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JPM, same story as Indonesian banks
🎯 💰 📈 USD184
Last 12-month cashflow +USD 28.8 billion ⬇️
January 8th, 2021
1 minute read
Sales
After a second quarter gain, sales declined in the third quarter -13% to USD 30.8 billion. Sales are down -15% from the peak, third quarter 2019. Non interest revenue declined -16%, revenue from interest fell -9%. Non interest which become larger in 2020 is still higher. We predict sales will rise to USD 35.3 billion by the third quarter 2021.
Cashflow
Cashflow was negative again in the third quarter -USD 16.1 billion bringing the average quarterly free cashflow for the last 12 months to a positive +USD 7.2 billion. With higher sales forecast & assuming steady quarterly investment spending of USD 1.2 billion, we predict a higher positive average quarterly free cashflow in the next 12 months of +USD 11.2 billion.
1 minute read
Sales
After a second quarter gain, sales declined in the third quarter -13% to USD 30.8 billion. Sales are down -15% from the peak, third quarter 2019. Non interest revenue declined -16%, revenue from interest fell -9%. Non interest which become larger in 2020 is still higher. We predict sales will rise to USD 35.3 billion by the third quarter 2021.
Cashflow
Cashflow was negative again in the third quarter -USD 16.1 billion bringing the average quarterly free cashflow for the last 12 months to a positive +USD 7.2 billion. With higher sales forecast & assuming steady quarterly investment spending of USD 1.2 billion, we predict a higher positive average quarterly free cashflow in the next 12 months of +USD 11.2 billion.
Sales decline, but will recover, cashflow will turn positive again, provisioning collapses, high yield, higher target price...
Balance sheet
Same as the Indonesian banks asset growth jumped in 2020 & the 12 month average growth rate was up to +4.4%. Meanwhile the sales to assets ration collapsed to 0.9% in the third quarter, from 1.3% a year ago. We expect 0% average quarterly asset growth this next 12 months & a recovery in sales to assert back to 1.1%.
Profit
Net profit doubled in the third quarter to USD 9.4 billion, higher than a year ago as provisioning collapsed. The cash cost ratio of net profit add depreciation & provisions minus sales as a percent of sales was lower at 58%. We assume higher provisions & a 63% cost ratio which predicts 12 month profits +49% to USD 38 billion.
Value
JPM has paid out capital of USD 175 billion in the last five years. At the current market value USD 387 billion, it’s 2.21X capital paid, 2.8X sales, 0.12X non-cash assets, 1.3X equity with a 12.8% profitability & a 2.9% yield. Our cashflow forecast is USD 45 billion. At 1.6% with a 0.2X adjustment gives a higher target price, USD184.
Same as the Indonesian banks asset growth jumped in 2020 & the 12 month average growth rate was up to +4.4%. Meanwhile the sales to assets ration collapsed to 0.9% in the third quarter, from 1.3% a year ago. We expect 0% average quarterly asset growth this next 12 months & a recovery in sales to assert back to 1.1%.
Profit
Net profit doubled in the third quarter to USD 9.4 billion, higher than a year ago as provisioning collapsed. The cash cost ratio of net profit add depreciation & provisions minus sales as a percent of sales was lower at 58%. We assume higher provisions & a 63% cost ratio which predicts 12 month profits +49% to USD 38 billion.
Value
JPM has paid out capital of USD 175 billion in the last five years. At the current market value USD 387 billion, it’s 2.21X capital paid, 2.8X sales, 0.12X non-cash assets, 1.3X equity with a 12.8% profitability & a 2.9% yield. Our cashflow forecast is USD 45 billion. At 1.6% with a 0.2X adjustment gives a higher target price, USD184.