## GZCO, a 114% higher target price

Current 70 Target 150 +114%

November 26th 2021

1 minute read

Sales soared 77%

Costs 10 points lower, first profit since 2015!

Cashflow jumped 12X

Balance sheet, cash up to 100 billion rupiah

Valuation, at 2X cashflow, a 114% higher target price

1 minute read

Sales soared 77%

- Sales soared 77% in the third quarter to 207 billion rupiah vs our 131 billion rupiah forecast.
- This brings the quarterly average to 72% growth.
- We predict average growth of 2% to bring sales to 224 billion rupiah in the third quarter of 2022.

Costs 10 points lower, first profit since 2015!

- The cash cost ratio was 10 points lower at -58% in the third quarter giving a first since 2015 positive 27 billion rupiah net profit.
- The average Cashflow cost ratio is at -70% now.
- We use the cashflow -70% cost ratio to predict a 8 billion rupiah profit in the third quarter of 2022.

Cashflow jumped 12X

- Free cashflow jumped from 8 to 120 billion rupiah in the third quarter with -10 billion rupiah investment Cashflow.
- Average quarterly Cashflow is at 48 billion rupiah now.
- We assume the same -10 billion rupiah investment spending which with higher sales gives a 58 billion rupiah Cashflow in the third quarter of 2022.

Balance sheet, cash up to 100 billion rupiah

- Cash also jumped from 12 to 100 billion rupiah in the third quarter.
- Liabilities declined from 937 to 935 billion rupiah so net cash improved from -925 to -835 billion rupiah.
- With our forecast cashflow & a -7 billion rupiah equity payout net cash will be -617 billion rupiah in 12 months time.

Valuation, at 2X cashflow, a 114% higher target price

- GZCO capital from the last 27 quarters was almost positive at -1 billion rupiah in the third quarter with a -32 billion rupiah liabilities payment & will be 180 billion rupiah in12 months time.
- At the current market value of 420 billion rupiah based on our forecasts it’s at 0.24 X assets with a 8 years payback & a 2% yield.
- Our cashflow forecast is 225 billion rupiah which means an 2 X valuation. A 4 X valuation gives a 114% higher target price of 150 rupiah.