Indonesia: INTP Burdened by Competition

Transcription

1. Indocement SELL Results Note (Unchanged) Burdened by competition Stock Data Target price (Rp) Rp15,000 Prior TP (Rp) RP19,800 Shareprice (Rp) Rp17,425 Net profit declined by 51.9% yoy, below ours and consensus. ASP declined 8.4% yoy due to fierce competition. Upside/downside (%) (13.9) Margin will remain declining going forward. Sharesoutstanding (m) 3,681 Maintain rating with lower TP. Marketcap. (US$ m) 4,654 Free float (%) Below estimate bottom-line. Indocement Tunggal Prakarsa (INTP) posted net profit amounted to Rp1.8tn, down 51.9% yoy. This was partly resulted by lower revenue and margins compression in FY17. The earnings numbers came below ours and consensus with 84.4% and 91.2% achievement, respectively. Revenue recorded negative growth by 6.1% yoy to Rp14.4tn in FY17. On quarterly basis, INTP’s bottom line was helped by lower tax rate in 4Q17 which stood at 9.2% (vs. 58.5% in 3Q17) which led net profit to surged by 67.9% qoq albeit revenue declined by 1.3% qoq. On the margin front, the company posted lower margins across the board with gross, operating and net margin stood at 34.7%, 13.4% and 12.9% in FY17 vs 41.2%, 23.5% and 25.2% in FY16. 36.0 Avg. 6m dailyT/O (US$ m) 2.4 Price Performance 3M 6M 12M -13.7 -10.1 4.7 Relative to JCI (%) -13.6 -16.0 -6.4 Absolute (%) 52w high/low (Rp) 17,425 - 16,000 150 140 130 120 110 JCI Index-Rebase Major Shareholders Birchwood Omnia Ltd. 51.0% Mekar Perkasa 13.0% Estimate Change; Vs. Consensus 2018F Latest EPS (Rp) 2019F 517 556 Vs. Prior EPS (%) (23.2) (30.3) Vs. Consensus (%) (23.2) (31.3) Source: Bloomberg Mar-18 Feb-18 Jan-18 Feb-18 Dec-17 Nov-17 Oct-17 INTP-Rebase Nov-17 Sep-17 Sep-17 Jul-17 Aug-17 Jul-17 Jun-17 May-17 Apr-17 90 May-17 100 Mar-17 Equity | Indonesia | Cement 26 March 2018 (INTP IJ) ASP decreased as a result of intense competition. On operational numbers, total sales volume increased by 5.5% yoy to 17.9mn ton, this positive growth mainly atributtable by domestic sales volume (99% contribution to total sales volume) that surged by 7% yoy to 17.7mn ton while its export was down by 57.9% yoy to 164k ton. Further, ASP was recorded declined by 8.4% yoy as a result of fiercer competition from new entrants and incumbent competitors. Overall market share of the company declined by 81bps to 25.2% in 2017. In 2 major islands, Java and Sumatra, INTP market shares narrowed to 32.8% (vs. 34.6% in FY16) and 10.8% (vs.11.4% in FY16, respectively. Margin will remain declining in 2018/19F. Going into 2018, we believe that INTP sales volume will remain flat as a result of the company policy to maintain overall utilization rate below 70% in 2018 due to higher supply growth compared to demand. On the margin front, we believe that the company’s margin will decrease further as a result of Rupiah depreciation and intense competition that burden the company’s move to increase ASP in 2018/19F. We believe gross and operating margins will decrease by 240 bps and 120 bps to 32.3% and 12.2%, respectively. Maintain rating with lower TP. At this stage of the cycle, we trim our ASP forecast for 2018/19F by 7.3% and 6.5% and downgrade our earnings estimate by 23.2% and 30.3%, respectively. Downward revision on our earnings forecasts has led our DCF-based TP declining to Rp15,000/sh. INTP currently trades at PE2018/19f 43.5x/40.4x, respectively. Risks to our call are lower coal price, higher cement demand growth, and Rupiah appreciation. With 13.9% potential downside from the current share price. INTP remain Sell. hasan@ipc.co.id Year To 31 Dec Revenue (RpBn) EBITDA (RpBn) EBITDA Growth (%) Net Profit (RpBn) EPS (Rp) EPS Growth (%) Net Gearing (%) PER (x) PBV (x) Dividend Yield (%) EV/EBITDA (x) +62 21 5793 1168 Source : INTP, IndoPremier Hasan PT Indo Premier Sekuritas Refer to Important disclosures in the last page of this report 2016A 15,362 4,743 (20.2) 3,870 1,051 (11.2) (36.4) 21.4 3.2 2.3 9.8 2017A 14,431 3,095 (34.7) 1,860 505 (51.9) (33.0) 44.5 3.4 1.1 17.1 2018F 15,843 3,140 1.4 1,903 517 2.3 (31.0) 43.5 3.2 1.1 13.4 2019F 16,797 3,338 6.3 2,049 556 7.7 (34.2) 40.4 3.1 1.2 14.1 2020F 18,621 3,967 18.8 2,394 650 16.9 (33.8) 34.6 3.0 1.4 11.8 Share Price Closing as of : 23-March-2018
2. INTP IJ Results Note Fig . 1: Net gearing trend Fig. 2: Gross and operating margin trend 0.0% Gross Margin Optg Margin -5.0% 50.0% -10.0% -15.0% 40.0% -20.0% -25.0% 30.0% -30.0% -35.0% 20.0% -40.0% -45.0% Source: INTP, IndoPremier Dec-17 Sep-17 Jun-17 Mar-17 Dec-16 Sep-16 Jun-16 Mar-16 Dec-15 Sep-15 Jun-15 Mar-15 Dec-14 Nov-17 Jul-17 Sep-17 May-17 Jan-17 Mar-17 Nov-16 Jul-16 Sep-16 May-16 Jan-16 Mar-16 Nov-15 Jul-15 Sep-15 May-15 Jan-15 Mar-15 Sep-14 Nov-14 Sep-14 10.0% -50.0% Source: INTP, IndoPremier Fig. 3: Sales and sales volume trend Fig. 4: Portion of bag and bulk 20,000 Sales (Rpbn) Sales Vol ('000 tons) - LHS 18,000 7,000.0 16,000 6,000.0 14,000 5,000.0 12,000 10,000 4,000.0 8,000 3,000.0 6,000 2,000.0 4,000 1,000.0 2,000 Dec-17 Sep-17 Jun-17 Mar-17 Dec-16 Sep-16 Jun-16 Mar-16 Dec-15 Sep-15 Jun-15 Mar-15 Sep-14 Dec-14 - 2013 2014 2015 Bag Source: INTP, IndoPremier EBITDA - Rp bn (LHS) 35.0% 2,000 30.0% 25.0% 1,500 20.0% 1,000 15.0% 10.0% 500 Jun-17 4,000 3,500 3,000 2,500 2,000 1,500 1,000 5.0% 500 0.0% - Sep-17 Mar-17 Dec-16 Sep-16 Jun-16 Mar-16 Dec-15 Sep-15 Jun-15 Mar-15 - Dec-14 2017 4,500 EBITDA margin - % (RHS 40.0% Jun-14 2016 Bulk Fig. 6: Capex 2013-2017 2,500 Sep-14 2017 Source: INTP, IndoPremier Fig. 5: EBITDA margin trend Mar-14 2016 Source: INTP, IndoPremier Refer to Important disclosures in the last page of this report 2013 2014 2015 Capex (Rpbn) Source: INTP, IndoPremier 2
3. INTP IJ Results Note Year To 31 Dec (RpBn) 2016A 2017A 2018F 2019F 2020F Income Statement Net Revenue 15,362 14,431 15,843 16,797 18,621 Cost of Sales (9,030) (9,423) (10,730) (11,369) (12,548) Gross Profit 6,331 5,008 5,113 5,428 6,073 SG&A Expenses (2,714) (3,080) (3,183) (3,340) (3,596) Operating Profit 3,618 1,928 1,930 2,088 2,477 485 505 399 421 457 Net Interest Forex Gain (Loss) 0 0 0 0 0 44 (145) 12 12 12 Pre-Tax Income 4,146 2,288 2,341 2,520 2,946 Income Tax (276) (428) (438) (472) (551) 0 0 0 0 0 3,870 1,860 1,903 2,049 2,394 Cash & Equivalent 9,674 8,295 8,000 9,150 9,460 Receivable 2,605 2,504 2,312 2,451 2,717 Inventory 1,780 1,769 1,729 1,832 2,022 365 316 411 450 496 14,425 12,883 12,452 13,883 14,695 16,035 14,979 17,363 20,822 26,073 Goodwill 112 107 97 87 78 Non Current Assets 553 561 562 562 0 31,542 28,864 30,832 35,742 41,266 Others-Net Minorities Net Income Balance Sheet Other Current Assets Total Current Assets Fixed Assets - Net Total Assets 0 0 0 0 0 Payable 1,519 1,549 0 1,335 1,473 Other Payables 1,599 1,842 1,481 1,565 1,725 ST Loans Current Portion of LT Loans Total Current Liab. Long Term Loans Other LT Liab. Total Liabilities Equity Retained Earnings Minority Interest Total SHE + Minority Int. Total Liabilities & Equity 70 88 88 88 88 3,188 3,479 2,828 2,988 3,286 102 96 0 0 0 722 732 834 884 975 4,012 4,307 3,662 3,872 4,262 4,255 4,233 4,233 4,233 4,233 21,883 20,323 21,275 22,299 23,496 0 0 0 0 0 26,139 24,557 25,508 26,532 27,729 30,151 28,864 29,170 30,404 31,991 Source : INTP, IndoPremier Refer to Important disclosures in the last page of this report 3
4. INTP IJ Results Note Year to 31 Dec 2016A 2017A 2018F 2019F 2020F Net Income (Excl.Extraordinary&Min.Int) 3,870 1,860 1,903 2,049 2,394 Depr. & Amortization 1,187 813 1,565 1,250 1,490 304 432 (760) (152) (263) (493) (439) 40 (619) (425) 4,868 2,665 2,748 2,528 3,196 (3,524) 239 (3,938) (4,700) (6,170) 504 521 397 418 454 Cash Flow Changes in Working Capital Others Cash Flow From Operating Capital Expenditure Others (3,020) 760 (3,542) (4,281) (5,716) Loans 51 12 (96) 0 0 Equity 0 0 0 0 0 (1,935) (930) (951) (1,024) (1,197) (383) (26) 102 50 92 Cash Flow From Investing Dividends Others (2,267) (944) (945) (975) (1,106) (419) 2,481 (1,739) (2,728) (3,625) Gross Margin (%) 41.2 34.7 32.3 32.3 32.6 Operating Margin (%) 23.5 13.4 12.2 12.4 13.3 Pre-Tax Margin (%) 27.0 15.9 14.8 15.0 15.8 Net Margin (%) 25.2 12.9 12.0 12.2 12.9 ROA (%) 13.1 6.2 6.4 6.2 6.2 ROE (%) 15.5 7.3 7.6 7.9 8.8 ROIC (%) 17.4 9.3 9.1 9.5 10.5 Acct. Receivables TO (days) 59.9 63.5 55.0 51.3 50.2 Acct. Receivables - Other TO (days) 1.1 1.1 0.5 0.5 0.5 Inventory TO (days) 5.5 5.3 6.1 6.4 6.5 Payable TO (days) 53.0 59.4 47.8 41.6 40.8 Acct. Payables - Other TO (days) 22.0 23.8 20.4 17.8 17.5 Debt to Equity (%) 0.7 0.7 0.3 0.3 0.3 Interest Coverage Ratio (x) 0.0 0.0 0.0 0.0 0.0 (36.4) (33.0) (31.0) (34.2) (33.8) Cash Flow From Financing Changes in Cash Financial Ratios Net Gearing (%) Source : INTP,IndoPremier Refer to Important disclosures in the last page of this report 4
5. Head Office PT INDO PREMIER SEKURITAS Wisma GKBI 7 /F Suite 718 Jl. Jend. Sudirman No.28 Jakarta 10210 - Indonesia p +62.21.5793.1168 f +62.21.5793.1167 INVESTMENT RATINGS BUY : Expected total return of 10% or more within a 12-month period HOLD : Expected total return between -10% and 10% within a 12-month period SELL : Expected total return of -10% or worse within a 12-month period ANALYSTS CERTIFICATION. The views expressed in this research report accurately reflect the analysts personal views about any and all of the subject securities or issuers; and no part of the research analyst's compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed in the report. DISCLAIMERS This research is based on information obtained from sources believed to be reliable, but we do not make any representation or warranty nor accept any responsibility or liability as to its accuracy, completeness or correctness. Opinions expressed are subject to change without notice. This document is prepared for general circulation. Any recommendations contained in this document does not have regard to the specific investment objectives, financial situation and the particular needs of any specific addressee. This document is not and should not be construed as an offer or a solicitation of an offer to purchase or subscribe or sell any securities. PT. Indo Premier Sekuritas or its affiliates may seek or will seek investment banking or other business relationships with the companies in this report.