亚太地区水泥行业-印度尼西亚水泥：盈利能见度提高，价值显现；对SMGR和INTP保持OW

www.jpmorganmarkets.comAsia Pacific Equity Research22 June 2022Equity Ratings and Price TargetsMkt CapPriceRatingPrice TargetCompanyTicker($ mn)CCYPriceCurPrevCurEnd DatePrev End DateIndocement Tunggal PrakarsaINTP IJ2.33IDR9,400OWn/c11,500Dec-2215,500n/cSemen IndonesiaSMGR IJ2.86IDR7,150OWn/c9,300Dec-228,500n/cSource: Company data, Bloomberg Finance L.P., J.P. Morgan estimates. n/c = no change. All prices as of 21 Jun 22.Indonesia CementValue emerging on improving earnings visibility; Stay OW on SMGR and INTPIndonesiaHead of Indonesia Research & StrategyHenry Wibowo AC(622-1) 5291 8526henry.wibowo@jpmorgan.comBloomberg JPMA HWIBOWO <GO>PT J.P. Morgan Sekuritas IndonesiaArnanto Januri(622-1) 5291 8047arnanto.januri@jpmorgan.comPT J.P. Morgan Sekuritas IndonesiaPo Wei(852) 2800 8537po.wei@jpmorgan.comJ.P. Morgan Securities (Asia Pacific) Limited/ J.P. Morgan Broking (Hong Kong) LimitedSee page 16 for analyst certification and important disclosures, including non-US analyst disclosures.J.P. Morgan does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.We remain OW on SMGR and INTP on the back of: (1) easing competition as second-tier brands have started to raise ASP in the past two months, albeit to a lesser magnitude relative to the main brands (Gresik and Tiga Roda); (2) positive development on DMO coal (coal price capped at ~$55/t compared to ICI4 spot prices at >$85/t with futures pointing to >$90/t in 3Q22) with SMGR securing DMO coal supply for the remainder of the year and INTP securing ~20% of the remaining annual requirement (vs. merely <10% two weeks ago); and (3) positive pricing actions potentially leading to strong operating leverage, if cost pressure normalizes. SMGR has outperformed INTP by 21% in the past 3M, which was driven mainly by a confirmation that SMGR has fully secured DMO coal supplyfor this year (see previous note). INTP is down 22% YTD (vs. JCI/SMGR +7%/-1%), though consensus earnings have only been revised down by 11% for the same period. In our view, this de-rating suggests the market has already anticipated INTP’s weak 2Q22 earnings on limited DMO coal supply, which limits further downside at this juncture. We believe any incremental positive development on INTP’s DMO coal procurement should drive upside in share price, while rationalizing competitive landscape and stronger volume growth in 2H22 should also help. Separately, we remain positive on SMGR, justified by its earnings visibility (on the back of DMO coal) and attractive valuation of 6.5x EBITDA (-2SD 10yr mean). We stay OW on INTP, with a lower TP of Rp11,500 (from Rp15,500) based on 12x EBITDA, and SMGR, with a higher TP of Rp9,300 (from Rp8,500) based on 8x EBITDA. INTP’s premium valuation is warranted on