INTP
Contact our analyst Eka
BUY, 25% Upside
29th November 2022
Price Rp 9,925
Target price Rp 12,440
29th November 2022
Price Rp 9,925
Target price Rp 12,440
October Volume Decline
- Domestic cement sales volume weakened -16.5% in October to 5.47 million tons with a contraction in bag volume of -22.6% but a slight increases in bulk sales of +2.5%. For January – October, domestic cement sales volume contracted -1.1% YoY with a contraction in bag sales volume of -6.6% and growth in bulk sales volume of +18.2%.
- INTP had a -20% YoY sales volume decrease due to the higher bag cement price. Bag sales volume decreased -27% while bulk sales volume decreased slightly -0.6%. For January to October, INTP’s total sales volume contracted -3.6% YoY with bag sales volume down by -3.6% YoY and bulk sales up by +15.3% YoY.
- With 12.4 mt cement sales volume in 9M2022, INTP revenue grew +9.9% to IDR 10.6 trillion, while for 3Q2022 INTP revenue grew by +21% YoY or +42% QoQ to IDR 4.75 trillion, higher growth compared to other quarters.
- We maintain our forecast for positive sales volume growth in 2022FY and single digit growth for 2023F as domestic demand is likely to recover with the bulk market expected to continue to growth inline with spending on infrastructure projects which has started again in 2H 2022.
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3Q2022: Triple digit growth QoQ
Valuation: Upgrade to BUY with TP 12,440
- After a lower bottom line profit in 1Q2022 and 2Q2022 due to cost pressure from coal prices, INTP recorded triple digit profit growth of +501% QoQ to IDR 655 billion with a higher NPM of 13.8% in 3Q2022 from 3.3% in 2Q2022 as INTP started to get coal at the DMO price in 3Q2022. For 9M2022, INTP’s bottom line profit still decreased by -22% YoY to IDR 947 billion but with a NPM increase to +8.1%.
- Energy costs rose +23% YoY to IDR 1.41 trillion in 3Q2022, but the increase is now slowing in line with securing 50% of coal supply at DMO prices. For 9M2022, fuel and power costs rose +33% YoY, a lesser increase compared to 1H2022’s +40% YoY.
- This resulted in a gross profit increased of +107% QoQ or +12% YoY to IDR 1.67 trillion with a higher GPM of 35.2%.
- We expect INTP will maintain better margins in the 4Q2022 and 2023F as a result of securing more DMO coal while selling prices have been increased several times in 9M2022.
- With a good 3Q2022 result, we revise up our 2022F profit forecast to IDR 1.6 trillion which is still a decrease of -9.6% YoY.
Valuation: Upgrade to BUY with TP 12,440
- We are now targeting INTP to trade at 26x 2023F PE within a year. Target Price is IDR 12,440 which represents +25% upside. We upgrade our recommendation to BUY.
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