Despite its high USD debt of USD649m, BSDE’s liquidity remains strong. As of 9M18, it had USD331m in cash. This is equivalent to 47% of its total cash holding or 51% of its USD debt. It will keep net gearing at below 20% as management reiterated that no further leveraging is needed. This is one of the lowest gearing levels in the sector. Moreover, FCF will remain positive due to lower capex requirements and its interest coverage ratio is strong at 3.0x until FY20E.
Buy stock with high USD exposure but solid fundamental
BSDE BUY TP 1250
Buffer from buyback programme
The stock is trading at close to its 6-year low of -2SD of its 5-year mean discount to RNAV at 58%. We think its 18-month buyback programme can provide a floor. Management can buy back a maximum of 10% of outstanding shares capped at IDR1,500 a share, with its IDR3.3t budget. End-9M18 cash holding was IDR8.6t and capex requirements for FY18-19E are limited.
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