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HERO, margins positive again
Current, target price Rp945, 1,133 (+20%)
May 14th, 2021
1 minute read
Sales, down again
Cashflow, to turn positive
1 minute read
Sales, down again
- Sales declined by -13% in the first quarter to 1,763 billion rupiah, which is -21% compared to our forecast.
- This is after a 6% increase in the fourth quarter & brings the quarterly average growth to -9%.
- We predict positive average growth of 7% a quarter in this next 12 months which will bring sales back to 2,235 billion rupiah by the first quarter of 2022.
Cashflow, to turn positive
- Cashflow was negative -124 billion rupiah in the first quarter after positive 214 billion rupiah in the fourth quarter.
- Average quarterly cashflow is still negative -86 billion rupiah.
- We use flat investment spending of -48 billion rupiah, which with higher sales, gives a positive average quarterly cashflow of 40 billion rupiah in this next 12 months.
Sales lower again, but margins positive, cashflow negative, but expecting positive, cheap at 0.45X sales, slightly higher target price...
Balance sheet, higher leverage
Profit, positive margins
Value, at 0.45X sales
- With negative cashflow, the net leverage of cash minus total liabilities was -3,036 billion rupiah in the first quarter from -2,908 billion rupiah in the fourth quarter & -3,068 billion rupiah a year ago.
- With our forecast positive cashflow & assuming a dividend payout of -6 billion rupiah...
- ...net leverage will improve to -2,883 billion rupiah in 12 months time.
Profit, positive margins
- The net loss was down to -2 billion rupiah in the first quarter from -875 billion rupiah in the fourth quarter.
- The cash cost ratio of net profit add back non cash costs minus sales as a percent of sales was down to -96%.
- We use the same -96% costs, to predict a positive next 12 months profit of 60 billion rupiah.
Value, at 0.45X sales
- HERO cumulative net capital is at -418 billion rupiah from the last five years.
- At the current market value of 3,953 billion rupiah, based on forecasts it’s 0.45X sales, 0.79X assets, 2.07X equity, with a 3.2% profitability & a 0.2% yield.
- Our free cashflow forecast is 168 billion rupiah. At 1.6% with a 0.45X adjustment, gives a 20% higher target price of 1,133 rupiah.
