INTP May2022

INTP

Contact our analyst Eka

Hold, 18% Upside
30th May 2022
Price Rp 10,225
Target price Rp 12075

Higher ASP

Domestic cement sales volume grew +4.7% YoY in 1Q2022 with a contraction in bag volume of -0.6% and strong growth of bulk sales volume of +24.0%.
INTP’s domestic sales volume contracted -0.8% with bag sales -5.7% and bulk up +20.1% mainly due to a price increase in bag cement because of higher fuel costs from higher coal prices. With another spike of coal prices in 1Q20222, there is another price hike in 2Q2022.
In April 2022, domestic sales volume contracted -9.5% due to the national holiday and Eid Al-Fitr celebration. Bag sales contracted -14.2% YoY while bulk sales grew +5.7% YoY.
INTP sales also contracted by -24.1% YoY with bag sales down -27.1% and bulk by a lesser -14.4% due to the price hike. The normal INTP leadership price gap has not returned to its previous level yet despite the price increases.
Domestic demand is likely to normalize after the holiday, but remain overshadowed by rising costs such as higher coal prices. We maintain our forecast for positive sales volume growth for 2022FY.

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Margin Depressed

Despite a net revenue increase of +3% YoY to IDR 3.56 trillion due to the higher ASP, INTP’s margin continued to be depressed by higher energy costs in 1Q2022.
Energy costs rose +53% YoY to IDR 1.42 trillion due to the spike in coal prices. This resulted in a cost of revenue increase of +11% YoY.
Gross profit decreased by -13% YoY to IDR 960.4 billion with a lower GPM of 27% from 36.8% in 4Q2021.
After the ASP hike in 1Q2022 to mitigate margin contraction, INTP also raised the ASP in April 2022 by around 5% - 7% to offset higher coal prices.
Operating profit decreased -48% YoY to IDR 207 billion with a lower OPM of 5.8% from 16.7% in 4Q2021.
INTP net profit in 1Q2022 decreased -48% YoY to IDR 183 billion. This resulted in a lower NPM of 5.1% from 13.9% in 4Q2021.
We revise our 2022F revenue and net profit forecasts to IDR 16.3 trillion and IDR 1.65 trillion which is growth of +10% and -7.6% respectively

Valuation: Downgrade to HOLD with TP 12,075