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GGRM, net cash reached!
🎯 💨 📈 Rp107,408
Last 12-month cashflow +Rp6,755bn ⬇️⬇️
October 29th, 2020
⏰ 1 minute read
⏰ 1 minute read
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Sales
Sales growth returned to positive +3% in the 3Q from a year ago after the negative 1Q. Sales jumped +13% from the 1Q & were 6% above our forecast, Rp29.7tn. Growth came from machine, up +14% from the 1Q, while hand-rolled increased by +4%. Sales are back on track & we predict 15.4% growth this next 12 months to Rp129.4tn
Cashflow
With the higher sales, cashflow increased by +48% in the 3Q to Rp1,941bn excluding working capital from Rp1,285bn in the 2Q. That’s almost exactly matching with our forecast Rp1,904bn.we use the average investment spending of the 2Q & 3Q which when combined with our sales forecast, predicts a higher average quarterly free cashflow of Rp2,057bn in this next 12 months.
Sales growth returned to positive +3% in the 3Q from a year ago after the negative 1Q. Sales jumped +13% from the 1Q & were 6% above our forecast, Rp29.7tn. Growth came from machine, up +14% from the 1Q, while hand-rolled increased by +4%. Sales are back on track & we predict 15.4% growth this next 12 months to Rp129.4tn
Cashflow
With the higher sales, cashflow increased by +48% in the 3Q to Rp1,941bn excluding working capital from Rp1,285bn in the 2Q. That’s almost exactly matching with our forecast Rp1,904bn.we use the average investment spending of the 2Q & 3Q which when combined with our sales forecast, predicts a higher average quarterly free cashflow of Rp2,057bn in this next 12 months.
Sales recovering, cashflow rising, already net cash, cheap ➡️ re rating...
Balance sheet
The title of our last report was ‘heading to net cash’ & that’s exactly what happened much faster than we expected. From her debt of Rp18tn in 2016, the 3Q was net cash of Rp 4,393bn, amazing! With our forecast cashflow & a dividend of Rp2,765bn, net cash will be Rp9,8985bn in 12 months (note the tax payable is Rp14tn).
Profit
Despite the higher sales, net profit was lower by -38% from a year ago to Rp1,826bn, but that was +33% from the 2Q. The cash cost ratio of net profit add back depreciation minus sales as a% of sales was at 92%. We use a lower 91% costs to predict the next 12 months profit will be flat at Rp9.2tn.
Value
GGRM has been a net capital payer. Cumulative payments have reached Rp34.87tn by the 3Q. The current market value Rp78.84 is only 2.26x the payments. It’s also 0.61x sales, 0.95x assets, 1.25x equity with a 15% profitability & 3.5% yield. Our cashflow forecast is raised to Rp8.27tn. At 1.6% with a 0.4x adjustment, this gives a higher target price Rp107,408.
The title of our last report was ‘heading to net cash’ & that’s exactly what happened much faster than we expected. From her debt of Rp18tn in 2016, the 3Q was net cash of Rp 4,393bn, amazing! With our forecast cashflow & a dividend of Rp2,765bn, net cash will be Rp9,8985bn in 12 months (note the tax payable is Rp14tn).
Profit
Despite the higher sales, net profit was lower by -38% from a year ago to Rp1,826bn, but that was +33% from the 2Q. The cash cost ratio of net profit add back depreciation minus sales as a% of sales was at 92%. We use a lower 91% costs to predict the next 12 months profit will be flat at Rp9.2tn.
Value
GGRM has been a net capital payer. Cumulative payments have reached Rp34.87tn by the 3Q. The current market value Rp78.84 is only 2.26x the payments. It’s also 0.61x sales, 0.95x assets, 1.25x equity with a 15% profitability & 3.5% yield. Our cashflow forecast is raised to Rp8.27tn. At 1.6% with a 0.4x adjustment, this gives a higher target price Rp107,408.
