## MPPA, only 0.12X sales

Target price Rp145

Last 12-month cashflow +Rp 304 billion

January 31st,, 2021

1 minute read

Sales

Sales declined by another -16% in the third quarter to Rp 1.4 trillion, the third quarter in a row of negative growth. The quarterly average growth is now at -8%. We expect sales to turn around & grow by on average +10% in this next 12 months & reach Rp 2.1 trillion by the third quarter of this year, 2021.

Cashflow

After two negative quarters, cashflow was back to a positive Rp 254 billion in the third quarter helped by positive working capital. This brought the average free cashflow up to a positive +Rp 76 billion. Assuming the same current low investment spending with higher sales, we get an average quarterly free cashflow Rp 7 billion in this next 12 months.

1 minute read

Sales

Sales declined by another -16% in the third quarter to Rp 1.4 trillion, the third quarter in a row of negative growth. The quarterly average growth is now at -8%. We expect sales to turn around & grow by on average +10% in this next 12 months & reach Rp 2.1 trillion by the third quarter of this year, 2021.

Cashflow

After two negative quarters, cashflow was back to a positive Rp 254 billion in the third quarter helped by positive working capital. This brought the average free cashflow up to a positive +Rp 76 billion. Assuming the same current low investment spending with higher sales, we get an average quarterly free cashflow Rp 7 billion in this next 12 months.

## Sales to grow again, margins to turn positive, small positive cashflow, only 0.12X sales, slightly higher target price...

Balance sheet

Despite the positive cashflow, the balance sheet leverage of cash minus total liabilities was higher again in the third quarter at -Rp 4.3 trillion from -Rp 4.2 trillion in the second quarter & -Rp3 trillion a year ago. With our forecast small positive free cashflow & assuming there’s no dividend, net cash will beRp 4.26 trillion in 12 months time.

Profit

The third quarter net loss was -at Rp 113 billion from-Rp 119 billion in the second quarter. The cash costs ratio of net profit add back depreciation minus sales as a percent of sales was flat at 104%. We use 99% costs s as sales recover to predict a much lower next 12 months net loss of -Rp 140 billion.

Value

MPPA has raised a total net capital of Rp 198 billion in the last five years. At the current market value of Ro 873 billion it’s at only 0.12X sales, 0.2X assets, 15X equity with no profitability or yield yet. Our cashflow forecast is Rp 29 billion. At 1.6% with a 0.6X adjustment gives a slightly higher target price Rp145.

Despite the positive cashflow, the balance sheet leverage of cash minus total liabilities was higher again in the third quarter at -Rp 4.3 trillion from -Rp 4.2 trillion in the second quarter & -Rp3 trillion a year ago. With our forecast small positive free cashflow & assuming there’s no dividend, net cash will beRp 4.26 trillion in 12 months time.

Profit

The third quarter net loss was -at Rp 113 billion from-Rp 119 billion in the second quarter. The cash costs ratio of net profit add back depreciation minus sales as a percent of sales was flat at 104%. We use 99% costs s as sales recover to predict a much lower next 12 months net loss of -Rp 140 billion.

Value

MPPA has raised a total net capital of Rp 198 billion in the last five years. At the current market value of Ro 873 billion it’s at only 0.12X sales, 0.2X assets, 15X equity with no profitability or yield yet. Our cashflow forecast is Rp 29 billion. At 1.6% with a 0.6X adjustment gives a slightly higher target price Rp145.