## GZCO a time to rise

🎯 🌴 📈 Rp97

Last 12-month cashflow -Rp 209 billion

December 3rd, 2020

1 minute read

Sales

After two very negative quarters, sales increased by +7% in the third quarter. At Rp 60 billion, sales were 24% below our forecast Rp 78 billion, but the cashflow receipts measure was higher at Rp 65 billion. With much stronger palmoil prices now, sales should rise from the fourth quarter to Rp 128 billion by the third quarter next year.

Cashflow

After three negative quarters, operating cashflow was positive again & as investment cashflow was also positive from asset sales, this meant positive free cashflow of Rp 32 billion in the third quarter. We assume that investment cashflow is close to zero & with higher sales, we get a similar positive cashflow Rp 29 billion in the thirds quarter next year.

1 minute read

Sales

After two very negative quarters, sales increased by +7% in the third quarter. At Rp 60 billion, sales were 24% below our forecast Rp 78 billion, but the cashflow receipts measure was higher at Rp 65 billion. With much stronger palmoil prices now, sales should rise from the fourth quarter to Rp 128 billion by the third quarter next year.

Cashflow

After three negative quarters, operating cashflow was positive again & as investment cashflow was also positive from asset sales, this meant positive free cashflow of Rp 32 billion in the third quarter. We assume that investment cashflow is close to zero & with higher sales, we get a similar positive cashflow Rp 29 billion in the thirds quarter next year.

## Sales still weak, but will rise, margins improving, cashflow positive again, debt down, cheap to assets, higher target price ...

Balance sheet

Asset sales & some positive cashflow recently have brought the net debt in the balance sheet down from almost Rp 2 trillion in 2015 to Rp 648 billion in this third quarter. With our forecast for more positive free cashflow next year & no dividend payment yet, net debt will be slightly lower, Rp 629 billion in 12 months time.

Profit

There’s only been one positive net profit quarter in the last five years, but the third quarter was a lower loss -Rp 10 billion. The cash cost ratio, net profit add depreciation minus sales as a percent of sales was 11%... we use quarterly cash costs Rp 101 billion to predict the next 12 months loss is, -Rp 241 billion.

Value

GZCO net capital raised in the last five years is down to only Rp 125 billion. At current value Rp 300 billion, it’s 0.73X sales, 0.22X assets, 0.77X equity with no profitability or yield yet. Our cashflow forecast, using nine months next year, is Rp 27:8 billion. At 1.6% with a 0.3X adjustment, gives a higher target price of Rp97.

Asset sales & some positive cashflow recently have brought the net debt in the balance sheet down from almost Rp 2 trillion in 2015 to Rp 648 billion in this third quarter. With our forecast for more positive free cashflow next year & no dividend payment yet, net debt will be slightly lower, Rp 629 billion in 12 months time.

Profit

There’s only been one positive net profit quarter in the last five years, but the third quarter was a lower loss -Rp 10 billion. The cash cost ratio, net profit add depreciation minus sales as a percent of sales was 11%... we use quarterly cash costs Rp 101 billion to predict the next 12 months loss is, -Rp 241 billion.

Value

GZCO net capital raised in the last five years is down to only Rp 125 billion. At current value Rp 300 billion, it’s 0.73X sales, 0.22X assets, 0.77X equity with no profitability or yield yet. Our cashflow forecast, using nine months next year, is Rp 27:8 billion. At 1.6% with a 0.3X adjustment, gives a higher target price of Rp97.