## LPCK a 7% yield forecast

🎯 🏡 📈 Rp4,564

Last 12-month cashflow -Rp 1,084 billion ⬆️

November 15th, 2020

⏰ 1 minute read

⏰ 1 minute read

Sales

Sales were lower -2% in the third quarter from the second quarter & at Rp 504 billion, 7% below our forecast. But key sales of houses & apartments were up by +12% while smaller other revenue was down -34%. Property sales have doubled from a year ago! We expect sales to rise to Rp 604 billion by the 3Q 2021.

Cashflow

Cashflow was small & lower than we had expected at Rp 9 billon in the third quarter, but that’s the second quarter in a row of positive cashflow. Investment spending is positive & when we combine this continuing with our sales forecast, we get a much higher average free cashflow of Rp 163 billion per quarter this next 12 months.

Sales were lower -2% in the third quarter from the second quarter & at Rp 504 billion, 7% below our forecast. But key sales of houses & apartments were up by +12% while smaller other revenue was down -34%. Property sales have doubled from a year ago! We expect sales to rise to Rp 604 billion by the 3Q 2021.

Cashflow

Cashflow was small & lower than we had expected at Rp 9 billon in the third quarter, but that’s the second quarter in a row of positive cashflow. Investment spending is positive & when we combine this continuing with our sales forecast, we get a much higher average free cashflow of Rp 163 billion per quarter this next 12 months.

## Property sales double from a year ago, will translate to strong cashflow ➡️ huge 7.4% yield, shares can jump ...

Balance sheet

The cashflow excluding working capital is positive but working capital is still very negative. This meant that the net cash position turned to net debt Rp 101 billion. With our positive cashflow forecast & a dividend payment of Rp 180 billion, the balance sheet will return to a net cash position again of Rp 371 billion in 12 months time.

Profit

Net profit bounced back from a loss in the second quarter to +Rp 220 billion profit in the third quarter. The cash cost ratio of net profit add back non cash costs minus sales as a % of sales was higher at 87%. We use the average 73% to predict a higher next 12 months profit of Rp 600 billion.

Value

LPCK has raised total Rp 7.95 trillion capital the last 5 years, but will now start to pay. At Rp 2.4 trillion the current value is 1.07X sales, 0.17X assets, 0.22X equity with a 5.3% profitability & a large 7.4% yield. Our cashflow forecast is Rp 652 billion. At 1.6% with a large 0.3X adjustment gives a higher target Rp4.564.

The cashflow excluding working capital is positive but working capital is still very negative. This meant that the net cash position turned to net debt Rp 101 billion. With our positive cashflow forecast & a dividend payment of Rp 180 billion, the balance sheet will return to a net cash position again of Rp 371 billion in 12 months time.

Profit

Net profit bounced back from a loss in the second quarter to +Rp 220 billion profit in the third quarter. The cash cost ratio of net profit add back non cash costs minus sales as a % of sales was higher at 87%. We use the average 73% to predict a higher next 12 months profit of Rp 600 billion.

Value

LPCK has raised total Rp 7.95 trillion capital the last 5 years, but will now start to pay. At Rp 2.4 trillion the current value is 1.07X sales, 0.17X assets, 0.22X equity with a 5.3% profitability & a large 7.4% yield. Our cashflow forecast is Rp 652 billion. At 1.6% with a large 0.3X adjustment gives a higher target Rp4.564.