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SMRA, disappointing sales
🎯 🏡 📈 Rp917
Last 12-month cashflow -Rp 3.76 trillion ⬇️
November 24th, 2020
⏰ 1 minute read
⏰ 1 minute read
Sales
Sales went the wrong way & declined by -6% in the third quarter from the second quarter after a +10% increase in the second quarter. At Rp 1,078 billion, sales were far below our previous forecast of Rp 1,463 billion. We shift to predicting that sales will now rise to Rp 1,478 billion in the third quarter of next year.
Cashflow
Despite the decline in sales, third quarter cashflow receipts were higher than the second quarter & cashflow was less negative at -Rp 127 billion. Investment spending was higher than we expected. We expect investment spending to reduce & with our higher sales forecast, this gives a positive average quarterly free cashflow of Rp 88 billion in this next 12 months.
Sales went the wrong way & declined by -6% in the third quarter from the second quarter after a +10% increase in the second quarter. At Rp 1,078 billion, sales were far below our previous forecast of Rp 1,463 billion. We shift to predicting that sales will now rise to Rp 1,478 billion in the third quarter of next year.
Cashflow
Despite the decline in sales, third quarter cashflow receipts were higher than the second quarter & cashflow was less negative at -Rp 127 billion. Investment spending was higher than we expected. We expect investment spending to reduce & with our higher sales forecast, this gives a positive average quarterly free cashflow of Rp 88 billion in this next 12 months.
Sales disappointing but we see an increase from now, back to positive cashflow & a bit lower debt, slightly higher target price ...
Balance sheet
The low sales, high investment spending & resulting negative cashflow meant that the large balance sheet net debt increased again to a new high Rp 7.92 trillion, from Rp 6.98 trillion a year ago. With our forecast positive free cashflow & assuming there’s no dividend payout, the net debt will finally reduce to Rp 7.56 trillion in 12 months time.
Profit
Because of the lower sales, net profit dropped to a first-time-in-five years’ loss of Rp 9 billion in the third quarter. The cash cost ratio of net profit add depreciation minus sales as a % of sales was 95%. We use the average costs 85% to predict a higher next 12 months profit of Rp 542 billion.
Value
SMRA has raised a total Rp 3.3 trillion of capital in the last five years. At Rp 10.8 trillion current value, it’s 2.03X sales, 0.43X assets, 1.1X equity with a 5.5% profitability & no yield yet. Our cashflow forecast is lower at Rp 353 billion. At 1.6% with a generous 0.6X adjustment gives a slightly higher target price of Rp917.
The low sales, high investment spending & resulting negative cashflow meant that the large balance sheet net debt increased again to a new high Rp 7.92 trillion, from Rp 6.98 trillion a year ago. With our forecast positive free cashflow & assuming there’s no dividend payout, the net debt will finally reduce to Rp 7.56 trillion in 12 months time.
Profit
Because of the lower sales, net profit dropped to a first-time-in-five years’ loss of Rp 9 billion in the third quarter. The cash cost ratio of net profit add depreciation minus sales as a % of sales was 95%. We use the average costs 85% to predict a higher next 12 months profit of Rp 542 billion.
Value
SMRA has raised a total Rp 3.3 trillion of capital in the last five years. At Rp 10.8 trillion current value, it’s 2.03X sales, 0.43X assets, 1.1X equity with a 5.5% profitability & no yield yet. Our cashflow forecast is lower at Rp 353 billion. At 1.6% with a generous 0.6X adjustment gives a slightly higher target price of Rp917.
