## SSIA, back to positive cashflow

Target price Rp631

Last 12-month cashflow -Rp 717 billion

February 3rd,, 2021

1 minute read

Sales

Sales increased by +13% in the third quarter to reach Rp 659 billion after big declines of -34% & -29% in the second & first quarters. Average quarterly growth is now at -5%. We expect average growth to turn positive +11% in this next. 12 months & sales to rise to Rp 968 billion by the third quarter of 2021.

Cashflow

Cashflow receipts were lower than sales, Rp 500 billion in the third quarter & cashflow was -Rp 273 billion from -Rp 249 billion in the second quarter. Average quarterly cashflow is -Rp 177 billion. We expect investment spending to remain Rp 2 billion, which with higher sales gives a positive average quarterly cashflow, Rp 15 billion this next 12 months.

1 minute read

Sales

Sales increased by +13% in the third quarter to reach Rp 659 billion after big declines of -34% & -29% in the second & first quarters. Average quarterly growth is now at -5%. We expect average growth to turn positive +11% in this next. 12 months & sales to rise to Rp 968 billion by the third quarter of 2021.

Cashflow

Cashflow receipts were lower than sales, Rp 500 billion in the third quarter & cashflow was -Rp 273 billion from -Rp 249 billion in the second quarter. Average quarterly cashflow is -Rp 177 billion. We expect investment spending to remain Rp 2 billion, which with higher sales gives a positive average quarterly cashflow, Rp 15 billion this next 12 months.

Balance sheet

The net leverage of cash minus total liabilities has been increasing again & was at -Rp 2.74 trillion in the third quarter up from -Rp 2.4 trillion in the second quarter, -Rp 2.16 trillion a year ago. With our forecast for some positive cashflow & assuming no dividend payout, net cash will be -Rp 2.68 trillion in 12 months time.

Profit

With higher sales, the third quarter net loss improved to -Rp 69 billion from -Rp 109 billion in the second quarter. The cash cost ratio of net profit add back depreciation minus sales as a percent of sales was down to 105%. With higher sales we use 98% costs to predict a next 12 months loss of -Rp 77 billion.

Value

SSIA has raised a net capital of Rp 112 billion in the last five years. At the current market value of Rp 2 trillion, it’s only 0.59X sales, 0.27X assets, 0.5X equity with no profitability or yield yet. Our free cashflow forecast is Rp 66 billion. At 1.6% with a generous 0.7X adjustment gives a higher target price of Rp631.

The net leverage of cash minus total liabilities has been increasing again & was at -Rp 2.74 trillion in the third quarter up from -Rp 2.4 trillion in the second quarter, -Rp 2.16 trillion a year ago. With our forecast for some positive cashflow & assuming no dividend payout, net cash will be -Rp 2.68 trillion in 12 months time.

Profit

With higher sales, the third quarter net loss improved to -Rp 69 billion from -Rp 109 billion in the second quarter. The cash cost ratio of net profit add back depreciation minus sales as a percent of sales was down to 105%. With higher sales we use 98% costs to predict a next 12 months loss of -Rp 77 billion.

Value

SSIA has raised a net capital of Rp 112 billion in the last five years. At the current market value of Rp 2 trillion, it’s only 0.59X sales, 0.27X assets, 0.5X equity with no profitability or yield yet. Our free cashflow forecast is Rp 66 billion. At 1.6% with a generous 0.7X adjustment gives a higher target price of Rp631.