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INKP, only 0.36X assets
Current, target price 7,925, 27,259 (+244%)

June 26th, 2021
1 minute read

Sales inch up
  • Sales inched up 1% in the first quarter to 801 million dollars which is above our forecast of 794 million dollars.
  • This brings the average quarterly growth to 1%.
  • We assume average growth of 3% in the next 12 months which will bring sales back to 882 million dollars by the first quarter 2022.

Costs, improving fast
  • The cash cost ratio of net profit add depreciation minus sales as a percent of sales was a low -74% in the first quarter & profit was up to 139 million dollars.
  • The average cost ratio is improving & is -81% for the last few quarters.
  • We use average costs of -79% which will bring average profit from 64 to 106 million dollars in the next 12 months.
Negative cashflow, expected to rebound
  • Negative working capital & high investment spending -158 trillion dollars in the fist quarter meant negative cashflow -139 million dollars.
  • Average quarterly Cashflow is still positive at 15 million dollars.
  • We use lower average investment spending of -78 million dollars which with higher sales will bring Cashflow up to 107 million dollars by the first quarter 2022.

Balance sheet, lower leverage
  • With negative cashflow, cash declined from 863 to 767 million dollars in the first quarter.
  • Liabilities increased slightly from 4,246 to 4,274 million dollars so net cash worsened from -3,383 to -3,507 million dollars.
  • With our forecast higher cashflow & a -128 million dollars equity payout, net cash will improve to -3,240 million dollars in 12 months.

Value, only 0.36X assets
  • INKP capital payouts from the last six years will now rise to 819 million dollars.
  • At the current market value of 3,097 million dollars, based on our forecasts, it’s at 0.92X sales, 0.36X assets with a 4% yield.
  • Our cashflow forecast is 395 million dollars. At a 27X valuation (3.7% yield), this gives a 244% higher target price of 27,259 rupiah.