INTP Apr2023

INTP

Contact our analyst Eka

Maintain BUY, 25% Upside
5th April 2023
Price Rp 10,450
Target price Rp 13,100

Expecting lower domestic sales in 1Q2023

Domestic cement sales in 1Q2023 are still under pressure from prolonged heavy rains. The start of fasting will also tend to reduce cement consumption.
In 20222, domestic cement sales volume weakened -3.4% YoY to 63.03 million tones (mt) led by a contraction in bag sales volume of -8.7% YoY due to price increases, while the bulk market maintained growth of +14.5%.
For January - February 2023 cement sales, the domestic market was still under pressure with volume declining -2.6% YoY to 9.39 mt due to prolonged heavy rains in February, while the bag market weakened -6.5% YoY and the bulk market grew by +10.2%.
Despite the decrease in domestic volumes, INTP had a +6.7% YoY sales volume increase in February with bag sales volume increasing +2.9% and bulk sales volume +19.6%.
We maintain our forecast for positive sales volume growth in 2023 as domestic demand is likely to recover from ongoing infrastructure projects which will boost cement consumption.

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4Q2022: Margin recover continue

The 60% DMO price of coal in 2H2022 had a positive impact on the recovery in INTP’s margins in 3Q2022 and 4Q2022.
In 4Q2022, INTP sales increased +12% YoY but declined -2% QoQ to IDR 4.66 trillion, in line with an ASP hike in September brining the total number of ASP hikes to 3 in 2022.
INTP bottom line increased 54% YoY or +37% QoQ to IDR 896 billion and the NPM increased to 19.2% from 13.8% in 3Q2022.
Energy costs decreased -2.3% QoQ to IDR 1.38 trillion in 4Q2022 inline with the securing of 60% of coal supply at DMO prices.
This resulted in a lower QoQ cost of revenue -4% QoQ and a gross profit increase of +11% YoY or +2% QoQ to IDR 1.7 trillion with a higher GPM of 36.4%.
We expect INTP will maintain better margins amid softer coal prices and with 100% DMO prices in 1Q2023. We are forecasting an INTP profit of IDR 1.9 trillion this year, which is an increase of +4.7% YoY.

Valuation: Maintain BUY with TP 13.100

We are now targeting INTP to trade at 23x 2024F PE within a year. Target Price is IDR 13,100 which represents +25% upside. We maintain our recommendation to BUY.

Previously

INTP Nov2022