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PSDN
Prasidha, something’s brewing...
🎯 ☕️ 📈 ➡️Rp244
12m Free cashflow minus Rp86bn 40/71
January 3rd, 2020
⏰ 1 minute read
⏰ 1 minute read
Something’s brewing...
Sales
PSDN has had flat to slightly declining sales since late 2017, eerly 2018. It’s a common theme for all our stocks. 3Q sales were 4% below the 2Q & 12% lower than a year ago. But..: the weakness is from the rubber business. The instant coffee business has jumped 38% from a year ago & now overtaken rubber for revenue. We use a 12% growth forecast for Rp1.4tn next 12 months up from Rp1.3tn the last 12 months.
Cash flow
PSDN has a total negative free cash flow of Rp189bn the last 5 years or Rp38bn a year. The last 12 months is minus Rp86bn because of a large investment, but operating cash flow is doing better, presumably from the instant coffee. Operating cash flow is plus Rp61bn the last 12 months vs Rp43bn for the entire last 5 years! We are forecasting with sales growth, a small Rp3.5bn positive free cash flow for the 12 months ahead.
Balance sheet
PSDN losses have meant equity has declined & debt has increased. Net debt at end 2015 was Rp196bn & as of the 3Q this year has increased to Rp382bn. It’s been an almost unremitting rise, especially with the recent investment spending. But with positive cash flow forecast, the net debt should be down slightly to Rp377bn by next year.
Profit
The net profit has been blighted by tax. Without ability to offset losses, Indonesian companies can report pre tax losses but still pay tax! This is the case for PSDN. But there has been an improvement in 2019 for both operating & net profit, which has climbed close to break even. We see this momentum leading, with our growth forecast, to a next 12 month profit of Rp24.5bn.
PSDN has had flat to slightly declining sales since late 2017, eerly 2018. It’s a common theme for all our stocks. 3Q sales were 4% below the 2Q & 12% lower than a year ago. But..: the weakness is from the rubber business. The instant coffee business has jumped 38% from a year ago & now overtaken rubber for revenue. We use a 12% growth forecast for Rp1.4tn next 12 months up from Rp1.3tn the last 12 months.
Cash flow
PSDN has a total negative free cash flow of Rp189bn the last 5 years or Rp38bn a year. The last 12 months is minus Rp86bn because of a large investment, but operating cash flow is doing better, presumably from the instant coffee. Operating cash flow is plus Rp61bn the last 12 months vs Rp43bn for the entire last 5 years! We are forecasting with sales growth, a small Rp3.5bn positive free cash flow for the 12 months ahead.
Balance sheet
PSDN losses have meant equity has declined & debt has increased. Net debt at end 2015 was Rp196bn & as of the 3Q this year has increased to Rp382bn. It’s been an almost unremitting rise, especially with the recent investment spending. But with positive cash flow forecast, the net debt should be down slightly to Rp377bn by next year.
Profit
The net profit has been blighted by tax. Without ability to offset losses, Indonesian companies can report pre tax losses but still pay tax! This is the case for PSDN. But there has been an improvement in 2019 for both operating & net profit, which has climbed close to break even. We see this momentum leading, with our growth forecast, to a next 12 month profit of Rp24.5bn.
Small positive cashflow
Value
At just Rp230bn market value, PSDN is trading at only 0.15x our sales forecast, which is in turn a quite impressive 1.7x the total assets. The shares are almost exactly 1x book value & the return on equity we expect is 10%. If we use a 15x PE valuation on our optimistic profit forecast, this gives a target price of Rp244.
At just Rp230bn market value, PSDN is trading at only 0.15x our sales forecast, which is in turn a quite impressive 1.7x the total assets. The shares are almost exactly 1x book value & the return on equity we expect is 10%. If we use a 15x PE valuation on our optimistic profit forecast, this gives a target price of Rp244.
