PT Pradiksi Gunatama TBK engages in the palm oil plantation activities in Indonesia. It produces crude palm oil and palm kernel. The company also plants and manages plasma plantations. PT Pradiksi Gunatama TBK was founded in 1995 and is headquartered in Batu Engau, Indonesia.

Indonesia

PT Pradiksi Gunatama Tbk

Basic Materials

The company does not pay dividends at all, or it pays them sporadically. There have only been a few years with dividend payments in the past ten years. 

PGUN.JK reported revenue of IDR 738 565mn in the last 12 months, down 15% from FY23. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS fell 32% from FY23 to IDR 13.81.

Over the last six months, the stock performance has varied, with an increase following a drop. The stock's price trend wasn't definitive when matched against its global counterparts from the same sector and industry (as depicted above). Over the past six months the stock has exceeded the performance of this peer group by 44ppts and its growth accelerated by 14ppts in the past month. This is equally valid for peers from the same country and industry. Given the stock's valuation versus its peers, its total price movement is mildly favourable.

The company has reported strong EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to 28.1% in the last 12 months, a decline from 41.9% in FY23. 

Historically, PGUN.JK has reported good net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled 10.7%, down from 12.4% in FY23. 

In the last 12 months, the return on capital employed (RoCE) declined to 3.3%, below the peers. 

PT Pradiksi Gunatama Tbk reported a return on equity (RoE) of 4.6% in the last 12 months, down from 7.1% in FY23. 

Another important profitability metric, return on assets (RoA), amounted to 3.0% in the last 12 months, a decrease from 4.4% in FY23. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 1.2 in the past several years. This ratio implies a average shareholder value creation. 

The institutional, legal, and compliance risks associated with the company's country are close to minimal. In combination with rigorous business standards, shareholder rights are well protected.

PGUN.JK has very poor trading liquidity. It will take considerable time for the average private investor to sell a common position under normal market conditions. Liquidity is very unstable and becomes extremely unfavourable on the days with the lowest activity. The trading volume mostly stays the same even under highly turbulent market conditions. Another factor to consider is the substantial number of days with zero trading volumes, i.e., without any ability to sell a position. The stock has a very small market capitalisation, which usually makes its trading liquidity erratic and unpredictable. 

No other major risks have been identified.

The risk of default is moderate. We note robust profitability and an favourable capital structure, among the positive credit factors. Among the negative credit factors, we point to weak positions in its industry, slow historical revenue growth, negligible return on capital, excessive margin volatility, and poor working capital management.

In highly turbulent market conditions, PGUN.JK is highly volatile. In other words, the stock will fall substantially more than the index in times of extreme market volatility or shocking company news. Standalone, the worst-day losses (less than 1% of the time) will likely be significant. 

In normal market circumstances, PGUN.JK is exceptionally volatile. Put differently, without outstanding market volatility or shocking company news, the stock's price will change quite unpredictably. The stock's losses on its worst days (less than 1-5% of the time) will range from large to substantial. 

From both historical and forecast perspectives, the stock is considerably overpriced compared to similar stocks. In particular, the stock is overpriced on P/E, 'expensive' on EV/EBITDA, overvalued on P/FCF. 

PT Pradiksi Gunatama Tbk

IDR 575

2

PT Pradiksi Gunatama Tbk

IDR 575

2

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

IDR 575

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