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GGRM, Only 0.79X assets
Current, target price 33,300, 90,103 (+171%)

July 30th, 2021
1 minute read

Sales up

• Sales were up by 4% in the second quarter to 30,840 billion rupiah which is slightly higher than our 30,640 billion rupiah forecast.
• This brings the average quarterly growth of the last 12 months to 4%.
• We predict average growth of 3% in this next 12 months which will bring sales to 34,364 billion rupiah by the second quarter of 2022.

But record costs

• Here’s where things go wrong. The cost ratio of net profit add non cash costs minus sales as a percent of sales reached a new high -96% in the second quarter & profit tumbled to 565 billion rupiah.
• Average costs are now at -93%.
• We use the average -93% to predict the profit will recover to 1,833 by the first quarter 2022.

Data charts & model

Cashflow turns negative

• Cashflow turned negative -1,122 billion rupiah with investment spending of -1,224 billion rupiah plus negative working capital:
• This brings the average quarterly cashflow down to 1,653 billion rupiah.
• We use the same -1,224 billion rupiah investment spending which with higher sales gives a recovery to 1,312 billion rupiah Cashflow in the second quarter 2022.

Balance sheet steady

• With negative cashflow cash declined from 7,694 to 6,562 billion rupiah in the second quarter.
• Liabilities also declined from 19,555 to 18,604 billion rupiah so net cash increased from -11,861 to -12,042 billion rupiah.
• With our forecast higher cashflow & assuming a -2,112 billion rupiah equity payout, net cash will improve to -9,201 billion rupiah in 12 month time.

Only 0.79X assets

• GGRM capital paid from the last six years increased to 39,351 billion rupiah in the second quarter.
• At the current market value of only 64,070 billion rupiah, based on our forecasts, it’s at 0.48X sales, 0.79X assets with a 3% yield.
• Our cashflow forecast is 4,953 billion rupiah. At 35X (a 2.9% yield) this gives a 171% higher target price of 90,103 rupiah.