rp 1.26 trillion.

Cashflow

Cashflow was finally positive at Rp 1 bn in the third quarter, if we exclude negative working capital. That’s close to our 0 forecast. Investment spending was higher than we expected, so we raise our spending forecast slightly. When combined with our sales prediction, this gives a still negative -Rp 4 billion average quarterly cashflow in this next 12 months.

We had expected sales momentum to slow down & it did in the third quarter. Growth was +1% compared to the second quarter & at Rp 292 billion, just slightly above our forecast Rp 290 billion. Tower revenues were stronger though at +5% & we still see sales rising +22.3% further in this next 12 months to Rp 1.26 trillion.

Cashflow

Cashflow was finally positive at Rp 1 bn in the third quarter, if we exclude negative working capital. That’s close to our 0 forecast. Investment spending was higher than we expected, so we raise our spending forecast slightly. When combined with our sales prediction, this gives a still negative -Rp 4 billion average quarterly cashflow in this next 12 months.

## Sales Growth slows, tiny positive cashflow, debt a little lower, but we still have a lower target price...

Balance sheet

The balance sheet net debt has expanded fast over the last one year, from Rp 1.48 trillion to now Rp 3.68 trillion. But that is better than the Rp 3.86 trillion in the second quarter.. With our forecast cashflow & assuming there’s no dividend payment, the net debt would be a fraction under Rp 4 trillion in 12 months time.

Profit

The net loss was larger in the third quarter, Rp 61 billion from the second quarter Rp 34 billion. That’s partly because depreciation is, +45% from last year. The cash cost ratio of profit add depreciation minus sales as a % of sales was 73%. We use the average 64% to predict a next 12 months loss -Rp 64 billion.

Value

CENT has raised Rp 3.5 trillion of capital in the last five years & we see this staying flat in the next 12 months. At Rp 4.09 trillion, it’s 3.24X sales, 0.51X assets, 1.67X equity with no profitability or yield yet. We use operating cashflow Rp 496 billion at a 10X multiple which gives a lower target price of Rp95.

The balance sheet net debt has expanded fast over the last one year, from Rp 1.48 trillion to now Rp 3.68 trillion. But that is better than the Rp 3.86 trillion in the second quarter.. With our forecast cashflow & assuming there’s no dividend payment, the net debt would be a fraction under Rp 4 trillion in 12 months time.

Profit

The net loss was larger in the third quarter, Rp 61 billion from the second quarter Rp 34 billion. That’s partly because depreciation is, +45% from last year. The cash cost ratio of profit add depreciation minus sales as a % of sales was 73%. We use the average 64% to predict a next 12 months loss -Rp 64 billion.

Value

CENT has raised Rp 3.5 trillion of capital in the last five years & we see this staying flat in the next 12 months. At Rp 4.09 trillion, it’s 3.24X sales, 0.51X assets, 1.67X equity with no profitability or yield yet. We use operating cashflow Rp 496 billion at a 10X multiple which gives a lower target price of Rp95.