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SMGR

Contact our analyst Eka
20th June 2023
BUY 68% Upside
Price Rp 6000
Target price Rp 10100

Higher Sales in May
  • In May 2023, SMGR experienced higher sales volume, aligning with increased domestic demand. Domestic cement sales rose by 24.9% YoY to 4.87 million tonnes (mt) due to the timing of Lebaran falling at the beginning of May in 2022. Bag sales volume increased by 20% YoY, while the bulk market saw growth of 41.2%.
  • Total sales for SMGR also recorded a YoY increase of 28.8% to 2.96 mt in May.
  • However, for January to May 2023, cement sales in the domestic market declined by 5.8% YoY to 22.12 mt, attributed to lower demand due to higher cement prices. During the same period, SMGR's domestic cement sales decreased by 6.1% YoY to 11.45 mt.
  • In 1Q2023, SMGR's revenue reached IDR 8.93 trillion, reflecting a 4% YoY increase, driven by a 7.7% YoY increase in domestic selling prices (ASP). Sales volume, however, declined by 2.3% YoY to 9.37 mt.
  • Improvements in cement demand observed in May 2023 indicate a potential recovery in domestic demand, supported by ongoing infrastructure projects in 2H2023. A 6.6% YoY growth in top-line revenue to IDR 38.8 trillion is anticipated for 2023.

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Higher Operating Margins in 1Q2023
  • In 1Q2023, SMGR's net income increased by 11% YoY to IDR 562 billion, but decreased by 21% QoQ due to seasonality. The higher YoY figure resulted from a 7.8% reduction in financing costs and a 4% decrease in operating expenses, leading to an improved net profit margin (NPM) of 6.3% compared to 5.9% in 1Q2022.
  • Despite a 6% YoY increase in cost of goods sold (COGS) to IDR 6.48 trillion in 1Q2023, SMGR maintained a flat gross profit of IDR 2.44 trillion, resulting in a lower gross profit margin (GPM) of 27.4%.
  • Operating expenses decreased by 4% YoY, primarily due to lower transportation, promotion, and labor costs, leading to an improved operating profit margin (OPM) of 9%.
  • Considering higher cement prices and lower coal prices projected for 2023, SMGR's bottom-line profit is expected to reach IDR 2.7 trillion, which is 15.7% YoY growth.

Valuation: Maintain BUY, TP 10,100 With 68% upside
  • SMGR's target price (TP) is set at IDR 10,100, representing a 68% upside. The valuation is based on a 25x price-to-earnings (PE) ratio for 2023F.
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Previously
​SMGR Mar2023
SMGR Nov2022
​SMGR Sep2022
​SMGR Jun2022
​SMGR Mar2022
​SMGR Nov2021
​SMGR Aug2021
​SMGR May2021
​SMGR Mar2021
​SMGR Nov2020
​SMGR Aug2020
​SMGR May2020
​SMGR Mar2020
SMGR, April 2019
SMGR, Nov 2018
​SMGR, May 2018
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