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HEAL, sales jump but higher investment too
🎯 🏥 📈 Rp4,381
Last 12-month cashflow -Rp 5 billion ⬆️

December 4th, 2020
1 minute read

Sales
After a negative second quarter, sales jumped sharply by +54% in the third quarter and were +28% higher than a year ago. At rp 1.15 trillion, sales were 42% higher than our forecast. Inpatient sales were up +45% while out patient sales increased by +67%. We are now expecting sales to rise to rp 1.27 trillion by the third quarter next year.

Cashflow
Cashflow was much stranger than we had expected at rp 72 billion in the third quarter, compared to our forecast of rp 24 billion and despite higher investment spending. We use a lower investment spending in our forecasts but even with higher sales we get a similar average quarterly free Cashflow of rp 74 billion in this next 12 months.

Sales jump, margins too, better than expected cashflow, lower debt... but investment spending rising, flat target price.

Data file & model
Balance sheet
In addition to improved Cashflow, working capital has also been positive, and this has meant the net debt is down from rp 791 billion a year ago, to rp 546 billion in the third quarter. With our forecast positive Cashflow and a dividend payment of rp 95 billion, net debt would decline to rp 343 billion in 12 months time.

Profit
As sales increased, net profit jumped 6-fold in the third quarter to Rp 215 billion. The cash cost ratio of net profit add back depreciation minus sales as percent of sales improved significantly to a best ever 75%. We use the same cost ratio of 75% to predict the next 12 months net profit will triple to Rp 947 billion.

Value
Capita raised has increased again to Rp 1.87 trillion, but this should now reduce back to Rp 1.57 trillion. At the current value Rp 11.4 trillion, it’s 2.3X sales, 1.76X assets, 2.87X equity with a 23.9% profitability & a 0.8% yield. Our cashflow forecast is Rp 298 billion. At 1.6% with a 0.7X adjustment, gives a higher target price Rp4,381.
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