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CLEO, expensive so a 12% higher target price
Current, target price 490, 549 (+12%)

October 25th, 2021
1 minute read

Sales disappointing decline
  • Sales declined by -6% in the third quarter to 274 billion rupiah which is below our forecast 298 billion rupiah.
  • This brings the average quarterly growth to 6%.
  • We predict average growth of 5% in this next 12 months to bring sales to 333 billion rupiah in the third quarter of 2022.

Costs up slightly
  • The cash cost ratio was slightly higher at -76% in the third quarter & profit was slightly lower at 45 billion rupiah.
  • Cashflow costs jumped to -93% on working capital.
  • We use the latest -76% costs to predict a 59 billion rupiah profit in the third quarter of 2022.
Cashflow much lower on working capital
  • Cashflow was much lower at 10 billion rupiah even with lower investment spending of -10 billion rupiah in the third quarter because of the working capital.
  • Average quarterly Cashflow is now at 48 billion rupiah.
  • We use the same -10 billion rupiah investment spending which with higher sales gives a higher 71 billion rupiah cashflow in the third quarter of 2022.

Balance sheet, flat
  • Cash declined from 91 to 15 billion rupiah in the third quarter.
  • Liabilities also declined from 436 to 368 billion rupiah so net cash was slightly worse from -345 to -353 billion rupiah.
  • With our forecast cashflow & a -65 billion rupiah equity payout, net cash will improve sharply to -154 billion rupiah in 12 months time.

Value, expensive so a 12% higher target price
  • CLEO capital from the last five years improved to -282 billion rupiah in the third quarter & will be -198 billion rupiah in 12 months time.
  • At the current market value of 5,877 billion rupiah, based on our forecasts, it’s at 4.1X assets with a 5.1 years payback & a 1.1% yield.
  • Our free cashflow forecast is 264 billion rupiah which is a 22X valuation. At a 25X valuation gives a 12% higher target price of 549 rupiah.