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DCII, expensive valuation
Current, target price Rp23,750, 13,654 (-43%)
- Sales seasonally lower,
- margins very strong,
- cashflow less & less negative,
- but high valuation, 20X assets…
June 5th, 2021
1 minute read
Sales, seasonally lower
Cashflow, less negative
1 minute read
Sales, seasonally lower
- Sales declined seasonally by -16% in the first quarter to 172 billion rupiah, which is -35% compared to our forecast.
- This is after a 11% increase in the fourth quarter & brings the quarterly average growth to 7%.
- We predict average growth of 8% a quarter in this next 12 months which will bring sales to 263 billion rupiah by the first quarter of 2022.
Cashflow, less negative
- Cashflow improved to -64 billion rupiah in the first quarter after -225 billion rupiah in the fourth quarter on lower investment.
- Average quarterly cashflow is now negative -129 billion rupiah.
- We use flat investment spending of -141 billion rupiah, which with higher sales, gives a lower negative average quarterly cashflow of -11 billion rupiah in this next 12 months.
Balance sheet, leverage flat
Profit, higher margins
Value, high
- The net leverage of cash minus total liabilities was -1,538 billion rupiah in the first quarter from -1,637 billion rupiah in the fourth quarter & -1,483 billion rupiah a year ago.
- With our forecast higher cashflow & assuming there is no dividend payout of ...
- ...net leverage will be -1,680 billion rupiah in 12 months time.
Profit, higher margins
- Net profit was lower at 48 billion rupiah in the first quarter from 65 billion rupiah in the fourth quarter as non cash costs increase.
- The cash cost ratio of net profit add back non cash costs minus sales as a percent of sales was down to -53%.
- We use the same -53% costs, to predict a 2X higher next 12 months profit of 417 billion rupiah.
Value, high
- DCII cumulative net capital is at -1,299 billion rupiah from the last four years.
- At the current market value of 56,613 billion rupiah, based on forecasts it’s 51X sales, 20X assets, 50X equity, with a 37% profitability & no yield yet.
- Our free cashflow forecast is 521 billion rupiah. At 1.6% with a 1X adjustment, gives a -43% lower target price of 13,654 rupiah.
