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HEAL, a -39% lower target price
Current 1,160 Target 712 -39%

November 27th 2021
1 minute read

Sales grew 1%
  • Sales grew 1% in the third quarter to 1,529 billion rupiah vs our 1,544 billion rupiah forecast.
  • This brings the quarterly average to 8% growth.
  • We predict average growth of 3% to bring sales to 1,735 billion rupiah in the third quarter of 2022.
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Costs 3 points higher
  • The cash cost ratio was 3 points higher at -74% in the third quarter giving a 290 billion rupiah net profit.
  • The average Cashflow cost ratio is much higher at -88% now.
  • We use -79% cost ratio to predict a 253 billion rupiah profit in the third quarter of 2022.
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Cashflow negative again
  • Free cashflow was negative again -129 billion rupiah in the third quarter with -261 billion rupiah investment Cashflow.
  • Average quarterly Cashflow is at -110 billion rupiah now.
  • We assume the same -261 billion rupiah investment spending which with higher sales gives a 104 billion rupiah Cashflow in the third quarter of 2022.
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Balance sheet, higher leverage
  • Cash declined from 573 to 362 billion rupiah in the third quarter.
  • Liabilities increased from 3,271 to 3,322 billion rupiah so net cash worsened from -2,698 to -2,960 billion rupiah.
  • With our forecast cashflow & a -94 billion rupiah equity payout net cash will be -2,712 billion rupiah in 12 months time.
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Valuation, a -39% lower target price
  • HEAL capital from the last 17 quarters improved to -1,629 billion rupiah in the third quarter with a -62 billion rupiah liabilities payment & a -20 billion rupiah equity payout & will be -1,287 billion rupiah in12 months time.
  • At the current market value of 13,940 billion rupiah based on our forecasts it’s at 1.72 X assets with a 21 years payback & a 1% yield.
  • Our cashflow forecast is 342 billion rupiah which means an 41 X valuation. A 25 X valuation gives a -39% lower target price of 712 rupiah.