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HMSP, a great result & 7.2% yield forecast
Current, target price Rp1,325, 3,913 (+195%)

April 28th, 2021
1 minute read

Sales, up
  • Sales increased by 4% in the first quarter to 23,558 billion rupiah, which is +4% compared to our forecast.
  • This is after a -2% decline in the fourth quarter & brings the quarterly average growth to 0%.
  • We predict positive average growth of 2% a quarter in this next 12 months which will bring sales to 25,623 billion rupiah by the first quarter of 2022.

Cashflow, paying excise
  • Cashflow was negative -1,610 billion rupiah in the first quarter after positive 2,869 billion rupiah in the fourth quarter on working capital to pay excise.
  • Average quarterly cashflow is now positive 1,255 billion rupiah.
  • We use flat investment spending of -125 billion rupiah, which with higher sales, gives a 2X higher average quarterly cashflow of 3,035 billion rupiah in this next 12 months.

Sales up, margins, recovering, net cash, quarterly cashflow to double, a 7.2% yield, higher target price...

Balance sheet, net cash!
  • After paying excise, the net leverage of cash minus total liabilities was positive +949 billion rupiah in the first quarter from -3,629 billion rupiah in the fourth quarter & -11,208 billion rupiah a year ago.
  • With our forecast higher cashflow & assuming a dividend payout of -11,421 billion rupiah...
  • ...net cash will be +1,669 billion rupiah in 12 months time.

Profit, margins recovering
  • Net profit was higher at 2,586 billion rupiah in the first quarter from 1,670 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 improved to -88%.
  • We use the same -88% costs, to predict a much higher next 12 months profit of 11,421 billion rupiah.

Value, a 7.2% yield
  • HMSP cumulative net capital is at 57,932 billion rupiah for the last six years.
  • At the current market value of 158,231 billion rupiah, based on forecasts it’s 2.26X capital paid, 1.54X sales, 3.50X assets, 4.82X equity, with a 34.8% profitability & a 7.2% yield.
  • Our free cashflow forecast is 12,141 billion rupiah. At 1.6% with a 0.6X adjustment, gives a 195% higher target price of 3,913 rupiah.