## TSPC, a 3.3% yield

Target price Rp2,194

Last 12-month cashflow +Rp 694 billion

February 1st,, 2021

1 minute read

Sales

After declines in the first & second quarters, sales growth turned positive again in the third quarter by +6% to reach Rp 2.74 billion. The average quarterly growth is at -1%. We expect average quarterly sales growth to turn positive +2% in this next 12 months & sales to rise to Rp 2.96 billion by the third quarter of 2021.

Cashflow

Cashflow in the third quarter was lower at Rp 105 billion compared to the Rp 116 billion in the second quarter. Average quarterly cashflow is now at Rp 173 billion because of the strong fourth quarter of 2019. Assuming steady investment spending & higher sales gives an average quarterly free cashflow of Rp 132 billion in this next 12 months.

1 minute read

Sales

After declines in the first & second quarters, sales growth turned positive again in the third quarter by +6% to reach Rp 2.74 billion. The average quarterly growth is at -1%. We expect average quarterly sales growth to turn positive +2% in this next 12 months & sales to rise to Rp 2.96 billion by the third quarter of 2021.

Cashflow

Cashflow in the third quarter was lower at Rp 105 billion compared to the Rp 116 billion in the second quarter. Average quarterly cashflow is now at Rp 173 billion because of the strong fourth quarter of 2019. Assuming steady investment spending & higher sales gives an average quarterly free cashflow of Rp 132 billion in this next 12 months.

## Sales growth to turn positive, strong cashflow, a 3.3% yield, higher target price...

Balance sheet

With dividends , the net cash minus total liabilities has stayed flat & was -Rp 457 billion in the third quarter from -Rp 371 billion in the second quarter & -Rp 398 billion a year ago. With our forecast positive cashflow & assuming a dividend of Rp 203 billion, net cash will be -Rp 134 billion in 12 months time.

Profit

With higher sales, net profit increased to Rp 133 billion in the third quarter from Rp 94 billion in the second quarter. The cash costs ratio of net profit add depreciation minus sales as a percent of sales was flat at 93%. We use an average 92% costs to predict the next 12 months profit is flat, Rp 677 billion.

Value

TSPC has paid out capital of Rp 486 billion the last five years. At the current market value of Rp 6.2 trillion, its 12X capital paid, only 0.54X sales, 0.68X assets, 0.94X equity with a 10.3% profitability & a 3.3% yield. Our cashflow forecast is Rp 527 billion. At 1.6% with a 0.3X adjustment gives a higher target price, Rp2,194.

With dividends , the net cash minus total liabilities has stayed flat & was -Rp 457 billion in the third quarter from -Rp 371 billion in the second quarter & -Rp 398 billion a year ago. With our forecast positive cashflow & assuming a dividend of Rp 203 billion, net cash will be -Rp 134 billion in 12 months time.

Profit

With higher sales, net profit increased to Rp 133 billion in the third quarter from Rp 94 billion in the second quarter. The cash costs ratio of net profit add depreciation minus sales as a percent of sales was flat at 93%. We use an average 92% costs to predict the next 12 months profit is flat, Rp 677 billion.

Value

TSPC has paid out capital of Rp 486 billion the last five years. At the current market value of Rp 6.2 trillion, its 12X capital paid, only 0.54X sales, 0.68X assets, 0.94X equity with a 10.3% profitability & a 3.3% yield. Our cashflow forecast is Rp 527 billion. At 1.6% with a 0.3X adjustment gives a higher target price, Rp2,194.