State-owned Cement Company in Southern Sumatra
The company was established in 1974 as private cement company prior fully acquired by the Government of Republic of Indonesia in 1991. It produces two types of cement:
Ordinary Portland Cement (OPC) and Portland Composite Cement (PCC) with recent production capacity of 1.25 mn tons/year. Located in Southern Sumatra, the company has three facilities in Baturaja, South Sumatra (mill facilities with clinker and cement facilities of 1.2 mn tons/year and 550K tons/year respectively), Palembang, South Sumatra (head
office and grinding and packaging facilities with capacity of 350K tons/year), and Panjang, Lampung ( grinding and packaging facilities with capacity of 350K tons/year).
Eyeing Higher Market Share in Southern Sumatra Through Capacity Expansion
In order to meet robust domestic cement demand, particularly in Southern Sumatra, the company is planning to expand its production capacity. Recently, it is constructing grinding facilities with a capacity of 750K tons/year that is expected to complete in mid this year. Using proceeds from IPO, which is estimated of Rp1.2-1.6 tn, it plans to construct new
cement mill with a total capacity of 1.85 mn tons/year that is scheduled to commence operation in 4Q16. Through the capacity expansion, it expects to increase its market share in Southern Sumatra from around 29% in FYE13 to 51% in FYE18.
Sounds Fundamental
The company booked growing performance over the last five years. During 2008-2012, operating revenue rose with CAGR of 8%. Manageable cost resulted gross profit grew higher at CAGR of 13%. At bottom line, net income increased with CAGR of 22%. Solid performance was also showed by its asset that grew with CAGR of 13% as well as equity of 34%. Higher equity translated to lower liabilities and interest bearing debt, which declined by 14% and 64% respectively. Therefore, by end of 2012, the company had almost no debt as only booked Rp3 bn compared to Rp158 bn in 2008.
Offers 23.76% Stake at Rp500-685/Share
At the public expose, the company offers as much as 2,34 bn shares, which equals to 23.76% of total paid up capital, to public at price ranging from Rp500 – 685/share. Acting as lead underwriters are Bahana Securities, Danareksa Sekuritas, and Mandiri Sekuritas. Using historical revenue growth of 8%, we estimate FYE13 revenue to reach Rp1.19 tn
and net income of Rp320 bn (assuming net margin of 27%) or lower than management’s FYE13 revenue and net income forecast of Rp1.4 tn and Rp 375bn. Our estimates result PER’13 of 15.4-21.1x while average PER’13 of listed cement producers of 20.2x. Conclude the comparison, we see that the counter is offered at attractive price compared to industry. Therefore, it could be a choice of investment in the ISX.
Offering Price Rp500-685
Number of Shares 2.34 bn
Target Proceeds Rp1.2-1.6 tn
Indicative Timetable
Book Building 29 May-7 Jun 2013
Effective Statement 18 Jun 2013
Offering Period 20, 21&24 Jun 2013
Allotment 26 Jun 2013
Distribution & Refund 27 Jun 2013
Listing 28 Jun 2013
Use pf Proceeds (%)
New Mill Construction 100.0
Shareholders Post IPO (%)
Gov’t of Rep. Of Indonesia 76.24
Public 23.76
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