by Batavia Prosperindo Securities
• 9M-2011 financial report showing good result
The 9M-2011 financial report showed that SMCB recorded revenue of Rp. 5,408.08 bn, increasing 26.15% compared to the 9M-2010’s of Rp. 4,287.12 bn. As for the net income, SMCB managed to grab profit of Rp. 740.42 bn, growing 19.28% compared to the 9M-2010 net income of Rp. 620.75 bn. This good result was supported by increase in Indonesian cement demand and strong sales of Holcim brand cement. As per 9M-2011, SMCB revenue and net income growth is better than its peer such as INTP and SMGR.
• Fresh start after quasi reorganization
SMCB revalued its asset for quasi reorganization and hence was able to record a positive retained earnings (Rp. 505.15 bn). As a result of this new fresh start, SMCB is able to give dividend to its investors. In 2011, SMCB gives dividend of Rp. 352 bn, which is about 42.39% from the previous year net income.
• Building new plant
As there is expectation that Indonesian cement consumption will still grow in the future, SMCB plans to build new factory in Tuban, East Java. This new factory will add 1,7 million tones of cement production capacity to SMCB current production capacity of 8,3 milion tones. This new plant is expected to be completed in 2013 with capital expenditure of around US$ 450 – US$ 500 milion.
· Target Price and Recommendation
Using DCF model we attained target price of Rp. 2,325 for SMCB. With the current price at Rp 2,100 (29/12/11), there is a potensial upside of 10.71%, and hence we recommend ”BUY” for SMCB.