印尼水泥业：寻找一个坚实的立足点.docxVIP

Equity ResearchAsia Pacific | IndonesiaCredit Suisse Equity Research Asia Pacific | Indonesia Indonesia Cement SectorIn search of a solid footing Cement | Assuming Coverage Figure 1: Utilisation rate to recover in 2021E]Capacity (Effective Prorated) ^^?ProductionUtilization rate, RHSResearch Analysts Figure 1: Utilisation rate to recover in 2021E ]Capacity (Effective Prorated) ^^?ProductionUtilization rate, RHS Robert Pranata 62 21 2553 7976 Source: ASI (Indonesia Cement Association), Credit Suisse estimates We expect 2020E cement volume to decline by 9%, implying that volume from May until December will likely see an average drop of 10%. We expect volume to recover by 10% in 2021E with bulk cement seeing the higher growth. We expect mid-single digit volume growth in 2022E and we think Indonesia/s structural volume growth to remain intact given our low consumption per capita compared to the region. On the supply side, we estimate 6 mn tons additional capacity for 2020E-2021E from two smaller players in Java. However, we think SMGR will focus on profitability as its market share is already above 50% and it has high debt level. As such, we estimate SMGRs market share to decline to 50% in 2020E compared to 53% in 2020E. We assume coverage on INTP with an OUTPERFORM rating, Rp14,200 target price and SMGR with NEUTRAL, Rp10,500 target price. We prefer INTP due to its net cash balance sheet (less earnings cut) and lower competitive pressure as the additional 6 mn tons additional capacity are located in SMGRs home base in eastern Java. We cut our net profit estimate. We now assume that earnings for INTP and SMGR will grow by -16%/+38%% and -36%/+98% for 2020E/2021E, respectively. We are closer to the bottom of EV/ton range but a significant improvement in return is required for meaningful re-rating. Risks to our thesis： (1) Longer-than-expected social distancing measures, (2) Lower- than-expected demand and ASP, (3) stronger-than-expected competitive pressure, and (4) high