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CPIN, heading to net cash
🎯 🐓 📈Rp9,366
Last 12 months cashflow +Rp1,534bn ⬆️
September 18th, 2020
⏰ 1 minute read
⏰ 1 minute read
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Sales
Sales were down -9% in the 2Q, after a -4% decline in the 1Q & were 8% below our forecast. Feed was down -15%, broiler -2%, chicks -21% while processed chicken was +15%. Food shopping was the main story of the 2Q. We expect sales to now rise again from the 3Q Rp13.7tn back up to Rp15tn by the 4Q.
Cashflow
Cashflow was a positive +Rp303bn in the 2Q excluding working capital. Cashflow been lower in recent years as sales slowed & investment increased, but the investment is now coming back down again. Assuming investment continues at this lower level & sales start to increase again, we predict a higher average quarterly free cashflow of Rp683bn in this next 12 months.
Sales were down -9% in the 2Q, after a -4% decline in the 1Q & were 8% below our forecast. Feed was down -15%, broiler -2%, chicks -21% while processed chicken was +15%. Food shopping was the main story of the 2Q. We expect sales to now rise again from the 3Q Rp13.7tn back up to Rp15tn by the 4Q.
Cashflow
Cashflow was a positive +Rp303bn in the 2Q excluding working capital. Cashflow been lower in recent years as sales slowed & investment increased, but the investment is now coming back down again. Assuming investment continues at this lower level & sales start to increase again, we predict a higher average quarterly free cashflow of Rp683bn in this next 12 months.
Sales to rise again. Higher cashflow, heading to net cash, increasing payouts, higher share price...
Balance sheet
The balance sheet has been net debt & despite recently lower cashflow, net debt has steadily reduced. From Rp7.5tn in 2015, net debt is Rp1.6tn as of 2Q & has halved since the 4Q thanks to positive working capital. With our forecast higher cashflow ahead & including the recent dividend, net debt will be only Rp188bn in 12 months time.
Profit
With the -9% decline in sales, net profit was down by a larger -20% as the cash cost ratio of net profit add back depreciation minus sales as a % of sales increased slightly from 92% to 93%. We use the lower 92% as sales now recover to predict a next 12 months net profit of Rp3.7tn, higher by +3.7%.
Value
CPIN has been paying out capital as we see from the lower debt & this is now accelerating. At Rp98.4tn it’s 1.88x sales, 2.96x assets, 3.92x equity with 14.7% profitability & a 1.35% yield. We raise our cashflow forecast to Rp2.7tn. At 1.6% with a 0.9x adjustment as they head to net cash, gives a higher target price of Rp9,366.
The balance sheet has been net debt & despite recently lower cashflow, net debt has steadily reduced. From Rp7.5tn in 2015, net debt is Rp1.6tn as of 2Q & has halved since the 4Q thanks to positive working capital. With our forecast higher cashflow ahead & including the recent dividend, net debt will be only Rp188bn in 12 months time.
Profit
With the -9% decline in sales, net profit was down by a larger -20% as the cash cost ratio of net profit add back depreciation minus sales as a % of sales increased slightly from 92% to 93%. We use the lower 92% as sales now recover to predict a next 12 months net profit of Rp3.7tn, higher by +3.7%.
Value
CPIN has been paying out capital as we see from the lower debt & this is now accelerating. At Rp98.4tn it’s 1.88x sales, 2.96x assets, 3.92x equity with 14.7% profitability & a 1.35% yield. We raise our cashflow forecast to Rp2.7tn. At 1.6% with a 0.9x adjustment as they head to net cash, gives a higher target price of Rp9,366.
