## INTP, time to rerate

🎯 🏗 📈 Rp32,809

Last 12-month cashflow +Rp 2.2 trillion ⬆️

November 18th, 2020

⏰ 1 minute read

⏰ 1 minute read

Sales

After two big negative growth quarters, sales jumped back +41% in the third quarter. Sales were 7% ahead of our recovery forecast at Rp 3.975 trillion. Cement sales were up +40% while smaller ready mix sales jumped +60%. We predict sales will rise back to Rp 4.34 trillion by the third quarter next year., which is back to 2018 levels.

Cashflow

Cashflow more than tripled from the second quarter to Rp 831 billion which is also much higher than we had forecast. Investment spending was very low at Rp 91 billion. We use the average Rp 220 billion investment spending which together with our sales forecast gives an average quarterly free cashflow of Rp 805 billion in this next 12 months.

After two big negative growth quarters, sales jumped back +41% in the third quarter. Sales were 7% ahead of our recovery forecast at Rp 3.975 trillion. Cement sales were up +40% while smaller ready mix sales jumped +60%. We predict sales will rise back to Rp 4.34 trillion by the third quarter next year., which is back to 2018 levels.

Cashflow

Cashflow more than tripled from the second quarter to Rp 831 billion which is also much higher than we had forecast. Investment spending was very low at Rp 91 billion. We use the average Rp 220 billion investment spending which together with our sales forecast gives an average quarterly free cashflow of Rp 805 billion in this next 12 months.

## Sales rebound, cashflow triples, profit 10X, capital payouts rising, shares to rerate...

Balance sheet

The balance sheet is full of cash. The net cash was slightly lower at Rp 6.7 trillion in the third quarter as the dividend payout is now 100%. But with our forecast higher cashflow ahead even assuming a higher dividend of Rp 2.9 trillion, the net cash will still rise a bit to Rp 7.06 trillion in 12 months time.

Profit

Net profit was up almost ten times from second to third quarter! The cash cost ratio of net profit add back depreciation minus sales as a % of sales continues to improve & was 76% in the third quarter. We assume the same 76% costs which gives a +73% (much) higher next 12 months net profit of Rp 2.88 trillion.

Value

INTP has paid out Rp 16.4 trillion the last five years which will now rise to Rp 19.3 trillion. At Rp 52.1 trillion, it’s 3.17X capital paid, 3.07X sales, 1.98X assets, 2.33X equity with a profitability of 74% & a 5.5% yield. Our cashflow forecast is higher Rp 3.22 trillion. At 1.6% with a 0.6X adjustment gives a target Rp32,809.

The balance sheet is full of cash. The net cash was slightly lower at Rp 6.7 trillion in the third quarter as the dividend payout is now 100%. But with our forecast higher cashflow ahead even assuming a higher dividend of Rp 2.9 trillion, the net cash will still rise a bit to Rp 7.06 trillion in 12 months time.

Profit

Net profit was up almost ten times from second to third quarter! The cash cost ratio of net profit add back depreciation minus sales as a % of sales continues to improve & was 76% in the third quarter. We assume the same 76% costs which gives a +73% (much) higher next 12 months net profit of Rp 2.88 trillion.

Value

INTP has paid out Rp 16.4 trillion the last five years which will now rise to Rp 19.3 trillion. At Rp 52.1 trillion, it’s 3.17X capital paid, 3.07X sales, 1.98X assets, 2.33X equity with a profitability of 74% & a 5.5% yield. Our cashflow forecast is higher Rp 3.22 trillion. At 1.6% with a 0.6X adjustment gives a target Rp32,809.