INCO sharp with a 6% yield forecast
INCO Current 7,175 Target 10,430 + 45%
May 10, 2022
1 minute read
Sales declined seasonally -12%
7% 0% 31% -2% -12%
Costs down profit up
-65% -69% -40% -91% -54%
Cashflow lower
-2, 74, 44, 39, 11
Balance sheet net cash improved
113, 135, 177, 190, 196
Capital paid flat , a 45% higher target price
173, 206, 208, 208, 208
May 10, 2022
1 minute read
Sales declined seasonally -12%
7% 0% 31% -2% -12%
- Sales declined seasonally -12% in the first quarter to 235 million dollars -13% vs our 269 million dollars forecast.
- This brings the quarterly average to 4% growth.
- We predict average growth of 3% in this next 12 months to bring sales to 267 million dollars in the first quarter 2023.
Costs down profit up
-65% -69% -40% -91% -54%
- The cash cost ratio went from -91% to -54% profit from -16 to 68 million dollars in the first quarter.
- The average cost ratio is at -64% now.
- We use a -59% cost ratio to predict a 70 million dollars profit in the first quarter 2023.
Cashflow lower
-2, 74, 44, 39, 11
- Free cashflow went from 39 to 11 million dollars in the first quarter with -42 million dollars investment Cashflow.
- Average quarterly Cashflow is at 42 million dollars now.
- We assume the same -42 million dollars investment spending which with higher sales gives a 67 million dollars Cashflow in the first quarter 2023.
Balance sheet net cash improved
113, 135, 177, 190, 196
- Cash increased 508 to 518 million dollars in the first quarter.
- Liabilities increased 318 to 322 million dollars so net cash improved 190 to 196 million dollars
- With our forecast cashflow & a -321 million dollars equity payout 63 million dollars liabilities payment net cash will be 133 million dollars in 12 months time.
Capital paid flat , a 45% higher target price
173, 206, 208, 208, 208
- INCO capital from the last 29 quarters continued flat at 208 million dollars in the first quarter but will be 1,976 million dollars in12 months time.
- At the current market value of 4,986 million dollars based on our forecasts it’s at 2.0 X assets with a 8 years payback & a 6% yield.
- Our cashflow forecast is 258 million dollars which means an 19 X valuation. A 20 X valuation gives a 45% higher target price 10,430 rupiah.