## INKP, stick with higher target price

Current, target price Rp10,075, 22,732 (+126%)

April 10th, 2021

1 minute read

Sales, up again

Cashflow, negative again

1 minute read

Sales, up again

- Sales increased another 12% in the fourth quarter to 794 billion rupiah which is 5% above our forecast.
- This is after growth of 1% in the third quarter & brings the average quarterly growth to 2%.
- We predict the same average quarterly growth of 2% in this next twelve months which will bring sales to 859 billion rupiah by the fourth quarter of 2021.

Cashflow, negative again

- But cash flow was negative again, -170 billion rupiah in the fourth quarter compared to +218 billion rupiah in the third quarter on higher investment spending.
- This brings the average quarterly Cashflow down to 96 billion rupiah. We use lower investment spending 40 billion rupiah, which with higher sales gives an average quarterly free Cashflow 121 billion rupiah in this next 12 months.

## Sales up ahead of forecast, but margins lower, negative cashflow & higher leverage, still we stick with a return to positive cashflow & our higher target price...

Balance sheet, higher leverage

Profit, lower margin

Value, stick with higher target

- Because of negative cashflow, the net leverage, cash minus total liabilities, increased to -3.38 trillion rupiah in the fourth quarter from -3.17 trillion rupiah in the third quarter, but better than -3.37 trillion a year ago.
- With our forecast higher free Cashflow & assuming a dividend payout of 92 billion rupiah...
- ...the net cash will be -2.99 trillion rupiah in 12 months time.

Profit, lower margin

- Net profit was 7 billion rupiah in the fourth quarter down from 84 billion rupiah in the third-quarter.
- The cash cost ratio of net profit add back depreciation minus sales as a percent of sales was higher at 89%.
- We use the average 80% cost ratio to predict a slightly higher next 12 months net profit of 308 billion rupiah.

Value, stick with higher target

- INKP has paid out capital of 463 billion rupiah in the last five years.
- At the current market value 3.9 trillion rupiah, it’s at 8.5X capital paid, 1.2X sales, 0.47X assets, 0.88X equity with a 7% profitability and a 2.5% yield.
- Our cashflow forecast is 483 billion rupiah. At 1.6% with a 0.3X adjustment gives a 126% higher target price, 22,732 rupiah.