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Danareksa Equity Snapshot - SMGR, 24 Januari 2020
January 24, 2020 09:40

Semen Indonesia(SMGR IJ)

Year of consolidation

Semen Indonesia sold 42.61mn tons of cement in FY19, or +28.5%yoy on the back of consolidation with Solusi Bangun Indonesia (SBI). SMGR’s sales accounted for 53.4% of the domestic cement consumption in FY19, the largest in the country. The sales volume is in-line with our target (103.1%). Excluding SBI, the sales volume reached 32.7mn tons (-1.4%yoy). We maintain our BUY call on SMGR.

Strong sales growth in FY19. Semen Indonesia (SMGR) sold 42.61mn tons of cement in FY19, or +28.5%yoy from 33.17mn tons in FY18. The strong sales were supported by consolidation with Solusi Bangun Indonesia (SBI) since Feb 19. The sales breakdown is as follows: 1) Semen Indonesia; sales in FY19 reached 30.48mn tons (-0.4%yoy) on the back of lower domestic sales (-2.2%yoy) but supported by higher export sales (+15.3%yoy), 2) Thang Long Cement (TLCC); 2.22mn tons of cement sold in FY19, or -14.0%yoy, and 3) SBI; 9.92mn tons of cement sold under SMGR’s ownership in FY19 which contributed 23.3% of the total sales. Semen Indonesia and TLCC contributed 71.5% and 5.2% of the group’s sales in FY19.

SMGR dominated the domestic cement market. In the domestic market, SMGR sold 36.35mn tons of cement domestically in FY19. This is +32.6%yoy on the back of consolidation with SBI. Hence, SMGR dominated the domestic market with market share of 53.4%, the largest in the country. Excluding SBI, the market share would be 38.4%.  Domestic cement consumption in FY19 reached 69.8mn tons (+0.34%yoy) on the back of flattish sales in Java (-0.30%yoy) and lower sales in Sumatra (-4.41%yoy). Strong demand was seen in the eastern part of Indonesia. Cement consumption in Sulawesi grew by +8.15%yoy, while Nusa Tenggara and eastern Indonesia posted growth of +7.74%yoy and +13.8%yoy, respectively. However, the demand in these areas only accounted for 23.7% of the total demand.

Sales in Dec19 soared 36%yoy. On a monthly basis, SMGR sold 3.93mn tons of cement in Dec19. This is +36.0%yoy and -10.7%mom. Semen Indonesia itself sold 2.78mn tons of cement in Dec19 (+4.4%yoy and -12.5%mom), while TLCC sold 235,000 tons (+4.6%yoy and +55.1%mom), and SBI sold 913,000 tons (-7.6%yoy and -14.5%mom). The group contributed 53.1% of the domestic cement consumption in Dec19.

Maintain BUY. SMGR’s cement sales of 42.61mn tons in FY19 are 103.1% of our target of 41.34mn tons. This is in-line with our target. SMGR is trading at EV/ton of USD148.3/ton, cheaper than INTP’s USD179.6/ton.

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