Andrey Wijaya - RHB Sekuritas
Maintain NEUTRAL on the cement sector, as national cement demand is expected to pick up, but competition in the industry is likely to remain intense.
The media has reported that Semen Indonesia is bidding for a stake in Holcim, which is owned by Holderfin, with an indicative offer of USD1.7-1.9bn (IDR26trn-29trn). Holcim’s current market cap is IDR14.3trn. The announcement of the winning bid will likely be made in mid-November.
Based on the above indicative offer, we estimate that Holcim is priced at USD113- 127/tonne, which is close to Semen Indonesia’s USD134/tonne.
Holcim’s cement production capacity is 15m tonnes pa, or 14% of total national capacity. *We believe its assets – in West Java, Central Java and Aceh – are attractive since they are located in areas where cement sales are growing faster than the industry average. *
Although Holcim booked a 1H18 operating loss of IDR227bn, if we excluded non-cash expenses, it would have booked positive EBITDA of IDR201bn.
Link to report: https://research.rhbtradesmart.com/attachments/97/rhb-report-ind_basic-materials-cement_sector-news-flash_20181026_rhb-214447313969869465bd1e59a9bd20.pdf
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