Positioned Ahead of The Upturn
Key Takeaways :
▪️ In 1Q23, INTP managed to secure a revenue of IDR4.2tn, surging +19.3% YoY (vs IDR3.6tn in 1Q22). Net profit came in at a staggering IDR371.4bn or grew 103.4% YoY (vs IDR182.6bn in 1Q22).
▪️ The volume increased by 3.3%, with a 0.2% hike in the bag market and a 13.6% increase in the bulk market. In a bag market side, INTP recorded -18.6% YoY in Java due to stiff competition from newcomer Semen Grobogan. While outside Java +41.3%, thanks to to additional sales from Maros operation in South Sulawesi.
▪️ We expect 2Q23 volume to recover and rise faster than last year due to increased governmental investments before the 2024 election and a higher rate of infrastructure and commercial construction, including some effects from the development of Kalimantan's new capital city.
▪️ We estimate stable ASP with 3%-4% increase in FY23E and FY24F. Retail prices have increased by more than 30% since the start of 4Q21 as a result of the high energy costs experienced by cement producers.
▪️ We recommend BUY for INTP with a target price of IDR11,300 (13% upside), implying a PE of 18.2x/15.1x and EV/EBITDA of 9.3x/7.5x for FY23E/FY24F. INTP is currently traded at the -1STD of its 5-year P/E band average. Risks to our call include: 1) Overcapacity situation, 2) High coal price 3) Price war with newcomers.
MNCS Research
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