Log in here
WEGE
WEGE, more sales, less investment
🎯 🏗 📈 Rp294
Last 12 months free cashflow -Rp692bn ⬇️
August 20th, 2020
⏰ 1 minute read
⏰ 1 minute read
Watch our 3 minute explainer video using the data file & model ⬇️
Sales
Sales growth was lower -33% compared to a year ago in the 2Q which is 16% below our forecast; the sixth quarter in a row of negative sales growth. Construction sales were down by less, -30%, property sales fell -91%. We expect a recovery from the 3Q onwards which results in flat growth in the next 12 months to Rp4.12tn.
Cashflow
Cashflow in 2Q was less negative at -Rp64bn excluding working capital. While the last 12 months average quarterly cashflow is at -Rp173bn. Cashflow has been recovering as investment spending has slowed down. With our forecast for flat sales growth in the next 12 months & lower investment, we get a positive next 12 months average free cashflow Rp28bn per quarter.
Sales growth was lower -33% compared to a year ago in the 2Q which is 16% below our forecast; the sixth quarter in a row of negative sales growth. Construction sales were down by less, -30%, property sales fell -91%. We expect a recovery from the 3Q onwards which results in flat growth in the next 12 months to Rp4.12tn.
Cashflow
Cashflow in 2Q was less negative at -Rp64bn excluding working capital. While the last 12 months average quarterly cashflow is at -Rp173bn. Cashflow has been recovering as investment spending has slowed down. With our forecast for flat sales growth in the next 12 months & lower investment, we get a positive next 12 months average free cashflow Rp28bn per quarter.
Order book up ➡️ sales growth, return to cashflow, trading volume indicates higher price...
Balance sheet
The balance sheet is in net cash becaiuse of the IPO & previous positive cashflow. The net cash has declined with the more recent negative cashflow but stayed positive at Rp388bn as of the 2Q. With our forecast for positive cashflow ahead & a lower Rp78bn dividend payout, the next 12 months net cash will be higher again to Rp422bn.
Profit
While sales declined -33%, profit declined -87% compared to a year ago. The cash cost ratio of net profit add depreciation minus sales as a % of sales was much higher at 99% bringing the last 12 months ratio to 93%. We see a return fo 91%, but lower JV income predicts a -13.6% lower 12 months profit of Rp320bn.
Value
WEGE current market value is at Rp1,847bn. That’s 0.45X our sales forecast, 0.31X the value of the total assets & 0.78X the equity with a profitability of 13.5%. That’s quite cheap. Yield is forecast at 4.2%. We use our 1.6% cashflow valuation with a 60% discount because of the negative sales growth which gives a higher target price of Rp294.
The balance sheet is in net cash becaiuse of the IPO & previous positive cashflow. The net cash has declined with the more recent negative cashflow but stayed positive at Rp388bn as of the 2Q. With our forecast for positive cashflow ahead & a lower Rp78bn dividend payout, the next 12 months net cash will be higher again to Rp422bn.
Profit
While sales declined -33%, profit declined -87% compared to a year ago. The cash cost ratio of net profit add depreciation minus sales as a % of sales was much higher at 99% bringing the last 12 months ratio to 93%. We see a return fo 91%, but lower JV income predicts a -13.6% lower 12 months profit of Rp320bn.
Value
WEGE current market value is at Rp1,847bn. That’s 0.45X our sales forecast, 0.31X the value of the total assets & 0.78X the equity with a profitability of 13.5%. That’s quite cheap. Yield is forecast at 4.2%. We use our 1.6% cashflow valuation with a 60% discount because of the negative sales growth which gives a higher target price of Rp294.
