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DSNG
Dharma Satya, strong growth
🎯🌴📈➡️Rp756
Free cash flow -Rp28bn ⬆️
August 4th, 2020
⏰ 1 minute read
⏰ 1 minute read
Watch the 3 minute explainer using the data file & model ⬇️
Sales
DSNG sales growth was +29% in 2Q. That was slightly [3%] above our forecast. Fruit production was up +1% from a year ago, which is the best performance of all the palm oil stocks we updated so far. With the price rising sharply in July we expect sales growth to continue and forecast +13.8% for the next 12 months, Rp7.18tn.
Cashflow
Cashflow was also strong in the 2Q at Rp128bn excluding working capital. While the last 12 months average free cashflow is a small -Rp7bn, the last 2 quarters have been quite strong plus. With strong sales growth continuing, we conservatively forecast that the free cashflow will rise further to a positive average Rp63bn per quarter in the next 12 months.
DSNG sales growth was +29% in 2Q. That was slightly [3%] above our forecast. Fruit production was up +1% from a year ago, which is the best performance of all the palm oil stocks we updated so far. With the price rising sharply in July we expect sales growth to continue and forecast +13.8% for the next 12 months, Rp7.18tn.
Cashflow
Cashflow was also strong in the 2Q at Rp128bn excluding working capital. While the last 12 months average free cashflow is a small -Rp7bn, the last 2 quarters have been quite strong plus. With strong sales growth continuing, we conservatively forecast that the free cashflow will rise further to a positive average Rp63bn per quarter in the next 12 months.
Strong sales growth, rising cashflow, improving debt, higher target...
Balance sheet
DSNG is in net debt. The net debt is at Rp5.96tn as of the 2Q which is an improvement compared to Rp6.17tn as of the 1Q. The reduction in debt would’ve been bigger but for some negative working capital. With our forecast for positive cash flow in the next 12 months the net debt will come down further to Rp5.7tn.
Profit
Net profit increased from just Rp2bn a year ago to Rp98bn in the 2Q, higher than Rp82bn in 1Q. The cost ratio of net profit add back depreciation minus Sales as a percent of sales is at 87% for the last 12 months. We use a lower 85% cost ratio for the next 12 months which gives a Rp463bn profit+59.7%.
Value
DSNG current market value is at Rp3.99tn. That’s equal to only 0.56X our sales forecast, just 0.34x the total assets & 0.92x the equity with a profitability of 10.7%. Yield is forecast at 0%. We use our 1.6% cash flow valuation with a 50% discount because of the quite high debt which gives a much higher target price of Rp756.
DSNG is in net debt. The net debt is at Rp5.96tn as of the 2Q which is an improvement compared to Rp6.17tn as of the 1Q. The reduction in debt would’ve been bigger but for some negative working capital. With our forecast for positive cash flow in the next 12 months the net debt will come down further to Rp5.7tn.
Profit
Net profit increased from just Rp2bn a year ago to Rp98bn in the 2Q, higher than Rp82bn in 1Q. The cost ratio of net profit add back depreciation minus Sales as a percent of sales is at 87% for the last 12 months. We use a lower 85% cost ratio for the next 12 months which gives a Rp463bn profit+59.7%.
Value
DSNG current market value is at Rp3.99tn. That’s equal to only 0.56X our sales forecast, just 0.34x the total assets & 0.92x the equity with a profitability of 10.7%. Yield is forecast at 0%. We use our 1.6% cash flow valuation with a 50% discount because of the quite high debt which gives a much higher target price of Rp756.
