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SILO, a sales recovery
🎯 🏥 📈 Rp9,902
12m free cash flow +Rp 229BN ⬆️⬆️
November 4th, 2020
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Sales
Sales growth staged a big comeback in the 3Q with growth improving to -1% from -22% in the 2Q from a year ago. Sales of Rp 1,826TN were up +40% from the 2Q & 8% ahead of forecast. Inpatient was +38%, outpatient +43%. As recovery continues, we expect sales to be +12.7% in this next 12 months to Rp 7,667BN.
Cashflow
As sales recovered, cashflow was a record Rp 352BN in the 3Q far above forecast, as investment spending dropped to zero! So 12 month cashflow becomes positive for the first time since 2016. We assume slightly higher investment spending which together with the higher sales will mean a very strong average quarterly cashflow of Rp 129BN in 12 months time.
Sales growth staged a big comeback in the 3Q with growth improving to -1% from -22% in the 2Q from a year ago. Sales of Rp 1,826TN were up +40% from the 2Q & 8% ahead of forecast. Inpatient was +38%, outpatient +43%. As recovery continues, we expect sales to be +12.7% in this next 12 months to Rp 7,667BN.
Cashflow
As sales recovered, cashflow was a record Rp 352BN in the 3Q far above forecast, as investment spending dropped to zero! So 12 month cashflow becomes positive for the first time since 2016. We assume slightly higher investment spending which together with the higher sales will mean a very strong average quarterly cashflow of Rp 129BN in 12 months time.
Making money again ➡️ higher target price
Balance sheet
The balance sheet has dropped back into net debt this year, but with the large positive cashflow in the 3Q, net debt has reduced back to Rp 673BN from Rp 1,056BN in the 2Q. With our forecast for more positive cashflow ahead & no dividend payment yet, the net debt will shrink again to Rp 158BN in 12 months time.
Profit
Net profit doubled from a year ago to Rp 86BN in the 3Q from a loss in the 2Q. The cash cost ratio, net profit add depreciation minus sales as a % of sales has improved significantly & was 85% in the 3Q. We use the average 90% to predict a net profit of Rp 1BN by the 3Q 2021.
Value
SILO has raised capital of Rp 1.8TN the last five years up to the 3Q, but this has reduced from Rp 2.1TN last year. At Rp 8.2TN, it’s 1.06X sales, 0.97X assets, 1.39X equity eyed no profitability or yield yet. E raise our cashflow forecast to Rp 515BN. At 1.6% with a 0.5X adjustment gives a target price of Rp9,902.
The balance sheet has dropped back into net debt this year, but with the large positive cashflow in the 3Q, net debt has reduced back to Rp 673BN from Rp 1,056BN in the 2Q. With our forecast for more positive cashflow ahead & no dividend payment yet, the net debt will shrink again to Rp 158BN in 12 months time.
Profit
Net profit doubled from a year ago to Rp 86BN in the 3Q from a loss in the 2Q. The cash cost ratio, net profit add depreciation minus sales as a % of sales has improved significantly & was 85% in the 3Q. We use the average 90% to predict a net profit of Rp 1BN by the 3Q 2021.
Value
SILO has raised capital of Rp 1.8TN the last five years up to the 3Q, but this has reduced from Rp 2.1TN last year. At Rp 8.2TN, it’s 1.06X sales, 0.97X assets, 1.39X equity eyed no profitability or yield yet. E raise our cashflow forecast to Rp 515BN. At 1.6% with a 0.5X adjustment gives a target price of Rp9,902.
