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INDF, prefer INDF over ICBP
Current, target price Rp6,330, 19,739 (+212%)
Last, next 12-months cashflow -Rp 24.1, +6.9 trillion

March 24th, 2021
1 minute read

Sales

• Sales jumped by 19% in the fourth quarter to Rp 22.96 trillion which is 8% ahead of our forecast.
• This is after a -4% decline in the third quarter & brings the average quarterly growth to 5%.
• We predict average quarterly growth of 2% this next 12 months & sales to reach Rp 25.11 trillion by the fourth quarter 2021.

Cashflow

• Cashflow was also extremely strong at Rp 2.7 trillion in the fourth quarter from Rp 2.6 trillion in the third.
• This brings average quarterly Cashflow to Rp 1 trillion (excluding the M&A).
• We use investment spending of Rp 1.5 trillion, which with higher sales gives a higher average quarterly free Cashflow of Rp 1.7 trillion in this next 12 months.

Strong sales, strong cashflow, de leveraging, forecasting higher cashflow than ICBP, higher target price, more upside...

Data file & model

Balance sheet

• With positive cashflow the net cash minus total liabilities improved to -Rp 67 trillion in the fourth quarter from -Rp 71 trillion in the third quarter & -Rp 28 trillion a year ago pre-M&A.
• With our forecast higher cashflow & assuming a dividend payout of Rp 1.9 trillion...
• ...net cash will improve to -Rp 62 trillion in 12 months time.

Profit

• Fourth quarter net profit jumped to Rp 4 trillion on a large FX gain, up from Rp 1.26 trillion in the third quarter.
• The cash cost ratio of net profit add depreciation minus sales as a percent of sales was lower at 83%.
• We use the average 86% costs to predict a next 12 months profit of Rp 9.5 trillion.

Value

• INDF post M&A has raised Rp 13.6 trillion of capital in the last six years.
• At the current market value of Rp 53 trillion, it’s 0.57X sales, only 0.33X assets, 0.64X equity with a 10.9% profitability & a 3.6% yield.
• Our cashflow forecast is Rp 6.9 trillion. At 1.6% with a 0.4X adjustment, gives a higher target price of Rp19,739.