INTP Aug2021

INTP

Contact our analyst Eka

BUY
9th August 2021
Price Rp 10,150
Target price Rp 14,300

Cement sales recovery

Domestic Cement sales continued to recover in June with +13.8% YoY growth to 5.55 million tones (mt). The domestic Bulk cement market growth was strongest at +20.9% YoY while the bag market grew +12%.
For 1H2021 domestic cement sales are up +7.3% to 29 mt from 27 mt last year.
INTP booked 1.4 mt June sales volume, growth of +8% YoY driven by strong growth in Java +8.2%, while outside java growth was +7.4%.
For 1H2021, INTP l sales volume was 7.42 mt, up by +5% YoY inline with the market demand.
The positive growth in bulk cement indicates a faster recovery of major infrastructure and commercial projects, however the recent spike of covid-19 cases followed by new restrictions (PPKM) has limited mobility even for the construction sector. We expect flat growth for 3Q2021 cement sales, but we expect the growth recovery to continue after the easing of PPKM.

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2Q2021: Higher Margin

In 2Q2021, INTP net revenue increased +14.8% to IDR 3.22 trillion, -6% lower QoQ. For 1H2021, net revenue increased +8% YoY to IDR 6.6 trillion.
INTP net profit in 2Q2021 increased significantly +238% YoY to IDR 235 billion despite the lower profit in 2Q2020. This resulted in a higher NPM of 7.3% from 2.5% in 2Q2020. 1H2021 net profit also increased to IDR 586.5 billion or +25% YoY with a higher NPM at 8.8%
Gross profit in 2Q2021 increased +22% YoY to IDR 994 billion, with a slightly higher GPM of 31%.
Operating profit increased significantly +2763% YoY to IDR 246 billion with a positive OPM of 7.6% from -0.3% OPM at 2Q2020.
For 1H2021, EBITDA also increased +33% to IDR 1.28 trillion with a higher Ebitda margin at 19.2%.
We are expecting INTP’s 2021FY revenue and net profit will reach IDR 15 trillion and IDR 1.9 trillion which is growth of +5.9% and +6.4% respectively.

Valuation: maintain Buy with TP 14,300

As we expect the recovery to continue giving a more positive sentiment towards the cement sector, we maintain our recommendation to BUY.
We are now targeting INTP to trade at 25x 2022F PE within a year. Target Price is IDR 14,300 which represents +41% upside.

Previously

INTP May2021