Bareksa.com - April’ 14 Domestic Cement Sales - Slower Growth Due to Election Holiday - In Apr’14, ASI reported a declining growth for domestic sales consumption to 4,52m (-0.4% YoY & -8% MoM). The declining growth was due to holidays and the election period, that obliged the labors to vote in their hometown. Java was the biggest sales contributor with a 56.7% portion (+190 bps).

Developed Market Share for SMCB & SMGR, but not INTP - SMCB & SMGR have succeeded to expand their market share to be 14.3% (+70 bps) & 44.3% (+110 bps). On the other side, INTP’s market share contracted by -110 bps to 30.9%. Please note that SMGR has persistently maintained its position as the leader in the industry by showing consistent market share at >40% YTD.

Recommendation - Taking into account fluctuations in macroeconomic condition, on the back of election year, we expect cement consumption to grow moderately by ~6% YoY in 2014. We forecast 2014F EPS growth of companies under our coverage (SMGR & INTP) will reach 10% & 9% YoY. We continue to prefer SMGR due to: 1) the capacity to capture demand through its well diversified plant locations. 2) consistent market share at >40%. 3) higher ROE at 26%/26% in 2014/15F, compared to INTP at 22%/21%.

April Domestic Cement Sales - Declining Growth due to Election Holiday

In April 2014, Indonesia Cement Association reported a declining growth in domestic cement consumption to reach to 4,52mn tonnes compared to 4,54mn tonnes in April 2013 (-0.4% YoY) & 4,91mn tonnes in March 2014 (-8.0% MoM). The yearly growth was far below the March’s growth of +8.4% YoY. It was due to holidays and the election period which happened in the respective month, that obliged the labor to go home to vote.

Java was still be the main contributor by giving 56.7% portion (+190 bps), translated to 2,56mn tonnes cement sales volume (+3.1% YoY & -5.9% MoM). The portion of the rest region changed insignificantly from the previous year. Moreover, based on the cement sales type, the bag’s sales volume still bigger than the bulk with the portion of 79% and 21%, respectively, in January’ 14.

Developed Market Share for SMCB & SMGR, but not INTP

In April 2014, both of SMCB & SMGR have succeeded to expand their market share to be 14.3% (+70 bps) & 44.3% (+110 bps) , respectively. On the other side, INTP’s market share contracted by -110 bps to 30.9%. Please noted that SMGR has persistently maintained its position as the leader in the industry by showing consistent market share at >40% YTD.

Recommendation - Taking into account fluctuations in macroeconomic condition, on the back of election year, we expect cement consumption to grow moderately by ~6% YoY in 2014. We forecast 2014F EPS growth of companies under our coverage (SMGR & INTP) will reach 10% & 9% YoY. We continue to prefer SMGR due to: 1) the capacity to capture demand through its well diversified plant locations. 2) consistent market share at >40%. 3) higher ROE at 26%/26% in 2014/15F, compared to INTP at 22%/21%.

*M. Dian Octiana is equity analyst of PT Buana Capital. This article is part of the Equity Research of PT Buana Capital