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SMGR, a capital payer again
Current, target price 7,800, 22,320 (+186%)

August 2nd, 2021
1 minute read

Sales inch up

• Sales inched up by 1% in the second quarter to 8,137 billion rupiah which is close to our forecast 8,157 billion rupiah.
• This brings the average quarterly growth to 3%
• We predict average growth of 6% in this next 12 months to bring sales to 9,759 billion rupiah in the second quarter 2022.

Costs seasonally higher

• The cash cost ratio of net profit add on cash costs minus sales as a percent of sales was up to -87% in the second quarter & profit was down to 343 billion rupiah.
• Average quarterly costs are now at -82% & average profit is 714 billion rupiah.
• We use the average -82% costs to predict an average 854 billion rupiah net profit in the second quarter 2022

Data file & model

Cashflow, seasonally lower

• Cashflow was down to 111 billion rupiah with lower investment spending of -344 billion rupiah in the second quarter.
• Average quarterly Cashflow has now improved to 1,510 billion rupiah.
• We use the same -344 billion rupiah investment spending which with higher sales gives a 1,322 billion rupiah cashflow in the second quarter 2022.

Balance sheet, lower leverage

• With dividend payouts cash declined in the second quarter from 3,805 to 2,500 billion rupiah.
• Liabilities also declined from 41,629 to 37,907 billion rupiah so the net cash improved from -37,824 to -35,407 billion rupiah.
• With our forecast positive cashflow & a -1,026 billion rupiah equity payout, the net cash will improve to -30,772 billion rupiah in 12 months time.

Value, a capital payer again

• SMGR capital from the last six years turned positive again to 988 billion rupiah in the second quarter.
• At the current market value of 46,270 billion rupiah, based on our forecasts, it’s at 1.18X sales & only 0.64X assets with a 2% yield.
• Our free cashflow forecast is 5,296 billion rupiah. At 25 (a 4% yield), this gives a 186% higher target price of 22,320 rupiah.