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DSMG, seasonally lower sales
Current, target price Rp640, 2,227 (+248%)

April 29th , 2021
1 minute read

Sales, down seasonally
  • Sales declined seasonally by -29% in the first quarter to 1,637 billion rupiah, which is -26% compared to our forecast.
  • This is after a 88% increase in the fourth quarter & brings the quarterly average growth to 9%.
  • We predict average growth of 8% a quarter in this next 12 months which will bring sales to 2,191 billion rupiah by the first quarter of 2022.

Cashflow, down too
  • Cashflow was positive 39 billion rupiah in the first quarter down from positive 269 billion rupiah in the fourth quarter.
  • Average quarterly cashflow is now positive 98 billion rupiah.
  • We use flat investment spending of -157 billion rupiah, which with higher sales, gives a higher average quarterly cashflow of 266 billion rupiah in this next 12 months.

Sales seasonally lower although more than expected, margins & cashflow too, but still positive, expecting higher ahead & at only 0.47X assets, a much higher target price...

Balance sheet, de leveraging
  • With positive cashflow, the net leverage of cash minus total liabilities was -7,251 billion rupiah in the first quarter from -7,272 billion rupiah in the fourth quarter & -7,829 billion rupiah a year ago.
  • With our forecast higher cashflow & assuming a dividend payout of -110 billion rupiah...
  • ...net cash will be -6,297 billion rupiah in 12 months time.

Profit, margins down
  • Net profit was down to 99 billion rupiah in the first quarter from 316 billion rupiah in the fourth quarter.
  • The cash cost ratio of net profit add back non cash costs minus sales as a percent of sales was up to -85%.
  • We use recent average -81% costs, to predict a higher next 12 months profit of 1,105 billion rupiah.

Value, only 0.47X assets
  • DSNG cumulative net capital is at -1,089 billion rupiah for the last six years.
  • At the current market value of 6,693 billion rupiah, based on forecasts it’s 0.75X sales, 0.47X assets, 0.91X equity, with a 3.7% profitability & a 1.7% yield.
  • Our free cashflow forecast is 1,065.5 billion rupiah. At 1.6% with a 0.35X adjustment, gives a 248% higher target price of 2,227 rupiah.