Other stocks here
WOOD, polishing up nicely
🎯 🪑 📈 Rp972
Last 12 months cashflow +Rp167bn ⬇️
September 28th, 2020
⏰ 1 minute read
⏰ 1 minute read
Watch the explainer ⬇️
Sales
Sales growth in the 2Q was +34% from a year ago, the first positive growth in 4 quarters & one of our highest. Sales also increased by +35% from the 1Q. The main manufacturing sales grew +57% while forestry & trading both declined. We expect sales to continue to rise from the 3Q, +15% this next 12 months to Rp2.82tn.
Cashflow
Cashflow was negative in the 2Q -Rp109bn excluding working capital but was positive if we include working capital. Combined with the first quarter +Rp168bn, first half cashflow is positive as investment spending has reduced significantly. With our sales forecast & a slight pick up again in investment spending, average quarterly cashflow will be positive +Rp61bn in this next 12 months.
Sales growth in the 2Q was +34% from a year ago, the first positive growth in 4 quarters & one of our highest. Sales also increased by +35% from the 1Q. The main manufacturing sales grew +57% while forestry & trading both declined. We expect sales to continue to rise from the 3Q, +15% this next 12 months to Rp2.82tn.
Cashflow
Cashflow was negative in the 2Q -Rp109bn excluding working capital but was positive if we include working capital. Combined with the first quarter +Rp168bn, first half cashflow is positive as investment spending has reduced significantly. With our sales forecast & a slight pick up again in investment spending, average quarterly cashflow will be positive +Rp61bn in this next 12 months.
Sales growing, investment slowing, debt paying, higher target price...
Balance sheet
The balance sheet is in net debt which has been increasing since 2017 because of higher investment spending. But net debt has started to reduce. From a peak Rp2.5tn in this 1Q, net debt was Rp2.26tn as of the 2Q. With our forecast positive cashflow & no dividend payment, net debt will come down to Rp2.0tn in 12 months time.
Profit
Despite the jump in sales, net profit was lower at Rp56bn in the 2Q from Rp63bn a year ago. That’s because the cash cost ratio of net profit add back depreciation minus sales as a % of sales increased from 84% to 88%. We use the higher 88% to predict this 12 months profit is up by +20.5% to Rp252bn.
Value
WOOD has been raising capital, almost 1.8tn since 2017. Now they’re starting to pay back. At Rp2.3tn current market value, it’s 0.72x sales, 0.41x assets, 0.76x equity with an 8.2% profitability & no yield. That’s cheap. Our cashflow forecast is Rp245bn. At 1.6% with a 0.4x adjustment because of the debt, that gives us a higher target price of Rp972.
The balance sheet is in net debt which has been increasing since 2017 because of higher investment spending. But net debt has started to reduce. From a peak Rp2.5tn in this 1Q, net debt was Rp2.26tn as of the 2Q. With our forecast positive cashflow & no dividend payment, net debt will come down to Rp2.0tn in 12 months time.
Profit
Despite the jump in sales, net profit was lower at Rp56bn in the 2Q from Rp63bn a year ago. That’s because the cash cost ratio of net profit add back depreciation minus sales as a % of sales increased from 84% to 88%. We use the higher 88% to predict this 12 months profit is up by +20.5% to Rp252bn.
Value
WOOD has been raising capital, almost 1.8tn since 2017. Now they’re starting to pay back. At Rp2.3tn current market value, it’s 0.72x sales, 0.41x assets, 0.76x equity with an 8.2% profitability & no yield. That’s cheap. Our cashflow forecast is Rp245bn. At 1.6% with a 0.4x adjustment because of the debt, that gives us a higher target price of Rp972.
