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HOKI, expensive, a -40% lower target price
Current 183 Target 110 -40%
December 6th 2021
1 minute read
Sales grew 6%
Costs 1 point lower, profit up
Cashflow negative on working capital
Balance sheet, higher leverage
Valuation, expensive, a -40% lower target price
1 minute read
Sales grew 6%
- Sales grew 6% in the third quarter to 200 billion rupiah vs our 189 billion rupiah forecast.
- This brings the quarterly average to 4% growth.
- We predict average growth of 5% in this next 12 months to bring sales to 240 billion rupiah in the third quarter of 2022.
Costs 1 point lower, profit up
- The cash cost ratio was 1 point lower at -94% in the third quarter giving a higher 4 billion rupiah net profit.
- The average Cashflow cost ratio is at -99% now.
- We use the same -94% cost ratio to predict a higher again 6 billion rupiah profit in the third quarter of 2022.
Cashflow negative on working capital
- Free cashflow was -61 billion rupiah in the third quarter with negative working capital & -5 billion rupiah investment Cashflow.
- Average quarterly Cashflow is at -15 billion rupiah now.
- We assume the same -5 billion rupiah investment spending which with higher sales gives a 9 billion rupiah Cashflow in the third quarter of 2022.
Balance sheet, higher leverage
- Cash increased from 3 to 4 billion rupiah in the third quarter.
- Liabilities increased from 248 to 323 billion rupiah so net cash worsened from -245 to -319 billion rupiah.
- With our forecast cashflow & a 0 billion rupiah equity payout net cash will be -286 billion rupiah in 12 months time.
Valuation, expensive, a -40% lower target price
- HOKI capital from the last 23 quarters worsened to -297 billion rupiah in the third quarter with 71 billion rupiah new liabilities & a -10 billion rupiah equity payout & will be -263 billion rupiah in12 months time.
- At the current market value of 1,771 billion rupiah based on our forecasts it’s at 1.8 X assets with a 30 years payback & a 0% yield.
- Our 12 month cashflow forecast is 33 billion rupiah which means an 53 X valuation. A 32 X valuation gives a -40% lower target price of 110 rupiah.