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SSMS, still high spending
🎯 🌴 📈 Rp1,010
Last 12-months cashflow -Rp 133 billion ⬇️
December 14th, 2020
1 minute read
Sales
Unlike most of the palm oil companies, sales increased in the third quarter by +14% from the second quarter. At Rp 969 billion, sales were 5% ahead of our forecast. We are predicting sales will rise above Rp 1 trillion for the first rise in the fourth quarter & then rise to Rp 1.17 trillion by the third quarter 2021.
Cashflow
Despite the higher sales, the cashflow was back to negative again in the third quarter at Rp 2 trillion as investment spending increased above our forecast to Rp 307 billion. We assume investment spending reduces back to Rp 199 billion which together with higher sales gives an average quarterly free cashflow of Rp 70 billion in this next 12 months.
1 minute read
Sales
Unlike most of the palm oil companies, sales increased in the third quarter by +14% from the second quarter. At Rp 969 billion, sales were 5% ahead of our forecast. We are predicting sales will rise above Rp 1 trillion for the first rise in the fourth quarter & then rise to Rp 1.17 trillion by the third quarter 2021.
Cashflow
Despite the higher sales, the cashflow was back to negative again in the third quarter at Rp 2 trillion as investment spending increased above our forecast to Rp 307 billion. We assume investment spending reduces back to Rp 199 billion which together with higher sales gives an average quarterly free cashflow of Rp 70 billion in this next 12 months.
Sales growth strong, but the highest spending, positive cashflow, but not enough for a much higher target price...
Balance sheet
The negative cashflow pushed the balance sheet net debt higher to Rp 4.75 trillion in the third quarter, although that’s still lower than the Rp 4.96 trillion in the first quarter. With our forecast positive free cashflow & assuming a dividend payment of Rp 74 billion, net debt will be slightly lower at Rp 4.54 trillion in 12 months time.
Profit
Net profit was lower in the third quarter at Rp 166 billion because of an FX loss of Rp 131 billion. Meanwhile, the cash cost ratio of net profit add depreciation minus sales as a percent of sales was lower at 70%. We use this year’s average 76% costs to predict a next 12 months profit of Rp 741 billion
Value
SSMS has raised a net capital of Rp 1.6 trillion in the last four years. At the current market value of Rp 8.3 trillion, it’s 1.86X sales, 0.67X assets, 1.76X equity with a 15.8% profitability & a 0.9% yield. Our cashflow forecast is Rp 280 billion. At 1.6% with a generous 0.55X adjustment, gives a higher target price of Rp1,010.
The negative cashflow pushed the balance sheet net debt higher to Rp 4.75 trillion in the third quarter, although that’s still lower than the Rp 4.96 trillion in the first quarter. With our forecast positive free cashflow & assuming a dividend payment of Rp 74 billion, net debt will be slightly lower at Rp 4.54 trillion in 12 months time.
Profit
Net profit was lower in the third quarter at Rp 166 billion because of an FX loss of Rp 131 billion. Meanwhile, the cash cost ratio of net profit add depreciation minus sales as a percent of sales was lower at 70%. We use this year’s average 76% costs to predict a next 12 months profit of Rp 741 billion
Value
SSMS has raised a net capital of Rp 1.6 trillion in the last four years. At the current market value of Rp 8.3 trillion, it’s 1.86X sales, 0.67X assets, 1.76X equity with a 15.8% profitability & a 0.9% yield. Our cashflow forecast is Rp 280 billion. At 1.6% with a generous 0.55X adjustment, gives a higher target price of Rp1,010.
