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SIMP, extremely cheap
🎯 🌴 📈 Rp617
Last 12-month cashflow +Rp 374 billion ⬆️
December 3rd, 2020
1 minute read
Sales
Sales declined by -3% in the third quarter from the second quarter & at Rp 3.44 trillion were 6% below our forecast. On the plantation side, production of oil was down -4%. Sales have been flat for five years, but we expect some growth now with sales rising to Rp 3.86 billion by the third quarter of next year, 2021.
Cashflow
Cashflow has been improving recently as investment spending has slowed down. The last 12 months cashflow excluding working capital was Rp 374 billion & the third quarter alone was Rp 324 billion! We expect low investment spending to continue, which, combined with our forecast higher sales gives an average quarterly free cashflow of Rp 96 billion this next 12 months.
1 minute read
Sales
Sales declined by -3% in the third quarter from the second quarter & at Rp 3.44 trillion were 6% below our forecast. On the plantation side, production of oil was down -4%. Sales have been flat for five years, but we expect some growth now with sales rising to Rp 3.86 billion by the third quarter of next year, 2021.
Cashflow
Cashflow has been improving recently as investment spending has slowed down. The last 12 months cashflow excluding working capital was Rp 374 billion & the third quarter alone was Rp 324 billion! We expect low investment spending to continue, which, combined with our forecast higher sales gives an average quarterly free cashflow of Rp 96 billion this next 12 months.
Sales still flat, but everything else improving, margins, cashflow, net debt, extremely cheap so shares should too...
Balance sheet
Lower investment spending & positive cashflow has meant the balance sheet net debt starting to reduce. From Rp 8.86 trillion last year, the net debt is down to Rp 8.14 as of the third quarter. With our forecast positive cashflow & a dividend of Rp 79 billion, net debt will be lower at Rp 7.83 billion in 12 months time.
Profit
Net profit was positive for the first time in eight quarters, Rp 141 billion in the third quarter, boosted by a non-cash biological gain, Rp 122 billion. The cash cost ratio, net profit add depreciation minus sales as a percent of sales improved to 89%. We use the same 89% to predict a next 12 months profitt, Rp 263 billion.
Value
SIMP has raised capital of Rp 1.92 trillion the last five years, but is starting to pay back. At current value Rp 6.08 trillion, it’s 0.39X sales, 0.17X assets, 0.34X equity with a 1.5% profitability & a 1.3% yield. Our cashflow forecast is now Rp 382 billion. At 1.6% with a 0.4X adjustment gives a higher target price of Rp617.
Lower investment spending & positive cashflow has meant the balance sheet net debt starting to reduce. From Rp 8.86 trillion last year, the net debt is down to Rp 8.14 as of the third quarter. With our forecast positive cashflow & a dividend of Rp 79 billion, net debt will be lower at Rp 7.83 billion in 12 months time.
Profit
Net profit was positive for the first time in eight quarters, Rp 141 billion in the third quarter, boosted by a non-cash biological gain, Rp 122 billion. The cash cost ratio, net profit add depreciation minus sales as a percent of sales improved to 89%. We use the same 89% to predict a next 12 months profitt, Rp 263 billion.
Value
SIMP has raised capital of Rp 1.92 trillion the last five years, but is starting to pay back. At current value Rp 6.08 trillion, it’s 0.39X sales, 0.17X assets, 0.34X equity with a 1.5% profitability & a 1.3% yield. Our cashflow forecast is now Rp 382 billion. At 1.6% with a 0.4X adjustment gives a higher target price of Rp617.
