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HEAL
HEAL, cashflow negative again
🎯 🥼 📉 Rp2,548
Last 12 months cashflow -Rp80bn ⬇️
September 6th, 2020
⏰ 1 minute read
⏰ 1 minute read
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Sales
Sales growth slumped to -16% in the 2Q, the first ever quarter of negative growth, down from +9% in the 1Q & 24% below our forecast.... Inpatient sales was down -6% while out patient was down by -29%! We expect a recovery from the 3Q, but much lower than our previous forecast, +0.4% growth this next 12 months to Rp3.59tn.
Cashflow
With the sharp drop in sales, cashflow slumped back to a negative -Rp94bn in the 2Q after having turned positive at the end of 2018. Investment spending has remained higher than we expected. With our forecast small sales growth & this time, lower investment spending, free cashflow will turn positive again by Rp38bn a quarter in the next 12 months.
Sales growth slumped to -16% in the 2Q, the first ever quarter of negative growth, down from +9% in the 1Q & 24% below our forecast.... Inpatient sales was down -6% while out patient was down by -29%! We expect a recovery from the 3Q, but much lower than our previous forecast, +0.4% growth this next 12 months to Rp3.59tn.
Cashflow
With the sharp drop in sales, cashflow slumped back to a negative -Rp94bn in the 2Q after having turned positive at the end of 2018. Investment spending has remained higher than we expected. With our forecast small sales growth & this time, lower investment spending, free cashflow will turn positive again by Rp38bn a quarter in the next 12 months.
Sales recovery, back to cashflow, debt down, but relatively expensive, so lower share price...
Balance sheet
The balance sheet is in net debt because od all the previous investment spending, aa well as rather unwise dividend payments. Net debt has been improving a bit thanks to some positive working capital & was Rp664bn in the 2Q. With our forecast for positive cashflow & hopefully no dividends, net debt will decline to Rp513bn in 12 months time.
Profit
While the sales declined by -16%, net profit dropped by -60% as the cash cost ratio of net profit add back depreciation minus sales as a % of sales increased from 84% to 87%. As sales now recover, we use the last 12 months average 84% to get a next 12 months profit of Rp314bn, down just slightly by -0.6%.
Value
HEAL has of course been raising capital the last few years, but will now start to begin paying back. At Rp9,185bn it’s 2.55x sales, 1.77x the assets & 2.86x the equity with a 9.8% profitability. Yield is 0%. We reduce our cashflow to Rp151bn which at 1.6% with a very generous 0.9x adjustment gives a lower target price of Rp2,867.
The balance sheet is in net debt because od all the previous investment spending, aa well as rather unwise dividend payments. Net debt has been improving a bit thanks to some positive working capital & was Rp664bn in the 2Q. With our forecast for positive cashflow & hopefully no dividends, net debt will decline to Rp513bn in 12 months time.
Profit
While the sales declined by -16%, net profit dropped by -60% as the cash cost ratio of net profit add back depreciation minus sales as a % of sales increased from 84% to 87%. As sales now recover, we use the last 12 months average 84% to get a next 12 months profit of Rp314bn, down just slightly by -0.6%.
Value
HEAL has of course been raising capital the last few years, but will now start to begin paying back. At Rp9,185bn it’s 2.55x sales, 1.77x the assets & 2.86x the equity with a 9.8% profitability. Yield is 0%. We reduce our cashflow to Rp151bn which at 1.6% with a very generous 0.9x adjustment gives a lower target price of Rp2,867.
