Cisarua Mountain Dairy [CMRY]: Profits Up 346% in 2021; Revenue Up 119%

"Worth the Hefty Price Tag?"

Balance Sheet

As a result of its IPO in December 2021, Cisarua Mountain Dairy received roughly IDR 3.57 trillion. Coupled with the company’s earnings for the year, the company has 3.66 trillion in cash/equivalents as of December 31st, 2021. 

Either by using its cash flows or cash balance, Cisarua Mountain Dairy has paid off all its bank debt. Thanks to the money it received from its IPO, and fairly low liabilities, the company currently has a low debt to equity ratio of 0.19.

The rather sizable cash balance has also significantly improved the company’s current (5.72) and quick (5.17) ratios. This would indicate that Cisarua Mountain Dairy currently has high liquidity. 

Income Statement

In 2021, sales from the company’s Dairy segment grew by 120% YoY, to IDR 2.65 trillion. Meanwhile, sales from the company’s Consumer Foods segment increased by 119% YoY, to 1.44 trillion. 

Cisarua Mountain Dairy’s revenues grew by almost 120% YoY, to IDR 4.09 trillion. The company’s gross and operating profit rose by 159% and 326% YoY, respectively. Net profit increased to 790 billion, growing by an impressive 346% compared to 2020.

Although Cisarua Mountain Dairy’s return on assets and return on equity decreased compared to 2020, this could be explained by its recent IPO.

As Cisarua Mountain Dairy only had its IPO in early December of 2021, there wasn’t enough time to see any sort of return from the money it just received from the IPO. So in my opinion, the ROA and ROE figures are somewhat misleading. 

Additionally, Cisarua Mountain Dairy’s profitability significantly improved in 2021. Gross profit margins increased to 48% from 40% in 2020. Operating and net profit margins grew substantially to 24.5% and 19.3%, respectively. 

Cash Flow Statement

Since 2019, Cisarua Mountain Dairy’s cash from operating activities has been growing at high rates. In 2021, CFO rose significantly to over DR 725 billion, from just 198.9 billion the previous year. Despite the company’s CapEx also rising to over 299 billion, Cisarua Mountain Dairy’s free cash flow in 2021 increased to over 426 billion. 

Looking at the cash that Cisarua Mountain Dairy receives from its customers, there is little difference between that figure and the revenues stated on the income sheet. So it’s reasonable to say that the company is sufficiently able to convert its sales into actual cash in its pockets.

Dividend History

As stated before, Cisarua Mountain Dairy has only just had its IPO in December, 2021. 

Prior to its IPO, Cisarua Mountain Dairy stated that it was planning to issue dividends with a minimum payout ratio of 30% in 2022. If the company sticks to this plan, then it would pay out IDR 29.88 per share in dividends. At the closing price for March 25th, 2022 (IDR 3,400 per share), this would mean a 0.88% yield. 

Price and Ratios

On March 25th, 2022, Cisarua Mountain Dairy closed at a price of IDR 3400 per share. With 7.93 billion shares outstanding, the company has a market cap of 26.98 trillion. 

In 2021, Cisarua Mountain Dairy’s earnings per share reached IDR 99.59, resulting in a trailing price to earnings ratio of 34.14. Based on my estimates for 2022 EPS, the company has a forward PER of 22.76. Currently, price to book and price to free cash flow stand at 5.74 and 63.32 respectively. 

Clearly, the market has priced Cisarua Mountain Dairy at a premium. Considering the company’s performance, it may be reasonable for the market to do so. 

Closing Remarks

With a large cash balance thanks to its IPO, unbelievably high earnings growth, improving profitability, and healthy cash flows, Cisarua Mountain Dairy’s premium asking price seems well earned.

At a trailing PER of 34.14, the stock is by no means cheap, but one could certainly make the argument that it is a “wonderful company”. Still, at the current price, some may feel that Cisarua Mountain Dairy is a better pick for the watchlist than the portfolio. 

Investing is a game of patience, after all. 

Disclaimer & Disclosure

As of March 26th, 2022, I do not own any shares in CMRY. However, this may change in the future. 

Although I try to be as objective as possible in my analysis, some bias may nevertheless be present.

Please seek advice from a finance professional before making any investment decision. 

Readers are fully responsible for their own investment decisions, and must do their own due diligence.

I take no responsibility for any losses you may incur based on the information provided.

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