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PWON +232% sales growth!
🎯 🛍 📈 Rp1,501
Last 12-month cashflow +Rp 397 billion ⬇️⬇️
November 15th, 2020
⏰ 1 minute read
⏰ 1 minute read
Sales
The challenges of forecasting in the property sector... sales jumped by +232% in the third quarter from the second & were 55% above our forecast at Rp 1.07 trillion. Rental revenue increased by +178% while property sales increased +500%! We expect the recovery to continue & sales to rise to Rp 1.56 trillion by the third quarter of next year.
Cashflow
Despite the higher than expected sales, this was not reflected yet in cashflow where receipts were only Rp 630 billion. Investment spending was also higher which resulted in lower than expected third quarter cashflow of Rp 188 billion. We expect cashflow will catch up & predict an average quarterly free cashflow of Rp 482 billion in this next 12 months.
The challenges of forecasting in the property sector... sales jumped by +232% in the third quarter from the second & were 55% above our forecast at Rp 1.07 trillion. Rental revenue increased by +178% while property sales increased +500%! We expect the recovery to continue & sales to rise to Rp 1.56 trillion by the third quarter of next year.
Cashflow
Despite the higher than expected sales, this was not reflected yet in cashflow where receipts were only Rp 630 billion. Investment spending was also higher which resulted in lower than expected third quarter cashflow of Rp 188 billion. We expect cashflow will catch up & predict an average quarterly free cashflow of Rp 482 billion in this next 12 months.
Sales bounce +232%, cashflow will catch up, net debt is coming, higher payouts & a much higher target price...
Balance sheet
Despite the positive cashflow, it was used to pay down non debt liabilities & the net debt increased to Rp 451 billion instead of the Rp 802 billion net cash we had expected. But with our higher cashflow forecast & a dividend of Rp 598 billion, there will finally be net cash of Rp 878 billion in 12 months time.
Profit
Despite the higher sales, higher non cash costs meant the net profit was lower at Rp 208 billion. The cash cost ratio of net profit add back non cash costs minus sales as a % of sales was back to normal 55%. We use 55% costs to predict the next 12 months profit is Rp 2 trillion, down by -6%.
Value
PWON has paid out Rp 3.05 trillion of capital rhe last five years & this will increase sharply. At Rp 23.2 trillion, it’s 7.6X capital paid, 4X sales, 0.87X assets, 1.25X equity with a 10.7% profitability & a 2.7% yield. Our cashflow forecast is Rp 1.93 trillion. At 1.6% with a 0.6X discount gives a much higher target price Rp1,501.
Despite the positive cashflow, it was used to pay down non debt liabilities & the net debt increased to Rp 451 billion instead of the Rp 802 billion net cash we had expected. But with our higher cashflow forecast & a dividend of Rp 598 billion, there will finally be net cash of Rp 878 billion in 12 months time.
Profit
Despite the higher sales, higher non cash costs meant the net profit was lower at Rp 208 billion. The cash cost ratio of net profit add back non cash costs minus sales as a % of sales was back to normal 55%. We use 55% costs to predict the next 12 months profit is Rp 2 trillion, down by -6%.
Value
PWON has paid out Rp 3.05 trillion of capital rhe last five years & this will increase sharply. At Rp 23.2 trillion, it’s 7.6X capital paid, 4X sales, 0.87X assets, 1.25X equity with a 10.7% profitability & a 2.7% yield. Our cashflow forecast is Rp 1.93 trillion. At 1.6% with a 0.6X discount gives a much higher target price Rp1,501.
