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SILO
Siloam, a sales slump
🎯 🏥 📈➡️ Rp6,539
12m free cash flow -Rp72bn
August 14th, 2020
⏰ 1 minute read
⏰ 1 minute read
Watch the 3 minute explainer using the data file & model ⬇️
Sales
Sales growth dropped to -22% compared to a year ago in the 2Q which is below our forecast & only the second quarter in of negative sales growth In 5 years. In patient sales were down -34%, out patient -26%. We expect a recovery from the 3Q onwards which results in 0% growth in the next 12 months to Rp6.8tn.
Cashflow
Cashflow 2Q was negative at Rp192bn excluding working capital, while the last 12 months average quarterly cashflow is -Rp18bn.. Cashflow has been negative for 5 years because of the large investment spending. With our forecast for flat sales in the next 12 months & low investment, we get finally positive next 12 months average free cashflow of +Rp61bn per quarter.
Sales growth dropped to -22% compared to a year ago in the 2Q which is below our forecast & only the second quarter in of negative sales growth In 5 years. In patient sales were down -34%, out patient -26%. We expect a recovery from the 3Q onwards which results in 0% growth in the next 12 months to Rp6.8tn.
Cashflow
Cashflow 2Q was negative at Rp192bn excluding working capital, while the last 12 months average quarterly cashflow is -Rp18bn.. Cashflow has been negative for 5 years because of the large investment spending. With our forecast for flat sales in the next 12 months & low investment, we get finally positive next 12 months average free cashflow of +Rp61bn per quarter.
Cashflow positive ➡️ Cash surging ➡️ Shares will rise
Balance sheet
The balance sheet is in net debt because of all the previous negative cashflow. But because of some positive working capital, net debt was flat from the 1Q to the 2Q & at Rp1.06tn. With our forecast of positive cashflow ahead for the first time & no dividend payout, the next 12 months net debt will be lower at Rp813bn.
Profit
As the sales declined, profit was turned to a loss in 2 of the last 3 quarters. The cash cost ratio of net profit add depreciation minus sales as a % of sales was higher at 97% bringing the last 12 months ratio to 98%. We assume a recovery to 93% which gives a lower next 12 months loss, Rp190bn.
Value
SILO current market value is at Rp7,560. That’s 1.11X our sales forecast, 0.93X the value of the total assets & 1.34X the equity with a negative profitability. That’s not cheap. Yield is forecast at 0%. We use our 1.6% cashflow valuation with a generous 30% discount because of the high debt which gives a slightly higher target price of Rp6,539.
The balance sheet is in net debt because of all the previous negative cashflow. But because of some positive working capital, net debt was flat from the 1Q to the 2Q & at Rp1.06tn. With our forecast of positive cashflow ahead for the first time & no dividend payout, the next 12 months net debt will be lower at Rp813bn.
Profit
As the sales declined, profit was turned to a loss in 2 of the last 3 quarters. The cash cost ratio of net profit add depreciation minus sales as a % of sales was higher at 97% bringing the last 12 months ratio to 98%. We assume a recovery to 93% which gives a lower next 12 months loss, Rp190bn.
Value
SILO current market value is at Rp7,560. That’s 1.11X our sales forecast, 0.93X the value of the total assets & 1.34X the equity with a negative profitability. That’s not cheap. Yield is forecast at 0%. We use our 1.6% cashflow valuation with a generous 30% discount because of the high debt which gives a slightly higher target price of Rp6,539.
