Log in here
SMAR
SMAR, big investment opportunity
🎯 🌴📈 Rp8,762
Last 12 months free cashflow +Rp1,296bn ⬆️
August 20th, 2020
⏰ 1 minute read
⏰ 1 minute read
Watch the 3 minute explainer using the data file & model ⬇️
Sales
Sales growth was higher at +13% compared to a year ago in the 2Q which is 14% above our forecast; the 3rd quarter in a row of positive sales growth. Domestic sales were up +35%, exports -10%. In the plantations, fruit production was down -11%. We expect sales to continue rising with +8% growth in the next 12 months, Rp40.5tn.
Cashflow
Cashflow in the 2Q was negative -Rp792bn excluding working capital, dragging 12 months average quarterly cashflow down to Rp324bn. Operating cashflow has turned much more positive in the last few years as sales have been growing. With our forecast for sales growth in the next 12 months, we also get a slightly higher next 12 months average quarterly cashflow, Rp336bn.
Sales growth was higher at +13% compared to a year ago in the 2Q which is 14% above our forecast; the 3rd quarter in a row of positive sales growth. Domestic sales were up +35%, exports -10%. In the plantations, fruit production was down -11%. We expect sales to continue rising with +8% growth in the next 12 months, Rp40.5tn.
Cashflow
Cashflow in the 2Q was negative -Rp792bn excluding working capital, dragging 12 months average quarterly cashflow down to Rp324bn. Operating cashflow has turned much more positive in the last few years as sales have been growing. With our forecast for sales growth in the next 12 months, we also get a slightly higher next 12 months average quarterly cashflow, Rp336bn.
Strong sales growth, cashflow positive, paying out capital, serious re rating potential...
Balance sheet
The balance sheet is in net debt because of the previous negative cashflow. Despite the recent cashflow improvement, negative working capital has kept the net debt quite high. Net debt was Rp13.2tn as of the 2Q. With our forecast for positive cashflow ahead and assuming there’s no dividend payout, the next 12 months net debt will be lower to Rp11.8tn.
Profit
In addition to the sales growth, net profit jumped because of FX gains. The cash cost ratio of net profit add depreciation minus sales as a % of sales was unusually high at 100%, but the last 12 months ratio is still stable 95%. We use the same 95% to predict a 74% higher next 12 months profit of Rp1.09tn.
Value
SMAR current market value is at Rp9.3tn. That’s 0.23X our sales forecast, 0.32 the value of the total assets & 0.79X the equity with a profitability of 9%. That’s very cheap. Yield is forecast at 0%. We use our 1.6% cashflow valuation with a 70% discount because of the high debt which gives a much higher target price of Rp8,762.
The balance sheet is in net debt because of the previous negative cashflow. Despite the recent cashflow improvement, negative working capital has kept the net debt quite high. Net debt was Rp13.2tn as of the 2Q. With our forecast for positive cashflow ahead and assuming there’s no dividend payout, the next 12 months net debt will be lower to Rp11.8tn.
Profit
In addition to the sales growth, net profit jumped because of FX gains. The cash cost ratio of net profit add depreciation minus sales as a % of sales was unusually high at 100%, but the last 12 months ratio is still stable 95%. We use the same 95% to predict a 74% higher next 12 months profit of Rp1.09tn.
Value
SMAR current market value is at Rp9.3tn. That’s 0.23X our sales forecast, 0.32 the value of the total assets & 0.79X the equity with a profitability of 9%. That’s very cheap. Yield is forecast at 0%. We use our 1.6% cashflow valuation with a 70% discount because of the high debt which gives a much higher target price of Rp8,762.
