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SMGR

Contact our analyst Eka
9th November 2021
BUY 34% Upside
Price Rp 9,575
Target price Rp12,850

Recovery continues
  • Domestic cement sales volume continues to grow +5.5% YoY to 46.9 million tones (mt) in 9M2021, while for September domestic sales increased +4.1% to 6.43 mt. 
  • Cement sales volume continues to recovery in 4Q2021 too as the October domestic sales recorded +10%-11% YoY.
  • For 3Q2021 SMGR sales volume increased +13.3% QoQ but was still lower compared to 3Q2020 -2.8% YoY to 10.7 mt.
  • While for 9M2021, SMGR total sales volume maintained positive growth of +2.5% YoY to 29.88 mt. SMGR’s Export sales grew +14.8% YoY to 6.6 mt but domestic sales were slower -0.6% to 23.22 mt.
  • With higher sales volume, SMGR booked sales of IDR 9.1 trillion lower -5% YoY from a lower ASP because of a price war in the domestic market. For 9M2021 SMGR sales slightly decreased -1.1% to IDR 25.3 trillion.
  • The management increased ASPs in October and plans another increase in November to offset  higher coal prices.
  • We expect higher sales growth in 4Q2021 as October sales shows double-digit growth and most infrastructure projects are continuing in 4Q2021.

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Lower Margins
  • Due to higher material prices especially coal prices, SMGR margins decreased in 3Q2021.
  • SMGR booked lower net profit -36% YoY to IDR 593 billion with a lower NPM of 6.5% from 9.7% last year. For 9M2021, net profit decreased 29.7% YoY to IDR 1.38 trillion with a lower NPM of 5.5%.
  • Inline with higher coal prices, SMGR fuel and energy costs increased +4% YoY. Cost of sales also increased +2.8% YoY to IDR 17.8 trillion in 9M2021.
  • Gross profit decreased -9.6% YoY to IDR 7.4 trillion with a lower gross profit margin of 29.4% in 9M2021.
  • SMGR finance costs continue to decrease in 9M2021 to IDR 1.26 trillion from 1.75 trillion. Operating expenses were -10% lower YoY.
  • Operating profit margin still decreased though to 8.4% from 9% in 9M2020.
  • We are forecasting SMGR bottom line for 2021F will still be positive with growth of  +1.4% YoY to IDR 2.83 trillion helped by a higher ASP and higher sales volume in 4Q2021.
•
Valuation: Maintain BUY, TP 12,850 with 34% upside
  • We are now targeting SMGR to trade at 25x PE in 2022F. Target price is IDR 12,850 which represents +34% upside. We maintain our BUY recommendation.
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Previously
​SMGR Aug2021
​SMGR May2021
​SMGR Mar2021
​SMGR Nov2020
​SMGR Aug2020
​SMGR May2020
​SMGR Mar2020
SMGR, April 2019
SMGR, Nov 2018
​SMGR, May 2018
PT. Binaartha Sekuritas

Setiabudi Atrium, Jl. HR Rasuna Said No.62, RT.18/RW.2, Karet Kuningan, Setia Budi, Jakarta Selatan, DKI Jakarta 12920
+62215206678 | email: kyc.online@binaartha.com

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