SMGR
Contact our analyst Eka
19th August 2025
BUY 15.4% Upside
Price Rp 2600
Target price Rp 3000
BUY 15.4% Upside
Price Rp 2600
Target price Rp 3000
Domestic sales Contract While Exports Rise
- SMGR’s domestic cement sales volume contracted more sharply than the overall market.
- Domestic cement demand fell -3.1% YoY to 27.16 million tons in 1H-2025, reflecting weak economic conditions, low purchasing power, and slower infrastructure activity.
- Bulk cement demand dropped -10.2% YoY, with Java down -3.4% due to reduced infrastructure spending, and demand outside Java down -22.2% as IKN construction normalized
- Bag cement volumes were flat overall — Java down -3.4% YoY but outside Java up +3.2% YoY. SMGR’s domestic cement sales fell -7.7% YoY to 12.9 mt, while regional sales surged +18.7% YoY to 4.3 mt. Group sales still contracted -2.2% YoY to 17.3 mt, as home market weakness, especially in bulk cement (-13.2%), outweighed export growth.
- Exports rose +24.9% YoY, lifting the export share from 16% in 1H-2024 to 21% in 1H-2025, helping stabilize utilization. SMGR kept bag cement ASP up +2.2%, but export ASP fell -2% YoY, leading to a blended ASP decline of -1.8% due to softer bulk prices.
- In 2H-2025, demand is expected to improve with resumed infrastructure projects. Management aims to restore over 50% market share and expand in cement derivatives and non-cement businesses.
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Q2 2025: Swing to Net Loss
- SMGR posted a net loss of IDR 2.6 billion in Q2-2025, compared to a IDR 29.7 billion profit in Q2-2024. For 1H-2025, net profit fell -92% YoY to IDR 40 billion. Cost of revenue was flat YoY (-0.1%) but rose +4.7% QoQ, with COGS per ton down -2.5% YoY but up +2.8% QoQ to IDR 730,549. This was driven by lower fixed costs (-21.6% YoY from maintenance and labor) but higher variable costs from fuel prices (+1.7% YoY).
- Gross profit fell -4.7% YoY to IDR 1.57 trillion, with GPM narrowing to 19.8% from 20.5% a year earlier. Operating expenses declined -4.2% YoY from lower transportation and promotion costs, but operating income still dropped -14.9% YoY and -47.1% QoQ to IDR 53.7 billion.
- We maintain our BUY recommendation with a revised target price of IDR 3,000, representing 15.4% upside. This is based on a 26x 2026F PE, reflecting expectations for gradual recovery in margins and domestic demand over the next year.
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