SMGR Apr2025

SMGR

Contact our analyst Eka

16th April 2025
BUY 52% Upside
Price Rp 2500
Target price Rp 3800

Price Increased, Lower Market Share

Domestic cement demand rose 5% YoY to 4.6 million tons in February 2025, supported by more effective working days compared to the previous year. However, cumulative sales for January–February 2025 declined by -0.4% YoY to 9.40 million tons. Growth in February was driven by bagged cement, with Java up 7.8% YoY and areas outside Java up 10.5% YoY. Bagged cement is expected to lead growth in 2025 due to the limited rollout of major infrastructure projects.
SMGR’s domestic sales increased 1.8% YoY in February 2025 to 2.17 million tons, while total SMGR Group cement sales rose 5% YoY to 3.03 million tons. However, January–February domestic sales still declined -3.6% YoY to 4.47 million tons, and total group sales fell -1.3% YoY to 5.97 million tons.
In Q4 2024, SMGR’s total group sales volume dropped -9.3% YoY to 10.31 million tons, causing revenue to fall -10.0% YoY to IDR 9.89 trillion. The decline was driven by weaker demand across both bagged (-11% YoY) and bulk cement (-14.2% YoY) segments. While SMGR raised prices in Q4, competitors did not follow, leading to a decline in market share to 49.5%, from 50.6% in 2023.
Looking ahead, Q1 2025 demand is expected to soften due to Ramadan falling in March, which typically slows construction activity. Management will focus on volume recovery and maintaining market share for the remainder of the year.

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US Export Market Expansion

Despite ongoing tariff trade tensions with the US, SMGR continues to target the US and Latin American markets, maintaining an annual export quota of 500,000 tons. Through its subsidiary PT Solusi Bangunan Indonesia Tbk (SMCB), SMGR signed a partnership agreement with Taiheiyo Cement Corporation (TCC) to expand in the US.
Demand for cement on the US West Coast remains strong, creating opportunities for importers. Even with tariffs in place, SMGR believes its pricing remains competitive, supported by efficient production and logistics.

Q4 2024: The Lower Profitability

SMGR’s bottom line weakened in Q4 2024, as profitability declined on weaker sales and rising costs.
Net income fell almost -100% YoY to IDR 40 million in Q4 2024, and for the full year, net profit dropped -67% YoY to IDR 720 billion.
Cost of revenue increased +3.3% QoQ, with COGS per ton up 7% YoY and 2.6% QoQ to IDR 773,400, largely driven by higher fixed costs such as mining retribution tariffs and maintenance, while variable costs fell due to lower fuel prices (-12.7% YoY).
Gross profit declined -30.1% YoY and -11.3% QoQ to IDR 1.9 trillion, with GPM falling to 19.4% from 24.9% in Q4 2023.
Operating income dropped -75.7% YoY and -47.2% QoQ to IDR 186 billion in Q4 2024, and for the full year, fell -62% YoY to IDR 1.25 trillion. This decline was partially due to a one-off increase in long-term employee benefit obligations and higher professional fees.
Management has also announced a share buyback program with a maximum allocation of IDR 300 billion, which remains in place.

Valuation Maintain BUY, TP IDR 3,800

We maintain our BUY recommendation, with a target price of IDR 3,800, representing a 52% upside. The valuation is based on a 21x 2026F PE ratio, reflecting expectations of a gradual recovery in margins and domestic demand over the coming year.

Previously

SMGR May2024