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HMSP, a 7% yield
Current, target price 1,045, 3,961 (+279%)

August 1st, 2021
1 minute read

Sales up

• Sales increased by 2% in the second quarter to 24,070 billion rupiah which is below our forecast 25,207 billion rupiah .
• Average quarterly sales growth is now at 3%.
• We predict average growth of another 3% in this next 12 months to bring sales back to 26,485 billion rupiah in the second quarter of 2022.

Costs, but new high costs

• The cash cost ratio of net profit add non cash costs minus sales as a percent of sales hit a new high -92% in the second quarter & profit was 1,548 billion rupiah.
• Average quarterly costs are at -90%.
• We use this average -90% costs to predict a 2,292 billion rupiah profit in the second quarter of 2022.

Data file & model

Cashflow jumps on working capital

• Cashflow was higher at 7,500 billion rupiah in the second quarter with investment spending at -114 billion rupiah on positive working capital.
• Average quarterly Cashflow is now at 4,365 billion rupiah.
• We use the same -114 billion rupiah investment spending which with higher sales will give a 2,399 billion rupiah Cashflow in the second quarter of 2022.

Balance sheet net cash turns negative again

• With the positive cashflow & despite the dividend payout cash increased from 14,021 to 15,673 billion rupiah in the second quarter.
• Liabilities jumped though from 13,072 to 18,789 billion rupiah (the working capital) so net cash turned negative from 949 to -3,116 billion rupiah.
• With our forecast positive cashflow & a -8,979 billion rupiah equity payout, net cash will be -2,419 in 12 months time.

Value a 7% yield

• HMSP capital paid from the last six years increased to 64,450 billion rupiah in the second quarter.
• At the current market value of 121,600 billion rupiah based on our forecasts, it’s at 1.17X sales, 2.76X assets with a 7% yield.
• Our cashflow forecast is 9,407 billion rupiah. At 49X (a 2% yield) this gives a 279% higher target price of 3,961 rupiah.