Indocement Tunggal Prakarsa(INTP IJ)

Transcription

1 Equity Research Company Update Monday,26 March 2018 SELL Maintain Indocement Tunggal Prakarsa(INTP IJ) Still too pricey Last price (IDR) 17,425 Target Price (IDR) 15,400 Upside/Downside -11.6% Previous Target Price (IDR) 14,700 Stock Statistics Sector Bloomberg Ticker Cement INTP No of Shrs (mn) 3,681 Mkt. Cap (IDRbn/USDmn) 64,145/4,654 Avg. daily T/O (IDRbn/USDmn) 32.8/2.4 Major shareholders (%) Birchwood Omnia Limited 51.0 Mekar Perkasa 13.0 Estimated free float 49.0 EPS Consensus (IDR) 2018F 2019F 2020F Danareksa Consensus ,149.7 Danareksa/Cons (21.3) (18.6) (29.5) INTP relative to JCI Index Source : Bloomberg x x Antonia Febe Hartono, CFA (62-21) ext.3504 antonia.hartono@danareksa.com Stefanus Darmagiri (62-21) stefanus.darmagiri@danareksa.com We reiterate our SELL call on INTP with a higher target price of IDR15,400 (from IDR14,700 previously) as we increase our ASP assumption by 1.4% as we expect the company to record flat ASP in 2018 (implying a 2% price increase from the price in 4Q17). For sales volume, we maintain our FY18 sales volume target at 17.9mn tons (+6.4%yoy), as we expect the stellar sales performance in 2M18 (+10.8%) to normalize going forward. Our new target price implies 28.6x 2018F P/E, near to its +1SD of 29.4x. Although our target price is increased, we don t think that INTP s current valuation of 31.4x can be justified. Our ASP growth assumption is revised up. We revise up our ASP growth assumption for 2018 by 1.4% (implying flat yoy growth from -1.0%yoy) following: (i) the company s decision to conduct selective price hikes in selected areas, including Sumatera and Central Java, (ii) the company s decision to change the mode of transportation from great bulk (shipping to ports) to containers (shipping to warehouses) which, in turn, resulted in higher prices and higher transportation costs. To arrive at our price assumption, INTP needs to increase its 4Q17 s ASP by 2.0%, which we believe is realistic. Our expectation is inline with the guidance provided by the company (stable prices in 2018). Maintaining our sales volume target. For sales volume, we maintain our FY18 sales volume target at 17.9mn tons (+6.4%yoy). We expect the stellar sales performance in 2M18 of 2.5mn tons (+10.8%yoy) to normalize going forward. The company indicated that the sales volume growth in March 2018 had softened to only 5-6%yoy vs. 10.2%yoy in February 2018 and 11.4%yoy in March Our sales volume growth assumption is inline with the management s target of 5-7%yoy growth in Increasing coal costs are not inevitable. For the coal price, we adjust our coal price assumption from USD78/ton to USD88/ton for 2018 given the sustainably high coal price which has currently reached USD101.86/ton (coal price index as of March 2018 issued by the Ministry of Energy). Our coal price assumption implies a flat price compared to the actual price in 2017 of USD89/ton. While we no longer expect coal cost savings in 2018, we still expect INTP to maintain its COGS per ton at IDR560,072/ton (-0.3%yoy) supported by various efficiency measures, particularly in regard to manufacturing overheads and direct costs. Maintain SELL. We reiterate our SELL call on INTP with a higher target price of IDR15,400 vs. IDR14,700 previously as we increase our ASP price assumption by 1.4%. Our new target price implies 28.6x 2018F P/E, near to its +1SD of 29.4x. Although our target price is increased, we don t think that INTP s current valuation of 31.4x can be justified. Key Financials Year to 31 Dec 2016A 2017A 2018F 2019F 2020F Revenue (IDRbn) 15,362 14,431 15,351 16,842 18,356 EBITDA (IDRbn) 4,611 3,106 3,276 3,971 4,584 EBITDA Growth (%) (22.7) (32.6) Net profit (IDRbn) 3,870 1,860 1,975 2,489 2,986 EPS (IDR) 1, EPS growth (%) (11.2) (51.9) BVPS (IDR) 7, , , , ,906.9 DPS (IDR) PER (x) PBV (x) Dividend yield (%) EV/EBITDA (x) Source : INTP, Danareksa Estimates See important disclosure at the back of this report 1

2 Exhibit 1. Revenues and Growth Exhibit 2. Net Profits and Growth Exhibit 3. Margins Exhibit 4. Gearing Level Exhibit 5. INTP s forward trailing P/E (x ) Average: -1sd -2sd 2sd 1sd Jan 11 Jan 12 Jan 13 Jan 14 Jan 15 Jan 16 Jan 17 Jan 18 Source: Bloomberg, Danareksa Sekuritas estimates Exhibit 6. Cement sector s forward trailing P/E (x ) sd sd 30.0 Average: sd sd 0.0 Jan 11 Jan 12 Jan 13 Jan 14 Jan 15 Jan 16 Jan 17 Jan 18 Source: Bloomberg, Danareksa Sekuritas estimates Exhibit 7. Forecast changes Previous New Changes (%) in IDRbn, unless stated ASP (IDR/ton) 796, , , , , Sales volume (mn ton) Coal price (USD/ton) Electricity cost (IDR/kWh) Revenue 14,431 15,141 16,458 15,351 16, EBITDA 3,106 3,266 3,948 3,276 3, Net profit 1,860 1,937 2,411 1,975 2, See important disclosure at the back of this report 2

3 A new promotional program has been introduced. Starting in February 2018, INTP introduced a new promotional program called Tiga Roda Menang Banyak. This program will enable cement buyers to obtain various gifts by sending a unique code in the cement s pack to INTP. Despite such marketing gimmicks, we believe this promotional program will not lead to significantly higher marketing and promotional expenses on a yoy basis considering that the company introduced a similar promotional program in Sensitivity analysis. We have also conducted sensitivity analysis on our forecast in 2018 based on the sales volume, ASP, and coal prices. Exhibit 8. Sensitivity analysis to sales volume Utilization rate (%) 75.0% 76.9% 78.9% 80.9% 82.9% Revenue (IDRbn) 14,640 14,995 15,351 15,706 16,062 EBITDA (IDRbn) 3,079 3,177 3,276 3,375 3,474 Net income (IDRbn) 1,814 1,895 1,975 2,055 2,136 EPS (IDR) Impact to EPS -8.1% -4.1% 4.1% 8.1% Exhibit 9. Sensitivity analysis to ASP 755, , , , ,286 Revenue (IDRbn) 14,640 14,995 15,351 15,706 16,062 EBITDA (IDRbn) 2,557 2,917 3,276 3,635 3,995 Net income (IDRbn) 1,391 1,683 1,975 2,267 2,559 EPS (IDR) Impact to EPS -29.6% -14.8% 14.8% 29.6% Exhibit 10. Sensitivity analysis of 2018 s net profit to coal price Revenue (IDRbn) 15,351 15,351 15,351 15,351 15,351 EBITDA (IDRbn) 3,401 3,339 3,276 3,213 3,151 Net income (IDRbn) 2,077 2,026 1,975 1,924 1,873 EPS (IDR) Impact to EPS 5.2% 2.6% -2.6% -5.2% See important disclosure at the back of this report 3

4 Exhibit 11. Income Statement Revenue 15,362 14,431 15,351 16,842 18,356 COGS (9,030) (9,423) (10,011) (10,583) (11,233) Gross profit 6,331 5,008 5,340 6,259 7,123 EBITDA 4,611 3,106 3,276 3,971 4,584 Oper. profit 3,618 1,928 2,003 2,649 3,262 Interest income Interest expense (12) (14) Forex Gain/(Loss) Income From Assoc. Co s Other Income (Expenses) 27 (53) Pre-tax profit 4,146 2,288 2,430 3,063 3,673 Income tax (276) (428) (455) (573) (687) Minority interest Net profit 3,870 1,860 1,975 2,489 2,986 Core Net Profit 3,870 1,860 1,975 2,489 2,986 Exhibit 12. Balance Sheet Cash & cash equivalent 9,674 8,295 8,023 7,978 6,281 Receivables 2, Inventory 1,780 1,769 1,879 1,978 2,091 Other Curr. Asset 365 2,802 2,963 3,223 3,488 Fixed assets - Net 14,644 14,979 15,194 15,359 17,254 Other non-curr.asset 1,082 1,001 1,002 1,002 1,002 Total asset 30,151 28,864 29,205 29,676 30,239 ST Debt Payables 2,089 2,207 2,344 2,478 2,631 Other Curr. Liabilities 1,099 1,272 1,257 1,309 1,373 Long Term Debt Other LT. Liabilities Total Liabilities 4,012 4,307 4,418 4,599 4,813 Shareholder'sFunds 26,139 24,557 24,787 25,077 25,426 Minority interests Total Equity & Liabilities 30,151 28,864 29,205 29,676 30,239 See important disclosure at the back of this report 4

5 Exhibit 13. Cash Flow Net income 3,870 1,860 1,975 2,489 2,986 Depreciation and Amort ,078 1,273 1,322 1,322 Change in Working Capital (200) (158) (146) OtherOper. Cash Flow (485) (402) (415) (401) (399) Operating Cash Flow 4,526 2,972 2,634 3,253 3,763 Capex (1,758) (1,412) (1,488) (1,487) (3,216) Others Inv. Cash Flow Investing Cash Flow (1,647) (917) (1,073) (1,086) (2,818) Net change in debt (14) 1 (88) (12) (5) New Capital Dividend payment 1,527 3,419 1,745 2,199 2,637 Other Fin. Cash Flow (319) (16) Financing Cash Flow 1,194 3,403 1,657 2,187 2,633 Net Change in Cash 4,073 5,458 3,217 4,353 3,578 Cash - begin of the year 8,656 9,674 8,295 8,023 7,978 Cash - end of the year 9,674 8,295 8,023 7,978 6,281 Exhibit 14. Key Ratios Year to 31 Dec 2016A 2017A 2018F 2019F 2020F Growth (%) Sales (13.7) (6.1) EBITDA (22.7) (32.6) Operating profit (28.1) (46.7) Net profit (11.2) (51.9) Profitability (%) Gross margin EBITDA margin Operating margin Net margin ROAA ROAE Leverage Net Gearing (x) (0.4) (0.3) (0.3) (0.3) (0.2) Interest Coverage (x) Source : INTP, Danareksa Estimates See important disclosure at the back of this report 5