## 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

Cashflow

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...

Balance sheet

Profit

Value

- 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.