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MNC Vision, strong sales growth
🎯 📱 📈 ➡️ Rp646
12 month free cashflow -Rp632bn ⬇️
July 26th, 2020
⏰ 1 minute read
⏰ 1 minute read
Watch the 3 minute explainer using the data file & model ⬇️
Sales
After a seasonal drop in the 1Q, IPTV sales were higher in the 2Q & growing at 13% from a year ago. Digital sales are growing even slightly faster at +15% from a year ago in 2Q. While there’s not much of track record yet, we assume a similar 13% sales growth over the next 12 months to reach Rp4.2tn.
Cashflow
Cashflow has been negative the last 2 years & -Rp632bn for the last 12 months. But the 2Q alone is positive Rp161bn & quite a lot more than that if we add back the negative working capital. With our sales growth forecast & assuming that investment spending is at the 1H level, the next 12 months cashflow will be +Rp644bn.
After a seasonal drop in the 1Q, IPTV sales were higher in the 2Q & growing at 13% from a year ago. Digital sales are growing even slightly faster at +15% from a year ago in 2Q. While there’s not much of track record yet, we assume a similar 13% sales growth over the next 12 months to reach Rp4.2tn.
Cashflow
Cashflow has been negative the last 2 years & -Rp632bn for the last 12 months. But the 2Q alone is positive Rp161bn & quite a lot more than that if we add back the negative working capital. With our sales growth forecast & assuming that investment spending is at the 1H level, the next 12 months cashflow will be +Rp644bn.
Strong sales, positive cashflow. lower debt, higher share price...
Balance sheet
Because of the negative cash flow, IPTV balance sheet has been net debt. After the recent IPO, the net debt has come down from Rp4.4th pre to Rp2.6tn as of the 2Q. That’s better than the Rp3.1tn in 1Q. With our positive cashflow forecast & assuming there’s no dividend pay out, the net debt would reduce quite significantly to Rp2tn.
Profit
While sales increased, net profit more than tripled in the 2Q from a year ago. That’s because the cash cost ratio (net profit add back depreciation minus sales as a % of sales) has improved from 71% to 61%. We use 61% to predict the next 12 months net profit at Rp610bn which is a higher than sales, 42% jump.
Value
IPTV current market value is at Rp12,860bn. That’s a quite high 3.06x our sales forecast, but a more reasonable 1.23x the value of the assets & 1.86x the equity with a 9% forecast profitability. We use our 1.6% cashflow valuation with a large 40% discount because of the still quite high debt. This gives a higher target price of Rp646.
Because of the negative cash flow, IPTV balance sheet has been net debt. After the recent IPO, the net debt has come down from Rp4.4th pre to Rp2.6tn as of the 2Q. That’s better than the Rp3.1tn in 1Q. With our positive cashflow forecast & assuming there’s no dividend pay out, the net debt would reduce quite significantly to Rp2tn.
Profit
While sales increased, net profit more than tripled in the 2Q from a year ago. That’s because the cash cost ratio (net profit add back depreciation minus sales as a % of sales) has improved from 71% to 61%. We use 61% to predict the next 12 months net profit at Rp610bn which is a higher than sales, 42% jump.
Value
IPTV current market value is at Rp12,860bn. That’s a quite high 3.06x our sales forecast, but a more reasonable 1.23x the value of the assets & 1.86x the equity with a 9% forecast profitability. We use our 1.6% cashflow valuation with a large 40% discount because of the still quite high debt. This gives a higher target price of Rp646.
