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SSMS, still high investment spending
🎯 🌴 📈 Rp920
Last 12 months cashflow -Rp87bn ⬆️
October 10th, 2020
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Sales
Sales growth was +31% in the 2Q after rising +9% in the 1Q. These are the first 2 positive growth quarters out of the last 7. Sales were 19% above our forecast. There’s no detail yet on production. With the palm oil price rising now, we forecast sales growth will be +11.8% in this next 12 months to reach Rp3.96tn.
Cashflow
Cashflow was positive again, +Rp19bn in the 2Q but was well below our forecast as investment spending was much higher than we had expected. Assuming that the future investment spending is lower than the 2Q but higher than our previous forecast, together with our sales growth forecast gives a higher average quarterly free cashflow +Rp47bn in this next 12 months.
Sales growth was +31% in the 2Q after rising +9% in the 1Q. These are the first 2 positive growth quarters out of the last 7. Sales were 19% above our forecast. There’s no detail yet on production. With the palm oil price rising now, we forecast sales growth will be +11.8% in this next 12 months to reach Rp3.96tn.
Cashflow
Cashflow was positive again, +Rp19bn in the 2Q but was well below our forecast as investment spending was much higher than we had expected. Assuming that the future investment spending is lower than the 2Q but higher than our previous forecast, together with our sales growth forecast gives a higher average quarterly free cashflow +Rp47bn in this next 12 months.
Sales growing as palm oil price rises, cashflow positive (but investment spending still high), debt reducing, shares can rise a bit...
Balance sheet
Like almost all plantations, the balance sheet has been in steadily rising net debt. The net debt has reduced to Rp4.47tn in the 2Q from Rp4.96tn in the 1Q because of FX gains. With our forecast positive cashflow in this next 12 months & assuming no dividend is paid, the net debt will reduce to Rp4.28tn in 12 months time.
Profit
Net profit jumped to Rp441bn in the 2Q because of FX gains as the rupiah strengthened. Excluding that, the cash cost ratio of net profit add back depreciation minus sales as a % of sales was at 93%. We use the first half average cash cost ratio of 79% to predict a net profit of Rp520bn in this 12 months.
Value
SSMS raised a net almost Rp1.8tn in the last 5 years , but has stated to pay capital in the last 2 quarters. At Rp7.6tn current value it’s 1.93x sales, 0.65x assets, 1.73x equity with an 11.8% profitability & no yield. Our cashflow forecast is lower now Rp187bn. At 1.6% with a 0.75x adjustment gives a higher target price Rp920.
Like almost all plantations, the balance sheet has been in steadily rising net debt. The net debt has reduced to Rp4.47tn in the 2Q from Rp4.96tn in the 1Q because of FX gains. With our forecast positive cashflow in this next 12 months & assuming no dividend is paid, the net debt will reduce to Rp4.28tn in 12 months time.
Profit
Net profit jumped to Rp441bn in the 2Q because of FX gains as the rupiah strengthened. Excluding that, the cash cost ratio of net profit add back depreciation minus sales as a % of sales was at 93%. We use the first half average cash cost ratio of 79% to predict a net profit of Rp520bn in this 12 months.
Value
SSMS raised a net almost Rp1.8tn in the last 5 years , but has stated to pay capital in the last 2 quarters. At Rp7.6tn current value it’s 1.93x sales, 0.65x assets, 1.73x equity with an 11.8% profitability & no yield. Our cashflow forecast is lower now Rp187bn. At 1.6% with a 0.75x adjustment gives a higher target price Rp920.
