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PWON, a 26% higher target price
Current 530 Target 668 +26%

November 25th 2021
1 minute read

Sales declined-1%

• Sales declined -1% in the third quarter to 1,329 billion rupiah vs our 1,303 billion rupiah forecast.
• This brings the quarterly average to 6% growth.
• We predict average growth of 6% to bring sales to 1,684 billion rupiah in the third quarter of 2022.

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Costs improved 6 points

• The cash cost ratio was 6 points lower at -61% in the third quarter giving a 274 billion rupiah net profit.
• The average Cashflow cost ratio is lower at -54% now.
• We use -60% cost ratio to predict a 518 billion rupiah profit in the third quarter of 2022.

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Cashflow average rising to new high

• Free cashflow was lower at 246 billion rupiah in the third quarter with -92 billion rupiah investment Cashflow.
• Average quarterly Cashflow is at 413 billion rupiah now.
• We assume the same -92 billion rupiah investment spending which with higher sales gives a 587 billion rupiah Cashflow in the third quarter of 2022.

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Balance sheet, lower leverage

• Cash increased from 5,802 to 5,927 billion rupiah in the third quarter.
• Liabilities declined from 10,911 to 10,275 billion rupiah so net cash improved from -5,109 to -4,348 billion rupiah.
• With our forecast cashflow & a -560 billion rupiah equity payout net cash will be -2,763 billion rupiah in 12 months time.

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Valuation, capital payouts recovering, a 26% higher target price

• PWON capital from the last 27 quarters increased again to 1,517 billion rupiah in the third quarter with a -118 billion rupiah liabilities payment & will be 3,983 billion rupiah in12 months time.
• At the current market value of 25,520 billion rupiah based on our forecasts it’s at 0.91 X assets with a 11 years payback & a 2% yield.
• Our cashflow forecast is 2,145 billion rupiah which means an 12 X valuation. A 15 X valuation gives a 26% higher target price of 668 rupiah.

Dat@ file & model