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PSGO
PSGO, heading to positive cashflow
🎯 🌴 📈 Rp135
Last 12 months cashflow -Rp461bn ⬆️
August 31st, 2020
⏰ 1 minute read
⏰ 1 minute read
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Sales
Sales in the 2Q continued to ramp up as the young plantations mature. Sales were lower than the 1Q as expected, but +55% from a year ago which is 10% above our forecast. We assume this fast growth can maintain from both higher production & price, & we forecast sales will rise +40% in the next 12 months to Rp1.15tn.
Cashflow
Cashflow was below our forecast at -Rp105bn in the 2Q. But better than average quarterly cashflow of -Rp188bn. Cashflow is improving as sales rise & investment is slowing down a bit. With our sales forecast & lower investment spending, we predict the next 4 quarters average cashflow will rise to -Rp29bn & will finally turn positive in 12 months time.
Sales in the 2Q continued to ramp up as the young plantations mature. Sales were lower than the 1Q as expected, but +55% from a year ago which is 10% above our forecast. We assume this fast growth can maintain from both higher production & price, & we forecast sales will rise +40% in the next 12 months to Rp1.15tn.
Cashflow
Cashflow was below our forecast at -Rp105bn in the 2Q. But better than average quarterly cashflow of -Rp188bn. Cashflow is improving as sales rise & investment is slowing down a bit. With our sales forecast & lower investment spending, we predict the next 4 quarters average cashflow will rise to -Rp29bn & will finally turn positive in 12 months time.
Sales growth +40%, lower investment ➡️ heading to cashflow, start paying out capital, higher share price ...
Balance sheet
The balance sheet is net debt because of investment & negative cashflow. The increase in the net debt has started to slow as investment spending has slowed making cashflow less negative & was Rp1.7tn in the 2Q. With our forecast for a smaller negative cashflow, heading to positive, net debt will climb only slightly to Rp1.8tn in 12 months time.
Profit
Net profit is still a loss, but the cash cost ratio of net profit add back depreciation minus sales as a % of sales has come below 100% & averages 90% in the first half. We use the average 1H cash costs to predict a next 12 months average cost ratio of 80% & that means a net profit of Rp158bn.
Value
PSGO has of course been raising capital, but is starting to turn to a net payer. At Rp2tn, it’s 1.75x sales, 0.58x the assets, 1.51x the equity with a 12% profitability. Yield is 0%. We use annualized 2Q21 cashflow Rp58bn which at 1.6% with a generous 0.7x adjustment because of the fast growth gives a higher target price of Rp135.
The balance sheet is net debt because of investment & negative cashflow. The increase in the net debt has started to slow as investment spending has slowed making cashflow less negative & was Rp1.7tn in the 2Q. With our forecast for a smaller negative cashflow, heading to positive, net debt will climb only slightly to Rp1.8tn in 12 months time.
Profit
Net profit is still a loss, but the cash cost ratio of net profit add back depreciation minus sales as a % of sales has come below 100% & averages 90% in the first half. We use the average 1H cash costs to predict a next 12 months average cost ratio of 80% & that means a net profit of Rp158bn.
Value
PSGO has of course been raising capital, but is starting to turn to a net payer. At Rp2tn, it’s 1.75x sales, 0.58x the assets, 1.51x the equity with a 12% profitability. Yield is 0%. We use annualized 2Q21 cashflow Rp58bn which at 1.6% with a generous 0.7x adjustment because of the fast growth gives a higher target price of Rp135.
