INTP
Contact our analyst Eka
BUY, 34% Upside
11th October 2023
Price Rp 10,100
Target price Rp 13,500
11th October 2023
Price Rp 10,100
Target price Rp 13,500
Highest cement sales in July, softer in August
- INTP recorded robust cement sales performance, outpacing the market. In August, INTP achieved a notable +7.8% increase in cement sales volume, totaling 1.6 million tons (mt), with bag cement growing by +7% and bulk cement by +9.8%. By contrast, in July, INTP reported a remarkable double-digit growth of +25.3% YoY, reaching 1.7 mt of cement, with bag cement growing by +23.1% and bulk cement by +31.9%. From January to August 2023, INTP's cement sales continued to grow at +8.5% YoY, reaching 10.8 mt, with a significant contribution from its Maros operation.
- Domestic cement sales showed a softer performance in August compared to the surge in July. In August, domestic demand slowed to +4% YoY following a remarkable +12.3% increase in July, reaching 5.95 million tonnes (mt) of cement. Bagged cement sales saw a slight uptick of +0.8%, while bulk cement experienced substantial growth of +12.7%. From January to August, domestic cement demand decreased by -1.3% YoY, totaling 39.18 mt, primarily due to lower demand in the first half of 2023.
- For the first half of 2023, INTP's market share improved from 24.7% to 27.4%, driven by an overall volume growth of +5.4% (bag cement grew by +2.9%, and bulk cement grew by +13.4%). This achievement stands out when compared to the domestic market, which continued to face pressure with a -4.9% decline.
- For the remainder of the year, cement demand is expected to rise due to ongoing infrastructure projects, both government and private, as well as increased demand resulting from El Niño, which has extended the dry season in 2H2023.
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Higher Margin in 2Q2023
Valuation: Maintain BUY with TP 13.500
- INTP achieved higher margins in 2Q2023, attributed to DMO coal price changes compared to 2Q2022. Despite a notable increase in sales volume in 2Q2023, INTP's sales rose by +11% YoY to IDR 3.72 trillion. The average selling price also saw slight improvements in 2Q2023.
- INTP's bottom line saw a substantial increase of +200% YoY, reaching IDR 327 billion, with the Net Profit Margin (NPM) rising to 8.8% from 3.3% in 2Q2022. This growth was primarily due to lower energy costs and higher finance income, offsetting the increase in raw material costs.
- Fuel and power costs decreased by -6.0% YoY to IDR 1.06 trillion, inline with the securing of 100% of coal supply at DMO prices, while raw material costs increased by +12.7% due to higher prices of limestone and gypsum. This resulted in a higher cost of revenue of +1% YoY, while gross profit still increased by +43% YoY to IDR 1.15 trillion with a higher GPM of 31%.
- INTP's bottom line saw a substantial increase of +200% YoY, reaching IDR 327 billion, with the Net Profit Margin (NPM) rising to 8.8% from 3.3% in 2Q2022. This growth was primarily due to lower energy costs and higher finance income, offsetting the increase in raw material costs.
Valuation: Maintain BUY with TP 13.500
- Regarding valuation, we are setting a target for INTP to trade at a 23X 2024F Price-to-Earnings (PE) ratio within a year, with a target price of IDR 13,500, representing a potential upside of +34%. Therefore, we maintain our recommendation to BUY.
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