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SSIA, a -19% lower target price
Current 480 Target 390 -19%

November 27th 2021
1 minute read

Sales jumped 23%

• Sales jumped 23% in the third quarter to 522 billion rupiah vs our 420 billion rupiah forecast.
• This brings the quarterly average back to -1% growth.
• We predict positive average growth of 9% to bring sales to 699 billion rupiah in the third quarter of 2022.

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Costs 10 points lower

• The cash cost ratio was 10 points lower at -107% in the third quarter giving a -79 billion rupiah net profit.
• The average Cashflow cost ratio is much higher at -137% now.
• We use a lower -96% cost ratio as sales recover to predict a -13 billion rupiah profit in the third quarter of 2022.

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Cashflow much more negative

• Free cashflow was a much bigger negative -347 billion rupiah in the third quarter with working capital & a positive 21 billion rupiah investment Cashflow.
• Average quarterly Cashflow is at -149 billion rupiah now.
• We assume -2 billion rupiah investment spending which with higher sales gives a 29 billion rupiah Cashflow in the third quarter of 2022.

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Balance sheet, higher leverage

• Cash slumped from 1,062 to 665 billion rupiah in the third quarter.
• Liabilities increased from 3,827 to 3,856 billion rupiah so net cash worsened from -2,765 to -3,191 billion rupiah.
• With our forecast cashflow & a 0 billion rupiah equity payout net cash will be -3,092 billion rupiah in 12 months time.

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Valuation, a -19% lower target price

• SSIA capital from the last 23 quarters improved to -554 billion rupiah in the third quarter with a -51 billion rupiah liabilities payment & will be -455 billion rupiah in12 months time.
• At the current market value of 2,183 billion rupiah based on our forecasts it’s at 0.29 X assets with a 73 years payback & a 0% yield.
• Our cashflow forecast is 99 billion rupiah which means an 22 X valuation. A 18 X valuation gives a -19% lower target price of 390 rupiah.

Data file & model