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LPPF
Matahari Departement store, sales will rebound
🎯 👠 📈 ➡️ Rp4,766
12m free cashflow -Rp235bn ⬇️⬇️
August 2nd, 2020
⏰ 2 minute read
⏰ 2 minute read
Watch the 3 minute explainer using the data file & model ⬇️
Sales
LPPF had the worst quarter of all companies so far with a sales decline of -82% from a year ago & -52% compared with the 1Q. It’s the 6th negative growth quarter out of the last 7. But we expect sales must recover into 4Q & we forecast a lesser -33% decline in sales the next 12 months to Rp4tn.
Cashflow
Cashflow has turned negative in the last 2 quarters & there are only 3 negative cashflow quarters since 2015. The 2Q was actually better than 1Q, which reverses the clear negative trend of cashflow since 2018. With our forecast for sales to now recover, we also expect cash flow to recover to a positive Rp334bn in the next 12 months.
LPPF had the worst quarter of all companies so far with a sales decline of -82% from a year ago & -52% compared with the 1Q. It’s the 6th negative growth quarter out of the last 7. But we expect sales must recover into 4Q & we forecast a lesser -33% decline in sales the next 12 months to Rp4tn.
Cashflow
Cashflow has turned negative in the last 2 quarters & there are only 3 negative cashflow quarters since 2015. The 2Q was actually better than 1Q, which reverses the clear negative trend of cashflow since 2018. With our forecast for sales to now recover, we also expect cash flow to recover to a positive Rp334bn in the next 12 months.
Sales rebound, cashflow back to positive, lower net debt, higher shares price...
Balance sheet
The net cash which was Rp1.2tn as recently as the 4Q has now turned suddenly to net debt Rp628bn in 2Q. After years of paying out capital the company is suddenly having to raise capital. But with our forecast of a return to positive cash flow in the next 12 months net debt will come back down again to Rp294bn.
Profit
Profit has also turned to a net loss as the cash cost ratio, net profit add back depreciation minus sales as a percent of sales, is above 100%. We predict a recovery with sales growth and use 83% which was the 12 month average in the 1Q to predict a return to net profit Rp375bn in the next 12 months.
Value
LPPF current market value is only Rp4.2tn. That’s equal to 1.01X our sales forecast, just 0.4 9X the total assets and 3.13 X the equity, with a forecast return to profitability of 27.7%. Yield will be 0%. We use our 1.6% cash flow valuation with a 40% discount as it’s almost net cash, which gives a higher target price Rp4,241.
The net cash which was Rp1.2tn as recently as the 4Q has now turned suddenly to net debt Rp628bn in 2Q. After years of paying out capital the company is suddenly having to raise capital. But with our forecast of a return to positive cash flow in the next 12 months net debt will come back down again to Rp294bn.
Profit
Profit has also turned to a net loss as the cash cost ratio, net profit add back depreciation minus sales as a percent of sales, is above 100%. We predict a recovery with sales growth and use 83% which was the 12 month average in the 1Q to predict a return to net profit Rp375bn in the next 12 months.
Value
LPPF current market value is only Rp4.2tn. That’s equal to 1.01X our sales forecast, just 0.4 9X the total assets and 3.13 X the equity, with a forecast return to profitability of 27.7%. Yield will be 0%. We use our 1.6% cash flow valuation with a 40% discount as it’s almost net cash, which gives a higher target price Rp4,241.
