INTP May2021

INTP

Contact our analyst Eka

BUY
19th May 2021
Price Rp 12,250
Target price Rp 15,170

Bulk sales recovery

The domestic Bulk cement market started to recover in April after months of contraction due to the restart of infrastructure projects from the end of March 2021.
As of April 2021, the domestic cement market grew +8.6% MoM to 4.89 Million Tons (MT) or +3.7% YTD to 19.76 mt. The bulk market grew double digits +13.8% YoY while the bag market growth was +7.1%.
INTP booked 1.27 mt sales volume driven by bulk sales volume up +18.9% YoY and bag sales volume +8.6% YoY.
For 1Q2021 sales volume, INTP booked total cement sales volume of 4.24 mt higher by +5.5% YoY inline with the increases of domestic cement sales volume +2.2% YoY to 14.8 mt.
The positive growth in bulk cement indicates a faster recovery of major infrastructure and commercial projects, so we are expecting higher cement demand in 2H2021.

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1Q2021: Stable Margin

In 1Q2021, INTP net revenue increased +2.2% to IDR 3.44 trillion, less than the growth of sales volume (+5.5%) due to lower average prices.
INTP net profit in 1Q2021 decreased +12.6% YoY to IDR 351.3 billion due to lower finance income, normalized income tax expense (from 22% to 25% ) and a lower ASP. This resulted in a lower NPM of 10.2% from 11.9% in1Q2020.
Gross profit in 2020 slightly increased +3.3% YoY to IDR 1.09 trillion, with a slightly higher GPM at 32%.
Operating profit increased +2.4% YoY to IDR 395.5 billion with a stable OPM at 11.5%.
EBITDA also increased +1.4% to IDR 731 billion with a stable Ebitda margin at 21.4%.
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 15,170

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 27x 2022F PE within a year. Target Price is IDR 15,170 which represents +24% upside.

Previously

INTP Mar2021