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Danareksa Equity Snapshot - INTP, 22 Januari 2020
January 22, 2020 10:29

Indocement Tunggal Prakarsa

Solid grounds for optimism

INTP booked cement sales in FY19 of 17.85mn tons, similar to 2018’s sales (+0.3%yoy). The flattish cement sales resulted in stable market share of 25.5% since INTP managed to maintain its sales in its home area, West Java and Java. The sales are in-line with our expectation (100.8%). We upgrade our recommendation to BUY, noting the stock’s more attractive valuation since its premium over SMGR has narrowed significantly. We maintain our forecasts on INTP.

INTP managed to maintain its market share at 25.5% in FY19.  INTP booked cement sales in FY19 of 17.85mn tons, similar to 2018’s sales (0.3%yoy higher). The sales growth is in-line with the domestic consumption, as domestic sales grew by 0.6%yoy. As a result, INTP’s market share was stable at 25.5% in FY19 (FY18: 25.6%). INTP booked strong sales growth in its home area, West Java, at +9.4%yoy. However, INTP booked less sales in Jakarta, Central Java, and East Java. As a result, its sales growth in Java was only 2.3%yoy. Java contributed 74.9% of the sales while West Java contributed 30.9%. INTP has 34.2% market share in Java. INTP’s FY19 cement sales of 17.85mn tons are in-line with our target of 17.70mn tons (100.8%).

Sales in Dec19 grew by 6%yoy despite the monthly seasonality. INTP sold 1.63mn tons of cement in Dec19, or +6.0%yoy but -8.9%mom. Sales in West Java were +14.9%yoy but -10.7%mom. Furthermore, sales in Java grew by +7.2%yoy but were down by -9.0%mom. INTP managed to maintain its market share in West Java at 46.9%, resulting in 34.0% market share in Java. In total, INTP’s market share in Dec19 stood at 24.9% - relatively stable (Nov19: 25.2% and Dec18: 25.2%).

Sluggish domestic sales led by flat demand in Java. Domestic cement consumption in FY19 reached 70.0mn tons, slightly higher than FY18’s (+0.6%yoy). The sluggish demand largely owed to flattish sales in Java which grew by only 0.2%yoy, while sales in Sumatra were down (-4.4%yoy). Java and Sumatra contributed 55.9% and 20.5% of the domestic demand. On a monthly basis, cement sales in Dec19 reached 6.54mn tons, or +7.2%yoy but -7.8%mom.

… read more 20200122 INTP