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LPCK
LPCK, a 9% yield
🎯 🏡 📈 Rp4,310
Last 12 months cashflow -Rp3,154bn ⬆️
September 9th, 2020
⏰ 1 minute read
⏰ 1 minute read
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Sales
Sales growth in the 2Q was the fastest of stocks we cover at +79% from a year ago, way above our expectation. This is the 3rd quarter in a row of positive sales growth. Residential sales jumped +200%, industrial +400%! We see the trend of sales is now rising & predict growth of +12.6% this next 13 months to Rp2.36tn.
Cashflow
Cashflow was back to a positive +Rp287bn in the 2Q excluding working capital (also slightly positive including working capital). That’s after 3 quarters of negative cashflow, as investment spending is back to a small plus. With our forecast for sales growth & very low investment spending, we predict that quarterly average cashflow will BW +Rp154bn in this next 12 months.
Sales growth in the 2Q was the fastest of stocks we cover at +79% from a year ago, way above our expectation. This is the 3rd quarter in a row of positive sales growth. Residential sales jumped +200%, industrial +400%! We see the trend of sales is now rising & predict growth of +12.6% this next 13 months to Rp2.36tn.
Cashflow
Cashflow was back to a positive +Rp287bn in the 2Q excluding working capital (also slightly positive including working capital). That’s after 3 quarters of negative cashflow, as investment spending is back to a small plus. With our forecast for sales growth & very low investment spending, we predict that quarterly average cashflow will BW +Rp154bn in this next 12 months.
Lower investment spending, positive cashflow, yield 9% & higher cash, shares cheap at only 0.17x the assets
Balance sheet
The balance sheet is unusually net cash as capital has been raised through equity as well as some debt. Net cash has been Rp300-400bn the last 5 years & as of the 2Q, was at Rp350bn. With our forecast for positive cashflow & assuming a dividend payment of Rp207bn, net cash will be up to Rp759bn in 12 months time.
Profit
Despite sales growth, net profit was a loss of -Rp389bn because of negative non cash other income. The cash cost ratio of net profit add back depreciation & non cash costs minus sales as a % of sales was 80% in the 2Q. We use 1H average 74% to predict the next 12 months profit will rise +4% to Rp596bn.
Valuation
LPCK has been raising capital but with sales growing & no investment, should now turn into a capital payer. At Rp2,331nm it’s 0.99x sales, 0.17x assets, 0.21x equity with a profitability of 6.4%. Yield is high, 9.5%. We increase our cashflow forecast to Rp727bn which at 1.6% with a large 0.3x adjustment gives a much higher target price of Rp5,089.
The balance sheet is unusually net cash as capital has been raised through equity as well as some debt. Net cash has been Rp300-400bn the last 5 years & as of the 2Q, was at Rp350bn. With our forecast for positive cashflow & assuming a dividend payment of Rp207bn, net cash will be up to Rp759bn in 12 months time.
Profit
Despite sales growth, net profit was a loss of -Rp389bn because of negative non cash other income. The cash cost ratio of net profit add back depreciation & non cash costs minus sales as a % of sales was 80% in the 2Q. We use 1H average 74% to predict the next 12 months profit will rise +4% to Rp596bn.
Valuation
LPCK has been raising capital but with sales growing & no investment, should now turn into a capital payer. At Rp2,331nm it’s 0.99x sales, 0.17x assets, 0.21x equity with a profitability of 6.4%. Yield is high, 9.5%. We increase our cashflow forecast to Rp727bn which at 1.6% with a large 0.3x adjustment gives a much higher target price of Rp5,089.
