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WOOD, a -38% lower target price
Current 885 Target 546 -38%
November 15th 2021
1 minute read
Sales climbed 12%
Costs 1 point higher
Cashflow more negative
Balance sheet, higher leverage low cash
Valuation, more capital, a -38% lower target price
1 minute read
Sales climbed 12%
- Sales climbed 12% in the third quarter to 1,381 billion rupiah vs our 1,167 billion rupiah forecast.
- This brings the quarterly average to 19% growth.
- We predict average growth of 6% 5% to bring sales to 1,658 billion rupiah in the third quarter of 2022.
Costs 1 point higher
- The cash cost ratio was 1 point higher at -89% in the third quarter giving a 134 billion rupiah net profit.
- The average Cashflow cost ratio is still above 100% at -103% now.
- We use a higher -93% cost ratio to predict a 91 billion rupiah profit in the third quarter of 2022.
Cashflow more negative
- Free cashflow was a more negative -106 billion rupiah in the third quarter with -25 billion rupiah investment Cashflow.
- Average quarterly Cashflow is at -62 billion rupiah now.
- We assume higher -65 billion rupiah investment spending which with higher sales gives a 50 billion rupiah Cashflow in the third quarter of 2022.
Balance sheet, higher leverage low cash
- Cash declined from 38 to 25 billion rupiah in the third quarter.
- Liabilities increased from 3,013 to 3,048 billion rupiah so net cash worsened from -2,975 to -3,023 billion rupiah.
- With our forecast cashflow & a -34 billion rupiah equity payout net cash will be -2,883 billion rupiah in 12 months time.
Valuation, more capital, a -38% lower target price
- WOOD capital from the last 19 quarters worsened to -1,770 billion rupiah in the third quarter & will be -1,596 billion rupiah in12 months time.
- At the current market value of 5,631 billion rupiah based on our forecasts it’s at 0.85 X assets with a 37 years payback & a 1% yield.
- Our cashflow forecast is 174 billion rupiah which means an 32 X valuation. A 20 X valuation gives a -38% lower target price of 546 rupiah.