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Indocement Tunggal Prakarsa(INTP IJ.IDR. 14,850 BUY TP: IDR. 18,100) - 18 Januari 2021
January 18, 2021 09:30

Indocement Tunggal Prakarsa (INTP IJ)

Market share maintained

Domestic cement sales in Dec20 reached 5.74mn tons (-5.0%mom, -12.1%yoy) as sales in Java dropped by 3.9%mom. INTP’s sales in Dec20 of 1.49mn tons (-0.7%mom, -8.9%yoy) came on the back of flattish sales in Western Java, INTP’s home-base. INTP sold 16.19mn tons of cement in FY20. This is in-line with our target of 16.03mn tons (101%). INTP managed to maintain its market share at 25.8% in FY20 (FY19: 25.5%) as domestic consumption in FY20 reached 62.74mn tons (-10.4%yoy). We maintain our BUY call on INTP. 

INTP sold 1.49mn tons of cement in Dec20,or similar to sales in the previous month, -0.7%mom and -8.9%yoy. The government revoked the long public holiday policy replacing the Lebaran holidays and tightened the social gathering restrictions over Christmas and New Year. Sales in Western Java, INTP’s home-base, were -0.8%mom and -13.4%yoy. The largest monthly sales contraction was seen in East Java: -7.5%mom and -10.6%yoy. However, sales in East Java accounted for only 5.6% of the total sales. By comparison, sales in Kalimantan jumped by +15.6%mom with a contribution of 5.1%.  

The FY20 sales are in-line (101%) with our target.INTP sold 16.19mn tons of cement in 2020 (-9.4%yoy). The FY20 sales volume is in-line with our target of 16.03mn tons (101%). Sales in Western Java in 2020 dropped by 14.2%yoy, causing the sales in Java to fall by -11.4%yoy. By contrast, sales in Sumatra grew by +2.0%yoy, Sulawesi sales rose by +23.0%yoy, and sales in East Indonesia climbed +7.9%yoy. Western Java contributed 46.8% of the total sales, followed by Central Java (20.2%), and Sumatra (10.6%). INTP managed to maintain its share in the domestic market at 25.8% (FY19: 25.5%). 

Domestic cement consumption in FY20 dropped by 10.4%yoy. Domestic cement demand in FY20 reached 62.74mn tons (-10.4%yoy) hit by the pandemic which resulted in weak economic conditions, delays in infrastructure projects development, and the implementation of social gathering restrictions in some areas. Sales in Java and Sumatra (the two biggest markets) dropped by -13.2%yoy and -3.8%yoy. Only Eastern Indonesia booked positive growth at +10.2%yoy but the area contributed only 3.2% of the demand. Monthly sales in Dec20 reached 5.74mn tons, -5.0%mom and -12.1%yoy.  

Maintain BUY. We expect sales volume in FY21 to reach 16.6mn tons (+3.6%yoy) and ASP to grow by +2.0%yoy. INTP is our top pick in the sector as we believe that the two new players will have only a small to medium impact on INTP’s market share as the new players will not enter INTP’s home-based market. Our TP is set at IDR18,100, implying 38.6x 21PE, translating to USD166.0 EV/ton. INTP is trading at EV/ton of USD133.8 vs. SMGR’s USD127 EV/ton. 



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