MHAL, investment spending slows
Target price SGD0.163
Last 12-month cashflow -SGD 7.2 million
February 26th,, 2021
1 minute read
1 minute read
- Sales increased by another 7% in the second half to SGD 124 million after a 2% increase in the first half.
- Water sales were up 6% & 3% ahead of our forecast.
- The average sales growth is now at 5% & we expect 5% average semester growth in the next 12 months, sales to reach SGD 137 million by the second semester 2021.
- Cashflow turned positive again to SGD 9.2 million in the second semester after minus -SGD 16.4 million in the first semester, as investment spending slowed.
- Average cashflow is -SGD 3.5 million.
- We assume the same investment spending SGD 23.1 million, which with higher sales gives a positive average semester free cashflow of SGD 11 million in this next 12 months.
Strong sales, positive cashflow as investment spending slows, higher target price ...
- The balance sheet leverage of cash minus total liabilities was lower -SGD 289.7 million in the second semester from -SGD 305.1 million in the first & SGD 254 million a year ago.
- With our forecast higher cashflow & assuming a dividend payout of SGD 7.4 million...
- ...the net cash will improve further to -SGD 275.1 million in 12 months time.
- Net profit was at SGD 19.2 million in the second semester up from SGD 17.4 million in the first semester.
- The cash cost ratio of net profit add back depreciation minus sales as a percent of sales was lower at 67%.
- We use the average costs ratio 74% to predict a next 12 months net profit of SGD 24.6 million.
- MHAL has raised capital of SGD 186 million in the last seven years.
- At the current market value of SGD 303 million, it’s only 1.14X sales 0.44X assets, 0.86X equity with a 7% profitability & a 2.4% yield.
- Our free cashflow forecast is SGD 21.9 million. At 1.6% with a 0.5X adjustment, this gives a much higher target price SGD0.163.