SMGR
Contact our analyst Eka
10th August 2021
BUY 52% Upside
Price Rp 8,475
Target price Rp12,900
BUY 52% Upside
Price Rp 8,475
Target price Rp12,900
Positive Volume Growth
- Domestic cement sales volume increased +7.3% YoY to 29 million tones (mt) in 1H2021, and SMGR total sales volume maintained positive growth of +5.7% YoY to 19.2 mt with higher export sales, +35.5% to 4.8 mt but slightly lower domestic sales -1.5% to 14.3 mt. With this results, SMGR still has the largest market and capacity share.
- For 2Q2021 SMGR sales volume increased +9.7% YoY to 9.46 mt but still decreased -2.4% QoQ due to the Lebaran holidays and PPKM. The increase in 2Q2021 was boosted by higher export sales to 2.45 mt +19% YoY or +3.4% QoQ, while domestic sales decreased -4.3% QoQ to 7.01 mt but were still higher +6.8% YoY compared to last year.
- We expect flat growth for 3Q2021 cement sales volume, but we expect the recovery to continue after the easing of PPKM
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Margin Improve
Valuation: Maintain BUY, TP 12,900 with 52% upside
- With higher sales volume in 2Q2021, SMGR booked revenue of IDR 7.6 trillion, or an increase of +12.7% YoY but still lower -11% compared to 1Q2021. For 1H2021, SMGR revenue slightly increased 1.2% YoY to IDR 16.2 trillion.
- SMGR net profit increased significantly +107.3% YoY to IDR 344 billion mainly due to lower finance costs in 2Q2021. This resulted in a higher NPM of 4.2% from 2.2% last year. For 1H2021, net profit increased +29.7% YoY to IDR 794.4 billion with a higher NPM of 4.9%.
- Inline with higher coal price, SMGR fuel and energy costs increased +4% YoY. Cost of sales also increased slightly +3.7% YoY to IDR 11.6 trillion in 1H2021.
- Gross profit still decreased -4.7% YoY to IDR 4.58 trillion with a lower gross profit margin of 28.3% in 1H2021.
- SMGR has managed their debt well, resulting in a 26.5% decrease in finance costs in 1H2021 to IDR 790 billion from 1.07 trillion.
- There was an increase in operating income of +16% YoY to IDR 1.99 trillion in 1H2021, while EBITDA increased +2.1% YoY to IDR 3.54 trillion and the EBITDA margin slightly increased to 21.9%.
- We are forecasting SMGR bottom line for 2021F to grow +6% YoY to IDR 2.96 trillion helped by continued operating cost efficiencies and lower finance costs.
Valuation: Maintain BUY, TP 12,900 with 52% upside
- We are now targeting SMGR to trade at 24x PE in 2022F. Target price is IDR 12,900 which represents +52% upside. We maintain our BUY recommendation.
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