INTP
Contact our analyst Eka
Hold
4th August 2020
Price Rp 11,900
Target price Rp 14000
4th August 2020
Price Rp 11,900
Target price Rp 14000
1H2020: below expectation
- 1H2020, INTP net revenue of IDR 6.17 trillion was down -11.6% YoY from 1H2019‘s IDR 6.98 trillion.
- Recovery in June sales volume could not cover the decline in 1Q2020.
- After recording growth in 1Q,, INTP net profit in 1H2020 declined -26.6% YoY to IDR 470 billion. The decline in net profit was inline with lower sales volume in 1H2020 and despite improving cost of revenues which declined -11.3% YoY.
- Lower costs were the result of lower coal prices and savings on fuel & power with a higher usage of low-calorific value (LCV) coal and of alternative fuels.
- Gross profit dropped -12.3% YoY to IDR 1.88 trillion from IDR 2.14 trillion in 1H2019 with a slightly lower gross profit margin of 30.4%.
- Operating profit dropped by -36% YoY to IDR 377.7 billion and the operating profit margin fell to 6.12% from 8.45% in 1H2019.
- However, despite the challenges, INTP still kept a clean balance sheet with no bank loans and a strong cash position as of 1H2020.
- As the 1H2020 result was lower than our expectation, We are reducing our forecasts for INTP’s revenue for 2020F to IDR 14.1 trillion which is -11.7% YoY while net profit will reach IDR 1.5 trillion down by -15% YoY.
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June Sales Rebound
Valuation: Hold with TP 14,000
- In June 2020, cement sales had positive growth due to the shifting of the Eid Al-Fitr holidays. Domestic cement sales increased +32.3% YoY to 4.97 million tons for the month of June.
- For the year to date, domestic cement sales still dropped -6.4% YoY to 27.57 million tons.
- INTP cement sales volume rebounded with June sales volume up +28.3% YoY to 1.33 million ton from 1.04 million tons in June 2019. For the Year to date, INTP sales volume still dropped by -12.4% YoY to 7.36 million tons.
- We expect an economic recovery after re-opening, and that 2H2020 cement demand will rebound as the Indonesia Government infrastructure projects continue.
Valuation: Hold with TP 14,000
- The 1H2020 was below our expectation and we revise our 2020F target.
- We are now targeting INTP to trade at 26x 2020F PE within a year. Target Price is IDR 14,000 which represents +18% upside. We downgrade our recommendation to HOLD.
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