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FREN, a 35% higher target price
Current 102 Target 138 +35%
November 21st 2021
1 minute read
Sales increased 6%
Costs 1 point lower
Cashflow negative
Balance sheet, higher leverage
Valuation, a 35% higher target price
1 minute read
Sales increased 6%
- Sales increased 6% in the third quarter to 2,691 billion rupiah vs our 3,054 billion rupiah forecast.
- This brings the quarterly average to 2% growth.
- We predict average growth of 7% to bring sales to 3,448 billion rupiah in the third quarter of 2022.
Costs 1 point lower
- The cash cost ratio was 1 point lower at -66% in the third quarter giving a 10 billion rupiah net profit.
- The average Cashflow cost ratio is at -71% now.
- We use the latest -66% cost ratio to predict a 225 billion rupiah profit in the third quarter of 2022.
Cashflow negative
- Free cashflow was negative -86 billion rupiah in the third quarter with -328 billion rupiah investment Cashflow.
- Average quarterly Cashflow is at -240 billion rupiah now.
- We assume the same -328 billion rupiah investment spending which with higher sales gives a 496 billion rupiah Cashflow in the third quarter of 2022.
Balance sheet, higher leverage
- Cash declined from 980 to 879 billion rupiah in the third quarter.
- Liabilities declined from 29,159 to 29,111 billion rupiah so net cash worsened from -28,179 to -28,232 billion rupiah.
- With our forecast cashflow & a -98 billion rupiah equity payout net cash will be -25,307 billion rupiah in 12 months time.
Valuation, a 35% higher target price
- FREN capital from the last 27 quarters improved slightly to -24,756 billion rupiah in the third quarter with a -16 billion rupiah liabilities payment & will be -24,634 billion rupiah in12 months time.
- At the current market value of 31,420 billion rupiah based on our forecasts it’s at 0.80 X assets with a 26 years payback & a 0% yield.
- Our cashflow forecast is 1,573 billion rupiah which means an 20 X valuation. A 27 X valuation gives a 35% higher target price of 138 rupiah.
