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Refer to Important disclosures in the lastpage of this report
StockData
Target price (Rp) Rp11,500
Prior TP (Rp) Rp11,500
Shareprice (Rp) Rp10,500
Upside/downside (%) +9.5
Sharesoutstanding (m) 5,932
Marketcap. (US$ m) 4,586
Free float (%) 49.0
Avg. 6m dailyT/O (US$ m) 4.0
Price Performance
3M 6M 12M
Absolute (%) 1.7 19.3 11.7
Relative to JCI (%) -2.8 13.1 1.3
52whigh/low (Rp) 11,025 - 8,050
Major Shareholders
Government 51.0%
Estimate Change; Vs. Consensus
2017F 2018F
Latest EPS (Rp) 434 602
Vs. Prior EPS (%) - -
Vs. Consensus (%) -16.7 -3.2
Source: Bloomberg
Chandra Pasaribu
PT Indo Premier Sekuritas
+62 21 5793 1168
EBITDA margin at the lowest
� Volume grew +9.3% yoy, thanks to infrastructure
� …but EBITDA margin only at 16.6% in 3Q17
� Balance remained intact
� Maintain our Hold call
Result was below expectation. Semen Indonesia booked net income of
Rp1.5tn (-50.2% yoy) in 9M17, below our and consensus numbers due to lower-
than-expected ASP, despite improvement in volume with growth of 9.3% yoy.
Nevertheless, net income grew +5.8% qoq to Rp367bn mostly affected by
seasonality as 2Q17 was a slow from Ramadhan festive seasons. Sales volume
grew 23.4% qoq in 3Q17, but with ASP continued to drop marginally by -1.3%
qoq. Overall, strong volume recovery was not enough to restore profitability
despite it helped to soften ASP decline. We do not expect any speedy recovery in
profitability before industry consolidation.
EBITDA margin at the lowest. In 3Q17, EBITDA margin was 16.6%, which was
historical low for Semen Indonesia. In 2Q17, EBITDA margin was 20.7%, while in
the past before the price war, Semen Indonesia’s EBITDA margin were around
30%. ASP has dropped -7.1% yoy in 9M17 and -1.3% qoq, while manufacturing
cost per ton increased +4.2% yoy and +2.5% qoq. Higher manufacturing was
mainly driven by increase prices in raw materials, energy cost and depreciation.
This increase has outweighed cost improvement in logistics and packaging. With
the price was still exist in the market, Semen Indonesia was forced to absorbed
any cost increase. We expect that consolidation within the industry as such low
EBITDA could not support sustainability.
Net gearing at 19% as of Sep17. Semen Indonesia’s balance sheet remained
healthy despite pressure on profitability. Net gearing of the company stood at
19% as of Sep17 with net debt of Rp5.7tn. We expect that Semen Indonesia
should be able to generate EBITDA of Rp5.5tn in FY17 and Rp6.7tn in Fy18, which
should be sufficient to repay any debt. The company has decided to rationalized
capex as no major capex in required. Semen Indonesia’s balance sheet is
sufficient to support any corporate action in acquisition. We remain confident that
Semen Indonesia will survive current price war.
Hold maintained. We remain cautious on the cement industry due to the
oversupply. Nevertheless, the industry could get positive catalyst if demand from
property improves. However, we remain skeptical that profitability will follow
improvement in demand. To restore profitability, the industry might consolidate
first. We maintain our Hold call on Semen Indonesia due to the healthy state of its
balance despite the pressure on profitability.
Semen Indonesia (SMGR IJ)
02 November 2017
Results Note
HOLD (Unchanged)
Year To 31 Dec 2015A 2016A 2017F 2018F 2019F
Revenue (RpBn) 26,948 26,134 25,784 29,812 34,345
EBITDA (RpBn) 7,265 6,611 5,452 6,708 7,967
EBITDA Growth (%) (11.6) (9.0) (17.5) 23.0 18.8
Net Profit (RpBn) 4,521 4,522 2,576 3,573 4,645
EPS (Rp) 762 762 434 602 783
EPS Growth (%) (18.8) 0.0 (43.0) 38.7 30.0
Net Gearing (%) (0.5) 11.1 9.1 (0.8) (11.0)
PER (x) 13.8 13.8 24.2 17.4 13.4
PBV (x) 2.3 2.0 2.0 1.9 1.7
Dividend Yield (%) 3.6 3.6 3.6 2.1 2.9
EV/EBITDA (x) 8.7 9.5 12.2 9.5 7.6
Source: SMGR, IndoPremier Share Price Closing as of : 1-November-2017
Equity |
Indonesia
| C
em
ent
80
85
90
95
100
105
110
115
120
Nov-1
6
Nov-1
6
Dec-1
6
Jan-1
7
Jan-1
7
Feb-1
7
Mar-
17
Mar-
17
Apr-
17
May-1
7
May-1
7
Jun-1
7
Jul-
17
Aug
-17
Aug
-17
Sep-1
7
Oct-
17
Oct-
17
SMGR-Rebase JCI Index-Rebase
SMGR Results Note
2 Refer to Important disclosures in the last page of this report
Fig. 1: Quarterly sales and volume Fig. 2: Quarterly EBITDA
Source: SMGR Source: SMGR
Fig. 3: Gross and operating margin (%) Fig. 4: Net gearing (%)
Source: SMGR Source: SMGR
Fig. 5: Cost per tons (Rp ) Fig. 6: Volume break down by region
Source: SMGR Source: SMGR
SMGR Results Note
3 Refer to Important disclosures in the last page of this report
Fig 7: 9M17 financial result highlights
9M17 9M16 % 3Q17 2Q17 % FY17 %
Turnover 20,552 19,082 7.7 7,838 6,315 24.1 25,784 79.7
Gross profit 6,049 7,574 (20.1) 2,192 1,914 14.6 8,828 68.5
EBITDA 3,956 5,019 (21.2) 1,302 1,309 (0.5) 5,452 72.6
Operating profit 2,323 3,872 (40.0) 707 720 (1.8) 3,543 65.6
Net Int. & Invest. Inc. (408) (110) 269.6 (213) (132) 60.8 (222) 184.1
Forex gain (losses) - - nm - - nm - nm
Except. & Others 87 106 (17.9) 14 31 nm - nm
Group Pretax 2,002 3,868 (48.2) 509 618 (17.7) 3,321 60.3
Taxation (531) (905) (41.3) (143) (264) (46.0) (731) 72.7
Minorities (11) (35) (68.1) 1 (8) (109.4) (15) 75.5
Net Profit 1,460 2,929 (50.2) 367 346 5.8 2,576 56.7
EBITDA Margin 19.2% 26.3%
16.6% 20.7%
21.1%
Source: SMGR, IndoPremier
SMGR Results Note
4 Refer to Important disclosures in the last page of this report
Year To 31 Dec (RpBn) 2015A 2016A 2017F 2018F 2019F
Income Statement
Net Revenue 26,948 26,134 25,784 29,812 34,345
Cost of Sales (16,302) (16,278) (16,956) (19,044) (21,602)
Gross Profit 10,646 9,856 8,828 10,767 12,743
SG&A Expenses (4,747) (4,882) (5,285) (6,053) (6,855)
Operating Profit 5,899 4,973 3,543 4,715 5,889
Net Interest (129) (180) (222) (113) 90
Forex Gain (Loss) 0 0 0 0 0
Others-Net 80 291 0 0 0
Pre-Tax Income 5,851 5,085 3,321 4,601 5,978
Income Tax (1,325) (550) (731) (1,012) (1,315)
Minorities (4) (13) (15) (16) (18)
Net Income 4,521 4,522 2,576 3,573 4,645
Balance Sheet
Cash & Equivalent 3,992 2,862 (614) 1,362 4,007 Receivable 3,629 4,018 3,964 4,584 5,281 Inventory 2,409 2,671 2,635 3,047 3,510 Other Current Assets 509 822 820 842 868
Total Current Assets 10,539 10,373 6,806 9,835 13,665 Fixed Assets - Net 25,168 30,847 30,088 29,367 28,561 Goodwill 1,134 1,355 1,275 1,195 1,115
Non Current Assets 688 1,280 1,190 1,230 1,275 Total Assets 38,153 44,227 39,871 42,180 45,215 ST Loans 139 819 0 0 0 Payable 3,783 4,078 0 4,652 5,359 Other Payables 1,970 2,263 2,418 2,841 3,333
Current Portion of LT Loans 707 992 0 0 0 Total Current Liab. 6,599 8,152 6,441 7,493 8,692
Long Term Loans 2,997 4,450 2,211 1,105 0 Other LT Liab. 1,116 1,051 35 31 28
Total Liabilities 10,712 13,652 8,687 8,630 8,721 Equity 2,605 2,507 2,051 2,051 2,051 Retained Earnings 23,815 26,528 27,517 29,802 32,661 Minority Interest 1,021 1,539 1,616 1,697 1,782
Total SHE + Minority Int. 27,441 30,574 31,185 33,550 36,494 Total Liabilities & Equity 38,153 44,227 39,871 42,180 45,215
Source: SMGR, IndoPremier
SMGR Results Note
5 Refer to Important disclosures in the last page of this report
Year to 31 Dec 2015A 2016A 2017F 2018F 2019F
Cash Flow
Net Income (Excl.Extraordinary&Min.Int) 4,525 4,535 2,591 3,589 4,663 Depr. & Amortization 1,366 2,111 1,909 1,993 2,078 Changes in Working Capital 1,128 (801) 21 (243) (274)
Others (224) 1,422 (664) 260 90 Cash Flow From Operating 6,794 7,267 3,856 5,599 6,558
Capital Expenditure (6,173) (8,602) (980) (1,233) (1,238) Others 172 328 57 19 137
Cash Flow From Investing (6,001) (8,274) (923) (1,214) (1,101) Loans 61 2,418 (4,050) (1,105) (1,105) Equity 0 0 0 0 0 Dividends (2,236) (2,261) (2,261) (1,288) (1,786) Others (49) (603) (847) (51) 37
Cash Flow From Financing (2,224) (446) (7,158) (2,445) (2,854) Changes in Cash (1,431) (1,452) (4,224) 1,941 2,603
FinancialRatios
Gross Margin (%) 39.5 37.7 34.2 36.1 37.1
Operating Margin (%) 21.9 19.0 13.7 15.8 17.1 Pre-Tax Margin (%) 21.7 19.5 12.9 15.4 17.4
Net Margin (%) 16.8 17.3 10.0 12.0 13.5 ROA (%) 12.5 11.0 6.1 8.7 10.6 ROE (%) 17.2 15.6 8.3 11.0 13.3 ROIC (%) 16.4 14.4 7.9 11.1 14.1
Acct. Receivables TO (days) 46.4 51.5 54.0 50.0 50.1 Acct. Receivables - Other TO (days) 1.5 1.9 2.5 2.3 2.4
Inventory TO (days) 6.2 6.4 6.4 6.7 6.6 Payable TO (days) 76.3 88.1 87.2 83.1 84.6 Acct. Payables - Other TO (days) 4.6 5.6 6.5 6.2 6.3
Debt to Equity (%) 14.0 20.5 7.1 3.3 0.0 Interest Coverage Ratio (x) 0.1 0.1 0.1 0.0 0.0 Net Gearing (%) (0.5) 11.1 9.1 (0.8) (11.0)
Source: SMGR, IndoPremier
Head Office
PT INDO PREMIER SEKURITAS
Wisma GKBI 7/F Suite 718
Jl. Jend. Sudirman No.28
Jakarta 10210 - Indonesia
p +62.21.5793.1168
f +62.21.5793.1167
INVESTMENT RATINGS
BUY : Expected total return of 10% or more within a 12-month period
HOLD : Expected total return between -10% and 10% within a 12-month period
SELL : Expected total return of -10% or worse within a 12-month period
ANALYSTS CERTIFICATION.
The views expressed in this research report accurately reflect the analysts personal views about any and all of the subject securities or issuers; and no part of the
research analyst's compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed in the report.
DISCLAIMERS
This research is based on information obtained from sources believed to be reliable, but we do not make any representation or warranty nor accept any
responsibility or liability as to its accuracy, completeness or correctness. Opinions expressed are subject to change without notice. This document is prepared for general circulation. Any recommendations contained in this document does not have regard to the specific investment objectives, financial situation and the
particular needs of any specific addressee. This document is not and should not be construed as an offer or a solicitation of an offer to purchase or subscribe or
sell any securities. PT. Indo Premier Sekuritas or its affiliates may seek or will seek investment banking or other business relationships with the companies in this
report.