by Mandiri Securities
SMGR is investing Rp200bn in PT Kertas Kraft Aceh (KKA) or equal to 20% ownership in the company. The management expects the investment will be able support the company’s operation going forward, especially its cement sack paper production. The fund is budgeted on Rp3-5tn Capex this year.
KKA is a state-owned cement sack paper manufacture which has been halted operationally since 2007. The State-Owned Asset Management Company of Indonesia has recently invited 18 investors, both domestic and international, to become KKA’s strategic partners in order to revitalize the company’s operation. The partnership fund needed is estimated up to Rp800-900bn which will be used to construct 2 boiler machines and improvement of production quality. KKA expects to start operating again by 2013.
SMGR currently trades at PE11F 14.3x and EV/EBITDA 9.9x. We have Neutral recommendation on the counter. (SMGR, Rp9,600, Neutral, TP: Rp9,100)