INTP
Contact our analyst Eka
BUY
24 March 2020
Price Rp 10,400
Target price Rp 15,800
24 March 2020
Price Rp 10,400
Target price Rp 15,800
2019FY: Higher profit
- INTP booked net revenue of IDR 15.94 trillion in 2019 +4.9% YoY led by a price recovery which started in the 2nd semester of 2018.
- INTP also managed their cost of revenue through various strategies.
- Cost of revenues decreased -3,5% YoY from lower coal prices, higher usage of low-calorific value (LCV) coal, and higher usage of alternative fuels; fuel costs decreased -10,1% YoY.
- Gross profit grew 26% YoY to IDR 5.5 trillion from IDR 4.37 trillion in 2018 and the gross profit margin improved from 28.8% in 2018 to 34.5% in 2019.
- Operating profit rose +77.3% YoY to IDR 1.9 trillion from IDR 1.07 trillion and the operating profit margin improved to 11.9% from 7.1% in 2018.
- INTP net profit was up +60.2% YoY to IDR 1.83 trillion, from IDR 1.14 trillion in 2018 and the net profit margin also improved from 7.5% to 11.5%.
- Good results in 2019FY were driven by a better average price, higher sales volume, and well managed fixed costs. We estimate 2020F, INTP bottom line profit will reach IDR 1.95 trillion.
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February Volume Negative
Valuation: Upgrade to BUY with TP 15,800
- In February 2020, the cement industry was still in the low season due to prolonged rains. Domestic cement sales YTD decreased -4,0% YoY to 4.64 million tons.
- For the month of February, domestic cement sales decreased slightly by -0.1% YoY to 4,87 million tons.
- INTP cement sales volume YTD decreased -12.4% YoY to 2.68 million ton from 3.06 million tons in 2018. In February only, INTP sold 1,31 million tons or a decrease of -7.5% YoY.
- We expect 1Q2020 cement demand will slow further from the impact of the COVID-19 virus plus heavy rainfall. We have revised our forecast from moderate growth to negative growth for cement demand in 2020F.
Valuation: Upgrade to BUY with TP 15,800
- We are targeting INTP to trade at 30x 2020F PE within a year. Target Price is IDR 15,800 which represents +52% upside.
- We are upgrading our target to BUY from HOLD, as INTP price is now at the lowest level since 2009 and we believe the fundamental outlook is still promising.
Previously