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Company Reports

18 November 2024

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Cement Sector – Neutral – Cement 3Q24 Round-Up

  • Our cement coverage posted negative 3Q24 aggregate top-line growth of -3.3% YoY (SMGR: -7.0% YoY, INTP: +4.8% YoY) due to weak domestic sales volumes and lower ASP on down-trading and shifts in sales mix towards bulk cement. SMGR experienced -9.3% YoY drop in volumes with flattish ASP (-0.6% YoY), while INTP saw positive volume growth of +9.5% YoY, supported by the inclusion of Semen Grobogan's sales, consolidated starting in 1Q24. On the bottom line, aggregate 3Q24 net profit reached IDR 839bn (+270.9% QoQ, -40.7% YoY) caused by higher overhead costs.
  • Going forward, we expect bulk cement market to gain some momentum, driven by strategic infra projects such as IKN and Jakarta’s MRT 2. Additionally, the extension of VAT incentives for  property market and the 3 Million Homes program, which is projected to boost domestic cement demand by c. 5-11%, may serve as additional catalysts for market growth.
  • However, we maintain Neutral call for cement sector, as low domestic utilization rate (c. 55%) may intensify price war. INTP (BUY, IDR 7,700) is our top pick for the sector, supported by its cost efficiency program that helped cut the company’s 3Q24 COGS/ton to IDR 626k (-6% YoY/-14% QoQ), lower than SMGR’s IDR 753k (+12% YoY/+1% QoQ). Meanwhile, we assign SELL rating to SMGR, primarily due to its pivot towards low-margin ‘Blue Ocean’ business.

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Cement 3Q24 results

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Cement 3Q24 results

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