INTP
Contact our analyst Eka
BUY
15th November 2021
Price Rp 12,450
Target price Rp 15,250
15th November 2021
Price Rp 12,450
Target price Rp 15,250
Recovery continue
- With higher activity since the lowering of the PPKM level, construction activity has picked up and had a positive effect on cement demand.
- Cement domestic demand continues to recover in the 4Q2021 as seen in October domestic sales which were up +10%-11% MoM.
- For 9M2021, domestic cement sales volume continued to grow +5.5% YoY to 46.9 million tones (mt), while for September domestic sales increased +4.1% to 6.43 mt.
- The domestic Bulk cement market growth was a stronger +7.2% YoY while the bag market grew +3.2%.
- INTP booked 13.03 mt of sales volume or +6.9% YoY growth driven by stronger domestic sales volume which increased +4.9% while export sales increased +288% YoY.
- We expect faster sales growth in 4Q2021 as October sales shows double-digit growth and most infrastructure projects are continuing in 4Q2021.
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Higher Margin in 3Q2021
- In 3Q2021, INTP net revenue increased +22% QoQ but slightly decreased -1% YoY to IDR 3.94 trillion due to higher sales volume. For 9M2021, net revenue increased +4.5% YoY to IDR 10.6 trillion.
- INTP net profit in 3Q2021 still decreased -4% YoY but was higher +164% QoQ to IDR 621 billion. This resulted in a higher NPM of 15.8% from 7.3% in 2Q2021. 9M2021 net profit also increased to IDR 1.2 trillion or +8% YoY growth with a higher NPM of 11.4%
- Gross profit in 3Q2021 increased +51% QoQ but declined -4% YoY to IDR 1.5 trillion, with a higher GPM of 38% from 30.1% in 2Q2021.
- Operating profit was stable at IDR 734 billion with a higher OPM of 18.6% from +7.6% OPM in 2Q2021.
- INTP has raised ASPs recently to offset higher coal prices in 3Q2021, but the coal price is expected continue to impact INTP’s performance in 4Q2021 and next year. To address this, INTP has increased LCV usage and alternative fuel from 9.3% in 2020 to 11.8% in 9M2021 and is targeting 25% LCV usage in 2025 to replace fossil fuels.
- INTP does not receive DMO supply and so there has been no effect on INTP from DMO changes.
- We are expecting INTP’s 2021FY revenue and net profit will reach IDR 14.8 trillion and IDR 2.1 trillion which is growth of +4.9% and +16.7% respectively.
- We are now targeting INTP to trade at 25x 2022F PE within a year. Target Price is IDR 15,250 which represents +22% upside.
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