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SRIL, will they finally get to Cashflow positive?
Current, target price
Rp204, 396 (+94%)

April 4th, 2021
1 minute read

Sales, all-time high
  • Sales jumped by 26% in the fourth quarter to USD 376 million which is 9% ahead of our forecast.
  • This is after 3% growth in the third quarter & brings the average quarterly growth to 8%.
  • We predict average growth of 4% in this next 12 months & sales to reach USD 441 million by the fourth quarter of 2021.

Cashflow, still negative
  • Cashflow was still negative -USD 33 million in the fourth quarter but better than -USD 73 million in the third quarter.
  • The average quarterly Cashflow is -USD 32 million.
  • We use the latest quarter investment spending USD 23 million, which with higher sales gives a finally positive average quarterly free Cashflow of +USD 23 million in this next 12 months.

Sales at all time high, better margins, but cashflow still negative, if Cashflow turns positive, huge upside potential...

Data file & model
Balance sheet, higher leverage
  • With negative cashflow, the net leverage of cash minus total liabilities was -USD 992 million in the fourth quarter from -USD 914 million in the third quarter & -USD 798 million a year ago.
  • With our forecast for positive cashflow & a dividend payout of USD 9 million...
  • ...the net cash will be -USD 909 million in 12 months time.

Profit, better margins
  • Net profit was positive +USD 12 million in the fourth quarter from -USS 4 million in the third quarter.
  • The cash cost ratio of net profit add back depreciation minus sales as a percent of sales was lower at 91%.
  • We use the average 89% cost ratio to predict a higher next 12 months net profit of USD 94.4 million.

Value, so cheap
  • SRIL has raised USD 452 million of capital in the last six years.
  • At the current market value of USD 298 million, it’s at only 0.18X sales, 0.16X assets, 0.39X equity with a 12.5% profitability & a 3.2% yield.
  • Our cashflow forecast is USD 92.4 million. At 1.6% with a 0.1X adjustment, gives a 94% higher target price of Rp396.
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