INTP Apr2022

INTP

Contact our analyst Eka

BUY, 23% Upside
5th April 2022
Price Rp 10,800
Target price Rp 13,255

Sales continue to grow

In a challenging cement sector with oversupply, a price war, and higher coal prices, INTP still managed to book +5% growth in cement sales volume, with INTP’s domestic cement sales growing +2.2%, bag sales +3% and bulk a slight decrease of -0.6% in 2021. The Java bulk market was down -4.5% due to stricter mobility restriction for infrastructure and commercial projects while outside Java saw growth of +24.2% as more infrastructure projects were outside Java in 2021.
The total domestic cement sales volume continues to grow +4.3% YoY with bag volume +4.7% and bulk +3.2%.
With more easing of restrictions in early 2022 inline with a decline on covid-19 cases, In January – February 2022, domestic cement sales continue to grow +6.5% with January domestic cement sales alone +8% YoY. Bulk grew +8.3% driven by infrastructure projects such as toll roads and industrial estates, while bag grew +1.1%.
Cement demand is likely to remain overshadowed by rising prices such as higher coal prices, which will especially affect the bag market. However, we expect positive sales volume growth in 2022 as infrastructure projects will boost domestic demand.

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Lower Margin in 4Q2021

In 4Q2021, INTP net revenue increased +6% QoQ and +3% YoY to IDR 4.16 trillion due to higher sales volume. For 2021, net revenue increased +4.1% YoY to IDR 14.77 trillion.
With higher energy costs especially coal and higher sales volume in 4Q2021, cost of revenue increased +8% QoQ or +11% YoY. This resulted in a lower gross profit -8% YoY to IDR 1.52 trillion with a lower GPM of 36.8% from 41.5% in 4Q2020.
To offset higher coal prices, INTP has raised ASPs with bag cement prices up 2 times or about 5%-9% and there are plans for a further increase in 1Q2022 to mitigate margin contraction.
Operating profit decreased -5% QoQ or -9% YoY to IDR 695 billion with a lower OPM of 16.7% from 18.9% OPM in 4Q2020.
INTP net profit in 4Q2021 still decreased -16% YoY or -7% QoQ to IDR 580 billion. This resulted in a lower NPM of 13.9% from 17.1% in 4Q2020. For 2021 net profit decreased slightly -1% YoY to IDR 1.78 trillion with a lower NPM of 12.1%
We are expecting INTP’s 2022F revenue and net profit will reach IDR 16.1 trillion and IDR 1.9 trillion which is growth of +9.3% and +9.1% respectively.

Valuation: maintain Buy with TP 13,255