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WEGE, a 4% yield
Current, target price 190, 391 (+106%)
August 30th, 2021
1 minute read
Sales back down
Costs lower
1 minute read
Sales back down
- Sales declined by -26% in the second quarter to 577 billion rupiah which is far below our forecast 834 billion rupiah.
- This brings the average quarterly growth to 1%.
- We predict average growth of 17% in this next 12 months to bring sales to 1,024 billion rupiah in the second quarter 2022.
Costs lower
- The cash cost ratio of net profit add non cash costs minus sales as a percent of sales improved to -92% in the second quarter & profit was slightly lower at 48 billion rupiah.
- Average quarterly costs are now at -95%.
- We use the latest -92% costs to predict a higher 84 billion rupiah profit in the second quarter of 2022.
Cashflow improved
Balance sheet, lower leverage
Value, a 4% yield
- Cashflow improved to -142 billion rupiah with lower investment spending of -3 billion rupiah in the second quarter.
- Average quarterly Cashflow has now improved to -81 billion rupiah.
- We use the same low -3 billion rupiah investment spending which with higher sales gives a positive 79 billion rupiah cashflow in the second quarter 2022.
Balance sheet, lower leverage
- Despite the negative cashflow, cash increased from 688 to 792 billion rupiah in the second quarter.
- Liabilities declined from 3,506 to 3,467 billion rupiah so net cash improved from -2,818 to -2,675 billion rupiah.
- With our forecast positive cashflow & a -67 billion rupiah equity payout, net cash will be -2,493 billion rupiah in 12 months time.
Value, a 4% yield
- WEGE capital from the last four years worsened to -799 billion rupiah in the second quarter.
- At the current market value of 1,819 billion rupiah, based on our forecasts, it’s at 0.55X sales & 0.36X assets with a 4% yield.
- Our free cashflow forecast is 249 billion rupiah, which means a 7X valuation. At 15X, this gives a 106% higher target price of 391 rupiah.
