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PWON
PWON, a great opportunity
🎯 🛍 📈 Rp1,062
Last 12 months cashflow +Rp1,194bn ⬆️
September 8th, 2020
⏰ 1 minute read
⏰ 1 minute read
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Sales
Sales really collapsed in the 2Q, down by -82% from a year ago & even more shockingly-80% from the 1Q too! This is of course well below our forecast. Rentals fell by -73%, property sales -91% & land sales -93%, ouch x3! We some recovery from the 3Q, but sales will still decline -22.9% this next 12 months to Rp4.37bn.
Cashflow
Excluding a negative working capital, 2Q cashflow managed to bounce back to positive +Rp231bn despite the sales decline. Average quarterly cashflow is Rp298bn the last 12 months, a big decline from Rp800bn at the peak. With our forecast for lower sales., but also lower investment spending, we get an average quarterly cashflow of Rp275bn a quarter this next 12 months.
Sales really collapsed in the 2Q, down by -82% from a year ago & even more shockingly-80% from the 1Q too! This is of course well below our forecast. Rentals fell by -73%, property sales -91% & land sales -93%, ouch x3! We some recovery from the 3Q, but sales will still decline -22.9% this next 12 months to Rp4.37bn.
Cashflow
Excluding a negative working capital, 2Q cashflow managed to bounce back to positive +Rp231bn despite the sales decline. Average quarterly cashflow is Rp298bn the last 12 months, a big decline from Rp800bn at the peak. With our forecast for lower sales., but also lower investment spending, we get an average quarterly cashflow of Rp275bn a quarter this next 12 months.
Sales to recover...didn’t quite make net cash yet... but will next 12 months, paying capital, shares to rerate.
Balance sheet
The balance sheet has been in net debt for the last fine years because of the previous investments. But with almost 100% positive cashflow, since then, net debt has declined to just Rp300bn in the 2Q. With our forecast positive cashflow & without a dividend, the net debt wil amazingly turn to net cash of Rp802bn in 12 months time.
Profit
Despite the huge sales decline, net profit fell only -49% because of non cash gains from FX & derivatives. The cash cost ratio of net profit add depreciation minus sales as a % of sales was higher at 128%! We use the 12 month average 68% as sales recover to predict a next 12 months profit Rp849bn down by -60.1%.
Value
PWON has been paying capital since 2017 & it’s accelerating despite the sales drop. At Rp19.6t, it’s 4.72x sales, 0.74x assets, 1.1x equity with a 4.4% profitability. Yield is 0%. We reduce our cashflow forecast 10% to Rp1,102bn, which at 1.6% with an 0.75x adjustment as the debt turns to cash, gives a great opportunity & higher target price of Rp1,062.
The balance sheet has been in net debt for the last fine years because of the previous investments. But with almost 100% positive cashflow, since then, net debt has declined to just Rp300bn in the 2Q. With our forecast positive cashflow & without a dividend, the net debt wil amazingly turn to net cash of Rp802bn in 12 months time.
Profit
Despite the huge sales decline, net profit fell only -49% because of non cash gains from FX & derivatives. The cash cost ratio of net profit add depreciation minus sales as a % of sales was higher at 128%! We use the 12 month average 68% as sales recover to predict a next 12 months profit Rp849bn down by -60.1%.
Value
PWON has been paying capital since 2017 & it’s accelerating despite the sales drop. At Rp19.6t, it’s 4.72x sales, 0.74x assets, 1.1x equity with a 4.4% profitability. Yield is 0%. We reduce our cashflow forecast 10% to Rp1,102bn, which at 1.6% with an 0.75x adjustment as the debt turns to cash, gives a great opportunity & higher target price of Rp1,062.
