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MDKA, paying back capital
🎯 ⛏ 📉Rp1,666
Last 12 months cashflow -Rp102bn ⬆️
September 21st, 2020
⏰ 1 minute read
⏰ 1 minute read
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Sales
Sales growth was -5% in the 2Q, the first quarter of negative annual growth & 16% below our forecast. Gold sales jumped +48%, silver (small) was up +131%, but cooper was down -88% on slow progress at the Wetar project. We expect higher sales from the 3Q as prices are still rising & +4.5% this next 12 months to USD427m.
Cashflow
Cashflow was a positive +USD21m excluding working capital (USD4m if including). This is the first positive cashflow in 5 quarters as investment spending has slowed down from USD40m a quarter to $11m in the 2Q. We expect moderate investment spend of USD20.7m/quarter this next 12 months, which combines with our sales forecast to predict an average quarterly cashflow of USD17.4m.
Sales growth was -5% in the 2Q, the first quarter of negative annual growth & 16% below our forecast. Gold sales jumped +48%, silver (small) was up +131%, but cooper was down -88% on slow progress at the Wetar project. We expect higher sales from the 3Q as prices are still rising & +4.5% this next 12 months to USD427m.
Cashflow
Cashflow was a positive +USD21m excluding working capital (USD4m if including). This is the first positive cashflow in 5 quarters as investment spending has slowed down from USD40m a quarter to $11m in the 2Q. We expect moderate investment spend of USD20.7m/quarter this next 12 months, which combines with our sales forecast to predict an average quarterly cashflow of USD17.4m.
Sales stall, but lower investment, positive cashflow, paying down debt to accelerate, but not cheap, shares flat...
Balance sheet
Because of earlier spending to get operations & sales up & running, the balance sheet is net debt. The net debt peaked at USD239m at the end of 2018. As of the 2Q net debt is USD213m. With our forecast cashflow & no equity payout (they’re buying back stock in reality), net debt would decline to USD141m in 12 months.
Profit
While sales fell by -5%, net profit dropped by -11% in the 2Q. The cash cost ratio of net profit add back depreciation minus sales as a % of sales increased from 56% to 62% (but depreciation was lower..). We use the recent average 64% cash cost ratio to predict a next 12 months profit of USD61m, up by 2.7%.
Value
MDKA has been raising capital, up to USD314m by the 4Q. But this is now being paid back, down to USD212m we predict. At USD2,472m it’s 5.79x sales, 2.59x assets, 4.02x equity with a profitability of 9.9%, yield forecast 0%. We raise our cashflow forecast to USD69.5m. At 1.6% with a 0.6x adjustment, gives a flat target price of Rp1,666.
Because of earlier spending to get operations & sales up & running, the balance sheet is net debt. The net debt peaked at USD239m at the end of 2018. As of the 2Q net debt is USD213m. With our forecast cashflow & no equity payout (they’re buying back stock in reality), net debt would decline to USD141m in 12 months.
Profit
While sales fell by -5%, net profit dropped by -11% in the 2Q. The cash cost ratio of net profit add back depreciation minus sales as a % of sales increased from 56% to 62% (but depreciation was lower..). We use the recent average 64% cash cost ratio to predict a next 12 months profit of USD61m, up by 2.7%.
Value
MDKA has been raising capital, up to USD314m by the 4Q. But this is now being paid back, down to USD212m we predict. At USD2,472m it’s 5.79x sales, 2.59x assets, 4.02x equity with a profitability of 9.9%, yield forecast 0%. We raise our cashflow forecast to USD69.5m. At 1.6% with a 0.6x adjustment, gives a flat target price of Rp1,666.
