INTP May 2024

INTP

Contact our analyst Eka

BUY, 34% Upside
14th May 2024
Price Rp 6,675
Target price Rp 8,970

Bulk Cement Increase

Domestic cement sales volume remained flat at 14.27 million tons (mt) in Q1 2024, with bulk cement increasing by +14.9% (Java +11.1% YoY and Outside Java +20.5% YoY), while bagged cement declined by -5.5%. The decrease in the bag market was due to lower retail demand during the fasting period and Eid holidays. Meanwhile, the spike in the bulk market was driven by government projects in the new capital city and infrastructure acceleration in Java.
The proportion of bulk cement in the domestic market also rose to 30.7% in Q1 2024, up from 26.8% in Q1 2023, fueled by infrastructure projects.
INTP reported a positive domestic sales volume growth of +4.1% YoY to 4.48 mt, outperforming the industry primarily due to operations at Semen Grobogan. Bagged cement saw a slight decline of -0.8%, while bulk cement surged by +28.8% YoY in Q1 2024. INTP's domestic market share stood at 29.5% in Q1 2024.
INTP’s cement sales decreased by -3.8% YoY to IDR 4.08 trillion in Q1 2024, attributed to a lower consolidated price from an increased sales composition of bulk cement products.
For April, sales volume is expected to contract due to extended holidays, though the trend of increasing bulk cement sales is anticipated to continue in 2024. Retail demand is expected to rise, peaking in the second half of 2024.

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Q1 2024 Results: lower margin

INTP experienced a decrease in margin due to the increased share of bulk cement and competitive pricing strategies, resulting in a lower consolidated price.
INTP's net profit declined by -36% YoY and -65% QoQ, reaching IDR 238 billion, with the Net Profit Margin (NPM) falling to 5.8% from 8.7% in Q1 2023.
Cost of revenue dropped by -2.3% YoY to IDR 2.9 trillion, driven by efficiencies in direct labor (-7.2% YoY) and packing costs (-5.5%). This led to a -7.5% YoY decrease in gross profit to IDR 1.18 trillion, with a reduced Gross Profit Margin (GPM) of 28.9%.
As INTP expanded operations in Semen Grobogan, which included costs such as delivery and advertising, the operating profit margin was compressed to 7.7% in Q1 2024. Delivery and selling expenses rose by +6.2% to IDR 690.2 billion, and general and administrative expenses increased by +8% to IDR 186.3 billion.

Valuation: Maintain BUY with TP 8.970

Regarding valuation, we project INTP to trade at an 18X 2025F Price-to-Earnings (PE) ratio within a year, setting a target price of IDR 8,970, representing a potential upside of +34%. Therefore, we maintain our recommendation to BUY.

Previously

INTP Nov2023