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TLKM, record cashflow as investment slows
🎯 📱 📈 Rp6,951
Last 12-month cashflow +Rp 21.2 trillion ⬆️
November 6th, 2020
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Sales
Sales growth has improved from -6% in the second quarter back to -1% in the third quarter. Sales were up by 1% from the second quarter, 3% below our forecast at Rp 33 trillion in the third quarter. Customers increased 6%, ARPU declined -4%. We expect Sales to continue to rise +3.1% in the next 12 months, Rp 137 trillion.
Cashflow
Cashflow has improved to a record Rp 21.2 trillion in the last 12 months which is an average Rp 5.3 trillion a quarter. This is as investment spending has slowed. We expect investment spending to stay low and when this is combined with our sales forecast we get a new record average quarterly cashflow, Rp 6.9 trillion this 12 months.
Sales growth has improved from -6% in the second quarter back to -1% in the third quarter. Sales were up by 1% from the second quarter, 3% below our forecast at Rp 33 trillion in the third quarter. Customers increased 6%, ARPU declined -4%. We expect Sales to continue to rise +3.1% in the next 12 months, Rp 137 trillion.
Cashflow
Cashflow has improved to a record Rp 21.2 trillion in the last 12 months which is an average Rp 5.3 trillion a quarter. This is as investment spending has slowed. We expect investment spending to stay low and when this is combined with our sales forecast we get a new record average quarterly cashflow, Rp 6.9 trillion this 12 months.
Sales recovery in 3Q, cashflow record (ex. working capital), lower debt ahead, higher payouts & it’s cheap relative to the payouts, target Rp7k...
Balance sheet
The balance sheet has been in net debt since 2017 and the net debt increased in the third quarter, because of a large negative working capital, to Rp 44.3 trillion. With our free cash flow forecast and assuming a dividend payment of Rp 8.25 trillion the net debt will be much lower at Rp 25 trillion in 12 months time.
Profit
There was a net profit Rp 7.5 trillion in the third quarter. That’s down -2% from a year ago because of higher depreciation. The cash cost ratio, net profit add back depreciation minus sales as a percent of sales was lower at 56%. We use the average 59% to predict a net profit Rp 27.5 trillion this next 12 months.
Value
TLKM has paid out capital of Rp 111.2 trillion so far. At Rp 274.4 trillion it’s only 2.4 7X that capital paid. It’s 2X sales, 1.14X assets, 2X equity, with a 20% profitability and a 3% yield. Our cashflow forecast is 27.5 trillion. At 1.6% with a large 0.4 X adjustment this gives a much higher target price of Rp6,951.
The balance sheet has been in net debt since 2017 and the net debt increased in the third quarter, because of a large negative working capital, to Rp 44.3 trillion. With our free cash flow forecast and assuming a dividend payment of Rp 8.25 trillion the net debt will be much lower at Rp 25 trillion in 12 months time.
Profit
There was a net profit Rp 7.5 trillion in the third quarter. That’s down -2% from a year ago because of higher depreciation. The cash cost ratio, net profit add back depreciation minus sales as a percent of sales was lower at 56%. We use the average 59% to predict a net profit Rp 27.5 trillion this next 12 months.
Value
TLKM has paid out capital of Rp 111.2 trillion so far. At Rp 274.4 trillion it’s only 2.4 7X that capital paid. It’s 2X sales, 1.14X assets, 2X equity, with a 20% profitability and a 3% yield. Our cashflow forecast is 27.5 trillion. At 1.6% with a large 0.4 X adjustment this gives a much higher target price of Rp6,951.
