PGUN

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PGUN, WEAK 3Q, but should get back on track with HIGHER palm oil price
Current 394 Target 440 +12%

January 14 2022
1 minute read

Sales declined -30%

Sales declined -30% in the third quarter to 159 billion rupiah vs our 249 billion rupiah forecast.
This brings the quarterly average to 33% growth.
We predict average growth of 11% in this next 12 months to bring sales to 239 billion rupiah in the third quarter of 2022.

Costs up, profit down

The cash cost ratio went from -83% to -108% profit from 7 to -44 billion rupiah in the third quarter.
The Cashflow cost ratio was also weak at -107%.
We use a lower -85% cost ratio to predict a 69 billion rupiah profit in the third quarter of 2022.

Cashflow lower but positive from investment gains

Free cashflow went from 4 to 1 billion rupiah in the third quarter helped by positive 15 billion rupiah investment Cashflow.
Average quarterly Cashflow is at 18 billion rupiah now.
We assume -3 billion rupiah investment spending which with higher sales gives a much higher 34 billion rupiah Cashflow in the third quarter of 2022.

Cash declined to only 1 billion rupiah

Cash declined from 21 to only 1 billion rupiah in the third quarter.
Liabilities increased 979 to 985 billion rupiah so net cash worsened -958 to -984 billion rupiah.
With our forecast cashflow & a -52 billion rupiah equity payout -72 billion rupiah liabilities payment net cash will be -912 billion rupiah in 12 months time.

BUT capital improved, a 12% higher target price

PGUN capital raised from the last 19 quarters improved -614 to -594 billion rupiah in the third quarter with a -20 billion rupiah liabilities payment & will be -359 billion rupiah in12 months time.
At the current market value of 1,969 billion rupiah based on our forecasts it’s at 1.06 X assets with a 13 years payback & a 3% yield.
Our free cashflow forecast is 137 billion rupiah which means an 14 X valuation. A 16 X valuation gives a 12% higher target price of 440 rupiah.