ERAA BUY TP 4700
New Deal with Xiaomi – expect a better balance sheet
Currently, ERAA is responsible for importing Xiaomi components (9M18: IDR 1.5trn, 23% of total inventory), with all purchases made on a cash-upfront basis, which takes a toll in the balance sheet, given lengthier cash-conversion cycle (9M18: 50 days) and hence adversely impacting cash-flows. This ends now, as company indicates an agreement was reached with Xiaomi, in which Xiaomi Indonesia will be responsible for importing components and assembly for about 70% of the volumes and ERAA will purchase the finished-goods from Batam, Indonesia in Rupiah, and the remaining 30% will still follow the current mechanism whereby ERAA imports the components to fulfill local TKDN and importing license requirement. This, coupled with the new 45-60days terms of payment from Xiaomi (current AP days is 28) will significantly reduce lead time and improve the cash conversion cycle (we estimate up to c. 37 days).
Komentar
Posting Komentar