Semen Indonesia

Stock Quote Semen Indonesia - SMGR:

Business Summary

Although Semen Indonesia's core business is the production (and distribution) of cement, the company is also involved in:

• Industrial real estate
• Cement bags
• Mining

The majority of the company's cement production stems from Semen Gresik (East Java), Semen Padang (West Sumatra) and Semen Tonasa (South Sulawesi).

The company's cement production, production capacity and sales volume have risen steadily in recent years - reaching record highs - due to robust domestic cement demand in combination with capital expenditure to build new plants. These numbers are predicted to increase further in the near future.

Semen Indonesia's Operational Highlights:

	2014	2015	2016	2017	2018
Cement Production in million tons	28.3	28.5	28.3	30.8
Production Capacity in million tons	31.8	31.8	31.8	33.5
Domestic Sales in million tons	26.2	26.0	25.7	27.1

 

	2009	2010	2011	2012	2013
Cement Production in million tons	18.1	18.2	19.8	22.8	26.9
Production Capacity in million tons	19.0	19.0	20.2	28.5	30.0
Domestic Sales in million tons	18.4	17.9	19.7	21.8	25.4

^{Source: Semen Indonesia Annual Report 2017}

An example of Semen Indonesia's intention to expand its business is the company's acquisition of a majority stake in Vietnam’s Thang Long Cement (worth USD $157 million) in December 2012. This move shows that the company is keen to look across borders to tap new markets and strengthen its production capacity. At mid-2013, Semen Indonesia is seeking to acquire a cement company in Myanmar.

Although Semen Gresik is clear market leader in Indonesia's cement industry, its market share has fallen a couple of percentage points in recent years because of increased production of competitors. To reverse this trend, the company has invested in the construction of two new cement plants in Rembang (Central Java) and Padang (West Sumatra), each with a production capacity of three million tons. The factory in Padang should become operational in late 2015, while the factory in Rembang is expected to start operations in late 2016. Moreover, the company is busy preparing the establishment of four new cement mills; two in Tuban (East Java) and two in Dumai (Riau, Sumatra).

Semen Indonesia's Financial Highlights:

	2015	2016	2017	2018
Net Revenue	26,948.0	26,134.3	27,813.7
Gross Profit	10,646.0	9,855.9	7,959.6
Net Income	4,521.5	4,521.6	2,014.0
EBITDA	7,473.5	6,962.9	5,397.0
Total Assets	38,153.1	44,226.9	48,963.5
Total Liabilities	10,712.3	13,652.5	18,524.4
Earnings per Share¹	762	762	340
Dividend per Share¹

 

	2010	2011	2012	2013	2014
Net Revenue	14,344.2	16,378.8	19,598.0	24,501.2	26,987.0
Gross Profit		7,486.9	9,297.6	10,944.1	11,578.9
Net Income	3,633.2	3,925.4	4,848.0	5,370.2	5,559.9
EBITDA	4,969.5	5,402.0	6,869.1	8,099.0	8,491.9
Total Assets	15,563.0	19,661.6	26,579.1	30,792.9	34,331.7
Total Liabilities	3,423.2	5,046.5	8,414.2	8,988.9	9,326.7
Earnings per Share¹	613	662	817	905	937
Dividend per Share¹	306.26	330.89	367.74	407.42	375.34

^{in billion IDR rupiah, except stated otherwise
¹ in IDR rupiah
Source: Semen Indonesia Annual Report 2017}

Future Prospects of the Indonesian Cement Sector

Indonesia's cement sector has shown a steep increase in domestic cement production and consumption. This trend is estimated to continue for a number of reasons:

• Indonesia's current low per capita cement consumption
• The government's intention to ramp up much-needed infrastructure development
• An expanding middle class that gives rise to to new housing and real estate development
• Solid national economic conditions with annual GDP growth of plus 5 percent

What are issues that negatively affect the Indonesian cement sector?

• Infrastructure development is not reaching its full potential due to red tape, a weak legal system, and a lack of public and private funds
• International financial turmoil (USA and Europe) can influence Indonesia's economic growth, thus affecting domestic cement demand
• Recent central bank monetary tightening led to a cooling property market

Semen Indonesia, Indocement Tunggal Prakarsa and Holcim Indonesia dominate Indonesia's cement sector. Click here for a detailed analysis of Indonesia's cement industry and market.

Projection Future Corporate Earnings Semen Indonesia:

	2018	2019	2020F	2021F	2022F
Revenue	30,688.0	40,368.0	36,321.0	37,994.0	41,943.0
Net Income	3,079.0	2,392.0	1,627.0	1,777.0	5,302.0
EBITDA	6,399.0	8,529.0	8,016.0	8,796.0	9,997.0
P/E Ratio (x)	17.7	22.8	33.4	30.6	14.5
P/BV (x)	1.7	1.7	1.6	1.6	1.8

^{in billion IDR rupiah unless otherwise stated
¹ in IDR rupiah
Source: Danareksa Sekuritas (05.10.2020)}