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MBSS
Mitrabahtera, coal is undervalued
🎯⚓️📈➡️ Rp1,050
12m free cashflow +$8 ⬇️
June 13th, 2019
⏰ 1 minute read
⏰ 1 minute read
Watch the explainer using the data file & model ⬇️
Sales
MBSS sales growth dropped sharply to -22% in the 1Q after a decline of -25% in the 4Q, well below our forecasts. Tug & barge was down -20% in the 1Q, crane -27%. We assume that sales growth is weak again in the 2Q, but then picks up into 2021. We forecast a return to growth of 5.6% to Rp$77.4m.
Cashflow
Along with the slowdown in sales, free cashflow has also declined when we adjust for working capital. But the adjusted cashflow is still positive $8m ($16m before adjustment). The cashflow has become positive now because of lower investment spending. With our sales growth forecast, we predict that the free cashflow will be a higher $10.5m for the next 12 months.
MBSS sales growth dropped sharply to -22% in the 1Q after a decline of -25% in the 4Q, well below our forecasts. Tug & barge was down -20% in the 1Q, crane -27%. We assume that sales growth is weak again in the 2Q, but then picks up into 2021. We forecast a return to growth of 5.6% to Rp$77.4m.
Cashflow
Along with the slowdown in sales, free cashflow has also declined when we adjust for working capital. But the adjusted cashflow is still positive $8m ($16m before adjustment). The cashflow has become positive now because of lower investment spending. With our sales growth forecast, we predict that the free cashflow will be a higher $10.5m for the next 12 months.
Sales to turn up, cashflow is positive, dividends ➡️ shares very undervalued
Balance sheet
Excitingly, because of positive cashflow including the working capital, MBSS net debt turned into net cash in the 4Q of $5m. The net cash remained at $5m in the 1Q. With our forecast for more free cashflow in the next 12 months the net cash will rise to $13.7m including a higher dividend of $1.5m. There’s cash to pay more.
Profit
Because of the high non cash depreciation, while MBSS cashflow is positive, the net profit is still negative. The cash cost ratio (net profit add depreciation minus sales as % of sales) is at 75% the last 12 months & we use 75% to predict a next 12 month net profit of $0, not positive but also no longer negative.
Value
MBSS current market value is just Rp574bn. That’s 0.53x our sales forecast, 0.2x the value of the assets & 0.24x the value of the equity, with no profitability yet. Yield is 4.4%. That’s cheap. We use our 1.6% cashflow valuation (10.5/.016) with a massive 80% discount as it’s valuation is so low. That gives a higher target price of Rp1,054.
Excitingly, because of positive cashflow including the working capital, MBSS net debt turned into net cash in the 4Q of $5m. The net cash remained at $5m in the 1Q. With our forecast for more free cashflow in the next 12 months the net cash will rise to $13.7m including a higher dividend of $1.5m. There’s cash to pay more.
Profit
Because of the high non cash depreciation, while MBSS cashflow is positive, the net profit is still negative. The cash cost ratio (net profit add depreciation minus sales as % of sales) is at 75% the last 12 months & we use 75% to predict a next 12 month net profit of $0, not positive but also no longer negative.
Value
MBSS current market value is just Rp574bn. That’s 0.53x our sales forecast, 0.2x the value of the assets & 0.24x the value of the equity, with no profitability yet. Yield is 4.4%. That’s cheap. We use our 1.6% cashflow valuation (10.5/.016) with a massive 80% discount as it’s valuation is so low. That gives a higher target price of Rp1,054.
