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SIMP, shares to quadruple
Target price Rp1,968
Last 12-month cashflow +Rp 936 billion

March 1st,, 2021
1 minute read

Sales
  • Sales jumped 21% in the fourth quarter to Rp 4.16 trillion after a -3% decline in the third quarter, +7% in the second quarter.
  • Sales were 10% above our forecast.
  • The average quarterly sales growth is now at 5%. We expect average growth to slow slightly to 4% & sales to reach Rp 4.775 trillion by the fourth quarter 2021.

Cashflow
  • Cashflow was back to positive Rp 68 billion in the fourth quarter after negative -Rp 111 billion in the third quarter.
  • Average quarterly Cashflow is at Rp 234 billion.
  • Investment spending was Rp 443 billion & we use that in our forecast, which with higher sales gives a stronger average quarterly Cashflow Rp 305 billion in this next 12 months:

Sales beat our forecast, cashflow back to positive, big cashflow ahead, only 0.17X assets, shares to quintuple...

Balance sheet
  • The balance sheet leverage of net cash minus total liabilities was at -Rp 14.5 trillion in the fourth quarter from -Rp 15.5 trillion in the third quarter, -Rp 15.4 trillion a year ago.
  • With our forecast for higher free cashflow & a dividend payout of Rp 480 billion...
  • ...the net cash will be -Rp 13.7 trillion in 12 months time.

Profit
  • Net profit was much higher at Rp 577 billion in the fourth quarter up from Rp 141 billion in the third quarter.
  • The cash cost ratio of net profit add back depreciation minus sales as a percent of sales was lower at 78%.
  • We use the average 84% costs to predict a stronger next 12 months profit, Rp 1.6 trillion.

Value
  • SIMP has raised capital of Rp 1.3 trillion in the last six years.
  • At the current market value, Rp 5.95 trillion, it’s only 0.33X sales, 0.17X assets, 0.3X equity with a 8.2% profitability & a 8.1% yield.
  • Our free cashflow forecast is Rp 1.22 trillion. At 1.6% with a 0.4X adjustment gives a four times higher target price of Rp1,968.