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TPIA, looks expensive
🎯 🏭 📉 Rp6,765
Last 12-month cashflow +USD 3 million ⬆️

January 12th, 2021
1 minute read

Sales
Sales bounced +17% in the third quarter to USD 427 million after a -24% drop in the second quarter. This means that the 12 months average quarterly sales growth has recovered back to a positive +9%. We predict average growth with be +9% in this next 12 months & sales will reach USD 593 million by the third quarter 2021.

Cashflow
Third quarter cash receipts were lower than sales at USD 402 million & investment spending also increased so free cashflow was back to a negative -USD 25 million. But we see investment spending declining to USD 25 million a quarter which with higher sales gives a positive average quarterly free cashflow of +USD 29 million in this next 12 months.

Sales growing again, cashflow turns positive on lower investment spending, but looks expensive, lower target price...

Data file & model
Balance sheet
With negative free cashflow, the net cash (cash minus liabilities) increased again back slightly above -USD 1 billion from -USD 952 million in the second quarter & -USD 768 million a year ago. With our forecast for positive free cashflow & including a dividend payout of USD 34 million, net cash will be -USD 926 million in 12 months time.

Profit
After four quarterly losses, net profit was back to a positive +USD 11 million again in the third quarter. The cash costs ratio of net profit add back depreciation minus sales as a percent of sales improved to 92%. We use lower 90% costs as sales rise to predict a next 12 months positive net profit of +USD 115 million.

Value
TPIA has raised USD 345 million of capital in the last five years. At the current market value of USD 12.7 billion, it’s a high 6.1X sales, 3.9X assets, 7X equity with a 6.3% profitability & a 0.3% yield. Our cashflow forecast is USD 115 million. At 1.6% with a generous 1.2X adjustment, gives a lower target price of Rp6,765.
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