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DSNG, a 52% higher target price
​Current 595 Target 907 (+52%)

November 2nd, 2021
1 minute read

Sales grew 6%
  • Sales grew by 6% in the third quarter to 1,755 billion rupiah which is below our 1,827 billion rupiah forecast.
  • This brings the quarterly average to 17% growth.
  • We predict average growth of 5% in this next 12 months to bring sales to 2,104 billion rupiah in the third quarter of 2022.

Costs lower, profit up 2X
  • The cash cost ratio was lower at -79% in the third quarter giving a 2X higher 211 billion rupiah net profit:
  • The Cashflow cost ratio is higher at -88% now.
  • We use the latest -79% cost ratio to predict a 283 billion rupiah profit in the third quarter of 2021.

Cashflow negative but will bounce back
  • Free cashflow was negative -82 billion rupiah in the third quarter with higher -213 billion rupiah investment spending & negative working capital.
  • Average quarterly Cashflow is at 69 billion rupiah now.
  • We assume the same -213 billion rupiah investment spending which with higher sales gives a higher 224 billion rupiah Cashflow in the third quarter of 2021.

Balance sheet, lower leverage
  • Cash declined slightly from 393 to 318 billion rupiah in the third quarter.
  • Liabilities declined from 7,738 to 7,442 billion rupiah so net cash improved from -7,345 to -7,124 billion rupiah.
  • With our forecast cashflow & a -103 billion rupiah equity payout net cash will be -6,436 billion rupiah in 12 months time.

Valuation, a 52% higher target price
  • DSNG capital from the last six years was flat at -1,524 billion rupiah in the third quarter & will improve to -733 billion rupiah in12 months time.
  • At the current market value of 6,223 billion rupiah based on our forecasts it’s at 0.44 X assets with an 17 years payback & a 2% yield.
  • Our cashflow forecast is 791 billion rupiah which means an 8 X valuation. At a 12 X valuation gives a 52% lower target price of 907 rupiah.