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PSGO, cutting spending
🎯 🌴 📈 Rp122
Last 12-month cashflow -Rp 225 billion ⬆️

November 21st, 2020
​⏰ 1 minute read
Sales
Sales growth for this young plantation was back to a positive +2% in the third quarter from the second after negative -13% growth in the second quarter. At Rp 226 billion, sales were 12% below our forecast, but we predict sales will jump in the fourth quarter with higher prices & reach Rp 302 billion by the third quarter 2021.

Cashflow
Despite slightly disappointing sales, cashflow was better than we predicted & the lowest negative so far at -Rp 27 billion excluding working capital. Investment spending fell in half to Rp 45 billion & we use this same investment spending which when combined with the higher sales gives a positive average quarterly cashflow Rp 13 billion by third quarter 2021.

Sales growth slows but expected to pick up again, lower spending, positive cashflow by next year, slightly higher target price ...

Data file & model
Balance sheet
Despite the cashflow improvement, it is still negative & so the net debt in the balance sheet increased again to Rp 1.75 trillion in the third quarter from Rp 1.7 trillion in the second. With our forecast for positive cashflow by next year & no dividend, net debt will be only slightly higher Rp 1.76 trillion in 12 months time.

Profit
Net profit was positive at Rp 1 billion in the third quarter thanks to a non cash biological gain. The cash cost ratio of net profit add non cash costs minus sales as a % of sales was at 94%. We use the average cashflow costs Rp 244 billion/quarter to predict a next 12 months profit of Rp 66 billion.

Value
PSGO has raised Rp 1.64 trillion in the last three years. At Rp 1,979 billion current market value, it’s 1.73X sales, 0.6X assets, 1.59X equity with a 5.3% profitability & no yield yet. Our cashflow forecast (third quarter of 2021 annualized) is Rp 52 billion. At 1.6% with a generous 0.7X adjustment gives a slightly higher target price of Rp122
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