SMGR, turning net capital payer again
Target price Rp21,982
Last 12-month cashflow +Rp 4.6 trillion
March 1st,, 2021
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- Sales fell 1% in the fourth quarter to Rp 9.55 trillion after the 29% jump in the third quarter, -13% drop in the second.
- Sales were 6% below our forecast.
- The average quarterly sales growth is now at -4%. We expect average growth to turn positive by 7% & sales to reach Rp 12.46 trillion by the fourth quarter 2021.
- Cashflow was lower at Rp 763 billion in the fourth quarter, down from Rp 2.28 trillion in the third quarter.
- Average quarterly free Cashflow is now at Rp 1.15 trillion.
- We use the same as the latest investment spending, Rp 1.29 trillion, which with higher sales gives a higher average quarterly Cashflow Rp 1.16 trillion in this next 12 months.
Sales growth to turn positive, strong cashflow, turning back to capital payer, shares to rise above Rp20k...
- The balance sheet leverage of net cash minus total liabilities was at -Rp 39.4 trillion in the fourth quarter from-Rp 40.4 trillion in the third quarter & -Rp 42 trillion a year ago.
- With our forecast for higher free cashflow & a dividend payout of Rp 1.72 trillion...
- ...the net cash will be -Rp 36.1 trillion in 12 months time.
- Net profit was higher at Rp 1.13 trillion in the fourth quarter up from Rp 935 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 77%.
- We use the same 77% costs to predict a stronger next 12 months profit of Rp 5.74 trillion.
- SMGR has raised Rp 2 trillion of capital in the last six years.
- At the current market value of Rp 62.3 trillion, it’s only 1.44X sales, 0.82X assets, 1.57X equity with a 14.5% profitability & a 2.8% yield.
- Our free cashflow forecast is Rp 4.6 trillion. At 1.6% with a 0.45X adjustment gives a revised higher target price of Rp21,982.