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KO looking a little dull as Cashflow flattens
Current 60 Target 63 +5%
February 13 2022
1 minute read
Sales declined seasonally -6%
Costs up seasonally profit down
Cashflow seasonally lower, average to remain high but flat
Balance sheet higher leverage
Valuation, a 5% higher target price
1 minute read
Sales declined seasonally -6%
- Sales declined seasonally -6% in the fourth quarter to 9,464 million dollars vs our 10,142 million dollars forecast.
- This brings the quarterly average to 3% growth.
- We predict average growth of another 3% in this next 12 months to bring sales to 10,389 million dollars in the fourth quarter of 2022.
Costs up seasonally profit down
- The cash cost ratio went from -69% to -76% profit from 2,475 to 2,450 million dollars in the fourth quarter helped by non cash gains.
- The average cost ratio is at -71% now.
- We use the same -76% cost ratio without non cash gains to predict a 2,210 million dollars profit in the fourth quarter of 2022.
Cashflow seasonally lower, average to remain high but flat
- Free cashflow went from 3,428 to 2,755 million dollars in the fourth quarter with -639 million dollars investment Cashflow & working capital gains.
- Average quarterly Cashflow is flat at 2,815 million dollars now.
- We assume lower -342 million dollars investment spending which with higher sales gives a slightly lower 2,733 million dollars average Cashflow in the next 12 months.
Balance sheet higher leverage
- Cash declined 11,301 to 9,684 million dollars in the fourth quarter.
- Liabilities increased 66,472 to 69,494 million dollars so net cash worsened -55,171 to -59,810 million dollars.
- With our forecast cashflow & a -5,658 million dollars equity payout -5,275 million dollars liabilities payment net cash will be -54,535 million dollars in 12 months time.
Valuation, a 5% higher target price
- KO capital paid from the last 24 quarters worsened 47,966 to 47,808 million dollars in the fourth quarter. with 1,417 million dollars new liabilities & a -1,259 million dollars equity payout & will be 58,740 million dollars in12 months time.
- At the current market value of 260,800 million dollars based on our forecasts it’s at 2.8 X assets with a 8 years payback & a 2% yield.
- Our cashflow forecast is 10,932 million dollars which means an 24 X valuation. A 25 X valuation gives a 5% higher target price of 63 rupiah.