Company Update

28 November 2023

Cement Sectoral Update November 28, 2023

Awaiting Decisive Catalyst to Push Through Looming Headwinds

Key Takeaways:
▪️ Currently, the overall sales are bolstered by the strong demand from Eastern Indonesia, with the sales growing by 1% YoY as opposed to the declining sales (-11% YoY) in the Java region as of 10M23.
▪️ The PPN incentive policy for properties in FY24F is hoped to deliver a domino-effect for cement demand, particularly the bag market which has had a sluggish FY22 (-8% YoY) and 10M23 (-20% YoY) performance.
▪️ INTP focuses on wrapping up the full acquisiton of PT Semen Grobogan located in Grobogan. While SMGR showed good export traction and is looking at an even better FY24F with the addition of US export deal.
▪️ In spite of a potential improvement in volume, upon weighing the looming risks ahead we call for a flat sales volume in FY24F. The risk cement players are to face include 1) geopolitical risks interlinked with the further depreciation of USD/IDR, entailing higher energy costs; 2) a possibility of an extended election period, holding off project worktime; 3) higher precipitation intensity post FY23’s weak-moderate El-Nino.

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