Holcim Indonesia Better than expected

Holcim Indonesia: Better than expected FY12 result; above ours (109%) and consensus (112%) estimates (SMCB, Rp3,450, Sell, TP: Rp2,450)

• SMCB has announced a positive FY12 result where they managed to book Rp1.35tn net income (+27.0% yoy, +7.9% qoq), ahead of ours (109%) and consensus (112%) estimates. The company posted strong revenue of 19.8% yoy growth (+7.4% qoq) which leads to growths all the way to the bottom line.
• Strong domestic volume growth of 10% qoq, greatly helped SMCB’s sales albeit the slight decrease in ASP by 3% qoq due to change in product sales mix. 9% qoq increase in direct labor cost has also attributed to the slight decline in gross margin.
• A further slight in operating margin came mostly from the G&A cost of +4% qoq. Further, higher than expected finance cost (+32% qoq) attributed in the higher below the line cost.
• SMCB FY12 result may have surprised us. However, we maintain our Sell recommendation on the due to expensive valuation (22.4x PE2013 vs. industry 18.5x; 314 EV/ton vs. industry 368x), aside our jittery in margin that may come below than our expected due to rising import activities.