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SMGR, about to pay back
🎯 🏗 📈 Rp18,797
Last 12-month cashflow +Rp 4,684 billion ⬆️
November 12th 2020
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Sales
The third quarter is normally the strongest for sales growth & this year was no exception with the second fastest growth of the last five years at +29% to Rp 9,599 billion. That’s 19% ahead of our forecast. We expect a continued recovery now, with sales rising back up to Rp 11.3 trillion by the third quarter of next year.
Cashflow
With higher sales cashflow quadrupled from Rp 435 billion in the second quarter to Rp 1.69 trillion., double our forecast. As investment spending has slowed, cashflow has returned to positive this year. We forecast low investment spending Rp 322 billion/quarter, which when combined with our sales forecast gives an average quarterly free cashflow Rp 1.1 trillion this next 12 months.
The third quarter is normally the strongest for sales growth & this year was no exception with the second fastest growth of the last five years at +29% to Rp 9,599 billion. That’s 19% ahead of our forecast. We expect a continued recovery now, with sales rising back up to Rp 11.3 trillion by the third quarter of next year.
Cashflow
With higher sales cashflow quadrupled from Rp 435 billion in the second quarter to Rp 1.69 trillion., double our forecast. As investment spending has slowed, cashflow has returned to positive this year. We forecast low investment spending Rp 322 billion/quarter, which when combined with our sales forecast gives an average quarterly free cashflow Rp 1.1 trillion this next 12 months.
Sales jump, cashflow quadruples & debt declines, we forecast SMGR will return to capital payer & shares will rise...
Balance sheet
The balance sheet net debt which increased because of the Holcim acquisition is now reducing as cashflow turns positive again. Net debt was down to Rp 21.7 trillion from Rp 29.2 trillion a year ago: with our cashflow forecast a& a dividend of Rp 593 billion, net debt will be down further to Rp 17.9 trillion in 12 months time.
Profit
As sales increased, net profit more than quadrupled to Rp 935 billion in the third quarter despite higher depreciation. The cash cost ratio of profit add depreciation minus sales as a % of sales has improved back to 80%! We use a more conservative 85% to predict that the next 12 months profit will be lower at Rp 2 trillion.
Value
SMGR has raised capital the last five years, Rp 3.68 trillion as of the third quarter, we see this turning to capital paid Rp 1.8 trillion. At Rp 66.4 trillion, its 1.69X sales, 0.87X assets, 1.81X equity with 5.39% profitability, a 0.89% yield. Our cashflow forecast is Rp 4.5 trillion. At 1.6% with a 0.4X adjustment the target is Rp18,797.
The balance sheet net debt which increased because of the Holcim acquisition is now reducing as cashflow turns positive again. Net debt was down to Rp 21.7 trillion from Rp 29.2 trillion a year ago: with our cashflow forecast a& a dividend of Rp 593 billion, net debt will be down further to Rp 17.9 trillion in 12 months time.
Profit
As sales increased, net profit more than quadrupled to Rp 935 billion in the third quarter despite higher depreciation. The cash cost ratio of profit add depreciation minus sales as a % of sales has improved back to 80%! We use a more conservative 85% to predict that the next 12 months profit will be lower at Rp 2 trillion.
Value
SMGR has raised capital the last five years, Rp 3.68 trillion as of the third quarter, we see this turning to capital paid Rp 1.8 trillion. At Rp 66.4 trillion, its 1.69X sales, 0.87X assets, 1.81X equity with 5.39% profitability, a 0.89% yield. Our cashflow forecast is Rp 4.5 trillion. At 1.6% with a 0.4X adjustment the target is Rp18,797.
