TPIA, strong sales recovery
Target price Rp11,729
Last 12-months cashflow +USD 334 million
March 5th,, 2021
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- Sales jumped another 26% in the fourth quarter to USD 538 million which was 20% above our forecast! This is after a 17% increase in the third quarter.
- Average quarterly growth is now at 4%.
- We expect growth to be 5% a quarter this next 12 months & sales to reach USD 650 million by the fourth quarter of 2021.
- Cashflow soared to USD 470 million in the fourth quarter up from -USD 25 million in the third quarter as investment spending fell further.
- Average quarterly Cashflow is now at USD 84 million .
- Using the average quarterly investment spending of USD 29 million, with higher sales, we predict average quarterly free Cashflow of USD 75 million in this next 12 months.
Strong sales growth again, huge Cashflow, de leveraging as investment slows, expensive, slightly higher target price...
- The balance sheet leverage of cash minus total liabilities was -USD 863 million in the fourth quarter from -USD 1 billion in the third quarter & -USD 1 billion a year ago.
- With our forecast slightly lower average cashflow & a dividend payout of USD 93 million...
- ...net cash will improve further to -USD 657 million in 12 months time.
- Net profit jumped to USD 71 million in the fourth quarter up from a USD 11 million in the third quarter.
- The cash cost ratio of net profit add back depreciation minus sales as a percent of sales improved sharply to 82%.
- We use the same 82% costs to predict a higher next 12 months net profit of USD 311 million.
- TPIA has raised capital of USD 322 million in the last five years.
- At the current market value of USD 12 billion, it’s at 5.2X sales, 3.3X assets, 5.9X equity with a 15% profitability & a 0.8% yield.
- Our free cashflow forecast is USD 299 million. At 1.6% with a 0.8X adjustment, this gives a higher target price of Rp11,729.