## ADES, a 10% yield, 77% higher target price

Current 3,180 Target 5,627 +77%

November 26th 2021

1 minute read

Sales jumped 27%

Costs 2 points higher

Cashflow positive again

Balance sheet, higher net cash

Valuation, a 10% yield, 77% higher target price

1 minute read

Sales jumped 27%

- Sales jumped 27% in the third quarter to a new high 241 billion rupiah vs our 258 billion rupiah forecast.
- This brings the quarterly average to 10% growth.
- We predict average growth of 4% to bring sales to 284 billion rupiah in the third quarter of 2022.

Costs 2 points higher

- The cash cost ratio was 2 points higher at -75% in the third quarter giving a 53 billion rupiah net profit.
- The average Cashflow cost ratio is at -66% now.
- We use a lower -68% cost ratio to predict a 83 billion rupiah profit in the third quarter of 2022.

Cashflow positive again

- Free cashflow was positive again 68 billion rupiah in the third quarter with -23 billion rupiah investment Cashflow.
- Average quarterly Cashflow is at 42 billion rupiah now.
- We assume the same -23 billion rupiah investment spending which with higher sales gives a 66 billion rupiah Cashflow in the third quarter of 2022.

Balance sheet, higher net cash

- Cash increased from 360 to 421 billion rupiah in the third quarter.
- Liabilities increased from 274 to 306 billion rupiah so net cash increased from 86 to 115 billion rupiah.
- With our forecast cashflow & a -185 billion rupiah equity payout net cash will be 178 billion rupiah in 12 months time.

Valuation, a 10% yield, 77% higher target price

- ADES capital from the last 23 quarters was flat at 156 billion rupiah in the third quarter but will rise to 392 billion rupiah in12 months time.
- At the current market value of 1,781 billion rupiah based on our forecasts it’s at 1.5 X assets with a 3 years payback & a 10% yield.
- Our cashflow forecast is 242 billion rupiah which means an 7 X valuation. A 13 X valuation gives a 77% higher target price of 5,627 rupiah.